Statute of limitations after 6, and not 10 years – changes in the Civil Code

Statute of limitations after 6, and not 10 years – changes in the Civil Code

On 9 July of the current year, the amended provisions of the Civil Code, regulating the statute of limitations of claims, will come into force. Changes are significant, because they cover not only the reduction of the basic period of statute of limitations of claims, but they also change the method of application of the statute of limitations institution in matters of claims against consumers. Getting ahead of ourselves, we should point out at the beginning that the act constitutes a significant breakthrough in the principle known to every law student that the statute of limitations is taken into account by the court only at the request of the defendant.

 

 

A shorter period of statute of limitations

Firstly, we should point out to the shortening of the basic statute of limitations of property claims, from 10 to 6 years. This means that claims will become time-barred sooner, which, according to the intention of the authors of the act, is aimed at encouraging creditors to initiate court proceedings faster. The shortening of the period of the statute of limitations applies to the basic period of the statute of limitations of claims which applies when special provisions do not anticipate a different period of the statute of limitations. Moreover, the new, shortened period of the statute of limitations, i.e. 6 instead of 10 years, will apply also to claims covered by final and enforceable court judgement or a settlement agreement concluded before the court or approved by the court. At present, such claims become time-barred after the lapse of 10 years.

Meanwhile, no changes were made to the three-year period of the statute of limitations applicable to claims for periodical benefits and claims connected with the conduct of a business activity.

The legislator also did not decide to interfere with the periods of the statute of limitation regulated in special provisions, such as, for example, the two-year period of the statute of limitations of claims resulting from the contract for performance of work.

 

 

The period of the statute of limitations will lapse at the end of the calendar year

What is more, for the needs of the institution of the statute of limitations, the legislator changed the method of determination of the lapse of the statute of limitations. The new regulation stipulates that the statute of limitations will always lapse on the last day of the calendar year. This means that the claims will not become time-barred exactly after 2, 3 or 6 (instead of 10) years, counting from the date of maturity of the claim, but always at the end of the calendar year. Therefore, in order to specify when the claim becomes time-barred, the specific date of arising of the claim will not have any importance, the year will be sufficient. For example, a claim for the payment of the rent for December 2018, payable by 10 January 2019, will become time-barred as a periodical claim after 3 years, but not on 10 January, but only on 31 December 2022.

We may assume that the new solution is aimed at elimination of disputes concerning the date of arising of the claim. However, in practice the determination of a specific date when the debtor should satisfy the claim will still be required. If nothing else, this will be of relevance for the determination of the date since when the creditor has been entitled to interest on the principal amount of the claim.

In practice, in the majority of cases such solution will mean the extension of the period for the pursuit of claims in excess of the period of the statute of limitations specified in the act. For example, a claim for payment of the remuneration for the performance of the service (subject to a two-year period of the statute of limitations), covered by an invoice whose payment deadline lapsed on 3 January 2018, will become time-barred not on 3 January 2020, but on 31 December 2020. In the case of claims which are subject to the new, six-year period of the statute of limitations, the application of the discussed rule may, in some cases, lead in practice to the extension of the period of the statute of limitation to nearly 7 years.

The rule that the end of the period of the statute of limitations is to fall at the end of the calendar year will not apply to the periods of the statute of limitations shorter than two years. In such cases, the lapse of the period of the statute of limitations will still be determined as so far, i.e. as of the specific calendar day, with reference to the specific date of the arising of the claim, and not on the last day of the calendar year.

 

The court will not take into account time-barred claims against consumers

An important  novum is the exclusion of the possibility of pursuing claims due against the consumers after the lapse of the period of the statute of limitations. That is because in Art. 117 of the Civil Court, an additional provision is made which stipulates that “After the lapse of the period of the statute of limitations, one may not demand the satisfaction of a claim against a consumer.” In the justification of the draft act, it was stated that, according to the new regulations, the effect of the statute of limitations will occur by the force of the law itself. In this way, according to the new provisions, a possibility will be excluded of compulsory satisfaction of a time-barred claim.

In practice, this means that in matters against consumers, the court will examine ex officio whether a claim of the plaintiff is time-barred.  If it is time-barred, then the statement of claim covering such time-barred claim will be subject to dismissal. We should emphasize that the taking into account the statue of limitations of the claim will not depend on the submission of a relevant objection by the consumer. At present, the lapse of the period of the statute of limitations is acknowledged by the court only in response to the objection raised by the defendant, regardless of whether the defendant is an entrepreneur or consumer. The new solution will significantly strengthen the protection of consumers in court proceedings. In view of introduction of a provision which directly excludes a possibility of demanding the satisfaction of a claim against a consumer after the lapse of a period of the statute of limitations, suits covering time-barred claims will not have a chance of success, even if the consumer does not raise an objection based on the statute of limitations. And we can suspect that in practice even in the situation when the consumer does not undertake any defence.

