On 1st October 2011, the Romanian New Civil Code (“NCC”) entered into force. It applies to agreements entered into and situations occurring after 1st October 2011.
The NCC significantly amends the previous 1864 Civil Code with regards to limitation periods (“LP”s) – the period of time within which court action must be commenced.
The most important change is that the parties to an agreement are now allowed to decide on the LP to be applied to their legal proceedings related to that agreement. Before the NCC, the LP was provided by law and any attempt to vary it would have led to the annulment of such clause.
Parties to an agreement may now decide how long after an event has occurred they can start a legal proceedings. The parties may also set out on which occasions such time period should start, be suspended or interrupted. However, the parties will not be allowed to transform, either directly or indirectly, an unlimited LP into a limited one, nor vice versa. Further, parties are not allowed to set any LP for a period of less then a year or for a period of more then ten years (though this can be 20 years in limited circumstances – see below).
If the parties do not specify a LP, the NCC sets default LPs for various agreements and situations. These can be for one, two, three or ten years. The one year LP applies for payment of services of some professionals, such as lawyers, public notaries, bailiffs, architects, hotels, restaurants, etc. The two year LP applies to insurance or re-insurance contracts, as well as intermediation agreements. The three year LP is still the usual LP for all other situations, but now applies also to claims regarding hidden flaws of goods/services, in place of the previous six month LP. The ten year LP applies to real rights (jus in re) (e.g. property rights, easement rights, etc) as well as environmental damages, moral damages caused by violence or torture, etc. Some of these LPs were previously assigned a period of 30 years.
The parties may amend these default LPs, such amendments only to be considered valid if all parties clearly express their consent to the amendment. Further, the possible amendments are somewhat limited: one, two and three year LPs can be extended to a maximum of ten years; a ten year LP can be extended to 20 years. Further, the parties cannot amend LPs concerning insurance contracts or any action related to consumer protection or so called “accession” agreements (agreements with non-negotiable, standard clauses such as utilities contracts, etc.).
The LPs may be invoked only during the first stage of proceedings by the statement of defense. The LP may be invoked by the party that benefits from it, or by its co-debtors, creditors, personal guarantors or any other interested person. The court, or any other jurisdictional authority, can no longer invoke the LP by its own initiative. If the LP has run out, proceedings can still be brought if the party benefitting from the LP decides to waive it.
With regards to LPs for mortgages, the NCC provides a special rule. If the right to start legal proceedings in connection to a loan agreement will be affected by the LP, the legal action connected to the mortgage will not be also automatically time-barred. The mortgagor will still be able to enforce the mortgage, but will be limited to the value of the mortgaged assets. The mortgagor will not be able to recover interest or any other benefits under the loan agreement; only the principal. Mortgage enforcement, as it is a real right (jus in re), has a LP of 10 years.
These changes radically modernise the concept of LPs in Romania and provide greater flexibility and control to parties themselves, whilst also replacing the old and obsolete provisions which allowed impracticably long LPs to be enforced.