The reform to the Civil Procedural Law that came into force on 7 October 2015 introduced an important modification where Statue of Limitations for contractual actions are concerned. This change is a significant change to Spanish Law as involves a legal concept that has been in force since 1889.
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Modifications in the Spanish Civil Procedural Law
The reform to the Civil Procedural Law introduced an important modification to the statute of limitations that applies to personal actions that do not have a specific time bar period contained in article 1964 of the Civil Code. These personal actions are of a broad nature and include actions that have their origins in a contract, such as the action for breach of contract. The modification to this statute of limitations is a significant change to Spanish Law as it involves a legal concept that has been in force for more than 100 years, since the entry into force of the Civil Code in 1889.
General statute of limitations changed, applicable to personal actions
Until the reform came into force on the 7 October 2015, the general statute of limitations for personal actions – applicable when no other specific time bar period exists – was the generous period of 15 years.
With the entry into force of the new statute of limitations for these personal actions, this period has now been reduced to five years which is calculated from the moment in which the fulfilment of the obligation can be claimed, as specified by the reform.
In addition, it is also specified that the five year period for obligations that impose a continuous duty to do something or to refrain from doing something is calculated each time a breach occurs.
The reform also stipulates a transitory system for the actions which have their origins in obligations that existed prior to the entry into force of the reform. It is established that such actions are subject to the period of 15 years but such a period cannot exceed the period of five years calculated from the date of the entry into force of the reform. In other words, the maximum date for the calculation of the statute of limitations for such actions will be the 7 October 2020.
We will now illustrate the transitory system with two examples for a better understanding of its application given that, in our opinion, the referral to article of 1939 of the Civil Code which establishes the transitory system does not offer the clarity required:
- Example one: An action which existed when the reform entered into force that has already run for 14 years will be time barred in one year’s time according to the previous statute of limitation of 15 years.
- Example two: Nevertheless, an action which existed when the reform entered into force that has only run for three years will be time barred five years from the entry into force of the reform: 7 October 2020, therefore “losing” seven additional years that would have existed under the previous regulation.
It can therefore be seen that the reform not only influences situations from the date of its entry into force but also has retroactive effects as it affects relationships and actions that existed prior to the new version of the law. As we have seen such retroactivity can also lead to the original period of the statute of limitations being reduced.
Other, more specific Statute of Limitations, such as those applied to insurance contracts are not affected.
However, it should be noted that this statute of limitations is of a generic character applicable to personal actions with contractual origins but not applicable to actions that have their origins in an insurance contract. Section 23 of the Insurance Contract Act contains a statute of limitations of two years for actions related to property and liability insurance and five years for insurance for persons (life and accidents). These specific periods have not be modified and prevail over the generic personal actions period and will continue to be applicable to actions between insurer and insured related to the clauses of policies.
Finally, it is worth highlighting that the statute of limitations for tort liability arising from fault or negligence has not been modified and continues to be one year (article 1968 CC).