However, at the same time, the new provisions stipulate that in exceptional cases the court may, upon consideration of the interests of both parties, override the lapse of the period of the statute of limitations of the claim against a consumer if this is justified by equity reasons. Exercising this right, the court should consider, in particular: (1) the length of the period of the statute of limitations, (2) the length of the period from the lapse of the statute of limitations to the time of pursuing the claim, (3) the character of the circumstances which lead to a waiver of pursuit of the claim by the rights-holder, including the influence of the obligated party on the rights-holder’s delay in pursuit of his claims.

Therefore, a decision on overriding the lapse of the statute of limitations will depend on the evaluation by the court of the circumstances of a given case. The court should follow the principles of equity in the taking of decisions on overriding the statute of limitations of claims. At the same time, overriding the statute of limitations of a claim against a consumer should be an exception and not a rule. Such situation may occur, for instance, when it is the defendant consumer who, by his action, causes a creditor’s delay in referring the matter to the court, and not much time passes from the lapse of the statute of limitations.

 

Application of the new rules to claims which are already pending

The legislator decided that the new provisions on the statute of limitations of claims will apply to claims which arise before the date of coming into force of the amendment to the act, which are not time-barred on that day. This means, inter alia, that the amendment to the Civil Code will affect the statute of limitations of claims which started to be time-barred even before the date of the amendment’s coming into force.

At the same time, the legislator introduced a principle according to which if, pursuant to the new provisions, the period of the statute of limitations is shorter than according to current provisions (i.e. 6 instead of 10 years), then the statute of limitations starts to take course on the date of coming into force of new provisions. Even though this means that the period of the statute of limitations is shortened, but it starts to take its course on the date of coming into force of new provisions.

Does this mean that the claim whose ten-year period of the statute of limitations is coming to an end, restarts to be time-barred for a period of another 6 years upon the coming into force of the new provisions? We will not have to deal with such a paradox. The interim provisions of the new act stipulate that if the period of the statute of limitations, started before the date of coming into force of new provisions, occurs subject to the currently-binding regulations concerning the statute of limitations, then the claim will become time-barred upon the lapse of such earlier period. For example, a claim which has been mature since 2008, and which is subject to ten-year period of the statute of limitations, will, upon the coming into force of the new provisions changing the ten-year to six-year period of the statute of limitations, become time-barred in 2018, and not in 2024.

What is more, the impact of the new act on the existing claims of consumers has been regulated separately. Namely, claims of consumers which arise before the date of coming into force of a new act and not time-barred on that date, are governed by the current provisions concerning statute of limitations. This means that claims of consumers which already exist on the date of entry into force of the amendment become time-barred at the same time as so far. The period of the statute of limitations of such claims will not, therefore, be reduced from 10 to 6 years. This is good news for, for instance, borrowers who have planned to lodge statements of claim, not long before the lapse of the ten-year period of the statute of limitations of the claims, against banks for return of overpayment in the repayment of the credit which arose as a result of, for instance, the application by the bank of forbidden clauses.

On the other hand, in matters where time-barred claims are pursued against consumers, with regard to which no objection based on the statute of limitations has been lodged until the date of coming into force of the amendment to the Civil Code, courts will obligatorily have to take the statute of limitations into account. Therefore, in particular, entrepreneurs who are currently in court disputes with consumers should take into account the new provisions on the statute of limitations because they may affect the result of the matters already pending against such consumers.

 

Summary

The new regulation of the statute of limitations will apply not only to claims arising after the date of its coming into force, but will also extend to obligations existing before which have not become time-barred yet. Therefore, both consumers and entrepreneurs may experience its consequences already this year. A change of the basic period of the statute of limitations from 10 to 6 years means mainly the reduction of time for the pursuit of claims in court, as well as the time for enforcement of the claims covered by the final and enforceable judgement or a settlement agreement concluded before the court. We may also assume that in connection with the exclusion concerning the principle of a possibility granted to courts to take into account time-barred claims of entrepreneurs against consumers, the number of statements of claims lodged by collection companies covering such time-barred claims will drop significantly.

 

 

The author of the article is Urszula Darkowska, attorney-at-law at GWW.