Limitation periods are of paramount importance for the success of any potential claim arising from non-conforming goods in the international sale of goods. If the applicable limitation periods have expired, claims could be rejected by the courts even if fully proven on the merits. Short limitation periods could require early submission of claims before all evidence is collected to preserve the chances for success.
What limitation periods apply to a CISG dispute?
Limitation periods limit the period during which a claim may be initiated - any claim filed afterwards could be rejected regardless of whether the claim can be proved on the merits unless asserted as a defense or as a set-off. Thus, the identification of all limitation periods which may apply to a potential claim is of a paramount importance for its success.
In cases regarding an international sale of goods transaction governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG), the identification of all applicable limitation periods is not always straightforward. The CISG does not contain limitation periods as this issue was intended to be addressed by the 1974 Convention on the Limitation Period in the International Sale of Goods (Limitation Convention). However, the Limitation Convention has not been ratified by a number of states, among them Bulgaria and Austria.
In the absence of ratification of the Limitation Convention, the national law rules for limitation periods apply. The national laws typically provide for different limitation periods such as limitation periods for (i) claims to remedy non-conforming goods, (ii) claims for damages for contractual non-performance, and (iii) claims for performance of payment obligations. All such limitation periods could be applicable to a CISG dispute unless generally incompatible with the application of the CISG.
The application of the CISG precludes only the domestic sale of goods provisions of the applicable national law, but not its general provisions. Thus, the general limitation periods provided under national law, such as limitation periods for claims for damages based on contractual non-performance or limitation periods for claims for performance of payment obligations, should be applicable to a CISG dispute. Although questionable whether special limitation periods under the domestic sale of goods regimes are compatible with the CISG, it may be argued that given the lack of limitation periods under the CISG, the domestic law limitation periods would apply to fill the gap.
Short limitation periods can influence the litigation strategy in a CISG dispute
The litigation strategy in a CISG dispute would require an assessment of which limitation periods will apply, their length and starting date.
Some limitation periods are very short under domestic legislation. For example, under Bulgarian law, there is a 6-month limitation period for claims for non-conforming goods, a 3-year limitation period for claims for damages caused by contractual non-performance and regular payments.
The starting date of limitation periods plays significant importance as well. For instance, in Bulgaria the short limitation period for non-conforming goods starts from the date of delivery, the limitation period for damages -- from the date the damages occur, and the limitation period for receivables - from the date when the receivables become due.
In cases where a short limitation period such as the 6-month limitation period under Bulgarian law applies, there could be insufficient time to prepare thoroughly all the necessary evidence to substantiate a claim. However, while the lack of sufficient evidence could be remedied with a follow-up submission, the omission to file within the limitation period could do irreparable harm to the claim.