July 9, 2018, saw the entry into force of an amendment to the Polish Civil Code (“PCC”) concerning limitation periods for civil-law claims. Along with modifying key limitation periods, the amendment introduces new rules of calculating the limitation date of a claim and revises regulations on limitation periods for claims against a consumer. Pursuant to the amended Art. 118 PCC, the general limitation period has been cut from ten to six years. Under Article 125(1) PCC, even claims confirmed by a decision of a court or another competent authority, by a court settlement or decision of an arbitration tribunal, or by a settlement concluded before a mediator and approved by the applicable court become time-barred after six years (previously after ten years). According to the revised method of determining the limitation date, prescribed in Art. 118 PCC, claims that become time-barred after two or more years will now expire on the last day of the appropriate calendar year.
Example 1: Under the amended Art. 118, if a claim subject to the general six-year limitation period becomes due on August 2, 2018, it expires on December 31, 2024, even though six years runs out on August 2, 2024.
The transitional arrangements stipulate that if a claim is not time-barred at the time of the entry into force of the amended regulations, its limitation date is calculated according to the new provisions. With regard to existing claims, subject until recently to a ten-year limitation period, the new, six-year period, being shorter than the previous limit, starts running afresh.
Example 2: A claim became due on January 10, 2015, and is not time-barred at the time of the amendment’s entry into force as its ten-year limitation period has not expired. The new, six-year limitation period is therefore applicable – it starts to run on July 9, 2018, and the claim becomes time-barred on December 31, 2024.
However, in the case of claims whose limitation period would be extended if the amended formula were applied, the limitation date calculated using the previous wording of the regulation continues in force.
Example 3: A claim became due on July 1, 2011, and is not time-barred as of July 9, 2018 (ten years has not elapsed). According to the amended formula, a new limitation period of six years ought to be calculated, running from July 9, 2018 (and, as in Example 2, the claim would become time-barred on December 31, 2024). But because the claim would, as a result, become time-barred after thirteen years, the original ten-year period continues to apply, and the claim becomes time-barred on July 1, 2021.
However, consumer claims which arose before July 9, 2018, and had not become time-barred by that date are not affected by the amended regulations and are still governed by the original provisions.
New limitation rules for claims against consumers
The amendment also introduces new rules for limitation periods applying to claims against consumers. According to Art. 117(21) PCC, once the appropriate limitation period has expired, one may no longer try to enforce such a claim. Nonetheless, Art. 1171 PCC provides for cases where satisfaction of such claims may be sought even if the limitation period has run out. This will be possible in exceptional circumstances and only if reasons of equity so dictate. The court will be required to consider in particular:
- the duration of the limitation period,
- the time lapse between the expiry of the limitation period and the moment when the claimant started to enforce the claim,
- the circumstances which prevented the claimant from taking action to enforce the claim, including any impact the debtor’s conduct had on the claimant’s delay in pursuing the claim.
The reduction of the general limitation period for claims from ten to six years is certainly bad news for many creditors. The legislator has argued that, firstly, parties to legal relations must be prompted to assert their rights more quickly and, secondly, enforcing e.g. ten-year-old claims is typically riddled with evidential difficulties. The provision which identifies the last day of a calendar year as the limitation date should, in turn, simplify those cases where the moment the claim becomes due is dependent on the date when the creditor is first able to take action to enforce it (Art. 120(1) PCC). Of course, the amended formula for calculating the limitation date does not apply to limitation periods shorter than two years.
Such a blanket revision of statutory limitation periods for claims which expire after two or more years was always sure to raise a few eyebrows. Curiously enough, a claim subject to a two-year limitation period which becomes due on January 2 will, as a result of the amended regulations, become time-barred only after nearly three years. Such a major extension (almost 50%) of the period after which a claim becomes time-barred, seems inconsistent with the aim of provisions intended to reduce limitation periods. It is also possible to question the argument raised by the legislator to the effect that the amendment will facilitate determining limitation dates and help debtors defend their rights. After all, if the performance deadline has been clearly defined by the parties, determining the date of expiry is simple enough.
Changes in the scope of limitation of claims against consumers fit in well with the overall trend to introduce legislation improving consumer protection. Under the former regulations, creditors were able to enforce a claim even after its limitation period had elapsed. Only after the debtor had cited expiry, would such a claim be dismissed. According to the amended regulations, courts will have to dismiss expired claims ex officio. In the legislator’s view, this change will discipline businesses into exercising their rights within a limited – and relatively short – time. At the same time, courts will only be allowed to disregard the lapse of the limitation period in exceptional cases, e.g. those where the claim expired very recently and in consequence of the consumer’s conduct. It is at this point that the amended regulations give rise to a procedural ambiguity. They impose on courts the obligation to acknowledge expiry ex officio. Yet, in many cases the expiry itself will be subject to controversy and will therefore require adduction of evidence. Will it now be the court’s duty to autonomously determine whether the disputed claim has expired, relieving the consumer of the obligation to prove that this is the case, which could, in turn, be argued to violate the general principles concerning the apportionment of the burden of proof in civil proceedings? According to the legislator, applying the new substantive law norm may not be identified with conducting proceedings to take evidence in civil-law actions. We have to wait and see, though, to find out if courts interpret the new regulations in the same way as the legislature.