Disputes on time bar

Ngo Khac Le - VIAC Arbitrator|17/11/2020 08:34

(VLR) “Time bar meant a time limit during which entities/ individuals were entitled to sue, requesting the Court to resolve civil cases to protect their infringed legitimate rights and interests; if that time limit ended, the right to sue was lost” (Clause 3 Article 150 of 2015 Civil Code). However, paying billions of VND just because of not knowing that the time bar already expired or there were cases where the time bar was “unlimited” (law suit could be started at any time), or “extended” (time excluded from time bar) through some lawsuits below so that you could see the importance of time bar.

Disputes on time bar

Disputes on time bar

Restart the time bar

The Buyer (Claimant) contracted with the Seller (Respondent) to buy tea. According to the contract, the Claimant had advanced an amount of money to the Respondent, but then, due to the poor quality of tea on the market, on August 20, 2013 the two parties signed an agreement, accordingly, the Respondent had to return the amount received and interest to the Claimant. On December 15, 2014, the parties made a document confirming that the Respondent still owed the Claimant VND 4 billion of advance. Due to the Respondent’s failure to pay the debt, on January 5, 2017, the Claimant sued the Respondent at arbitration.

The Arbitral Tribunal found that according to Article 33 of the 2010 Law on Commercial Arbitration “unless otherwise provided by the specialized law, the time bar for commencing a legal action according to arbitral procedures was 2 years from the time the legitimate rights and interests were violated”. The law and regulations on commercial arbitration did not provide for the consequences of the expiration of the time bar, but according to the civil law and regulations, “… If that time limit ended, then the right to sue was lost” (Clause 3, Article 150 of the 2015 Civil Code). The Arbitral Tribunal determined that this was a commercial dispute under the sale and purchase of goods contract, so the time bar was 2 years from the time of infringement of legitimate rights and interests (Article 319 of the 2005 Law on Commerce). Therefore, the time bar of 2 years already expired (The Request for Arbitration was dated January 5, 2017). However, the Respondent confirmed (after being sued) that they did not deny the amount owed to the Claimant even though the time bar had expired, but only requested the Claimant to reconsider (exempt/reduce) the claim of interest due to late payment. Thus, the Respondent admitted that it still owed the Claimant the principal amount, there was no dispute over this amount but only the interest dispute.

The acknowledgment of the outstanding principal made the time bar still available in accordance with Article 157 of the 2015 Civil Code as follows: “1. The time bar for a civil lawsuit re-started in the following cases: a) The obligor had admitted part or all of its obligations to the petitioner “. Therefore, the time bar began again with a period of 02 years from the date following the date the Respondent admitted the debt owed to the Claimant under Clause 2, Article 157 of the 2015 Civil Code: “The time bar for a civil lawsuit re-started following the date of the event specified in Clause 1 of this Article the Respondent had admitted part or the whole of the obligation “. The Arbitral Tribunal decided that the time bar remained and issued an Arbitral Award to force the Respondent to pay the Claimant the advance amount of VND 4 billion.

No time bar applied

Company A (Claimant) and Company B (Respondent) signed a legal service contract which stated that the Claimant was obliged to deposit money and the Respondent had to ensure the success of the lawsuit. The result was unsuccessful. More than 2 years later, the Claimant sued to demand refund of the deposit but the Respondent argued that the time bar of 2 years was over, so the Claimant lost the right to sue. The Arbitral Tribunal found that the Claimant’s deposit (of 80% of the contract value) meant that the ownership of this money still remained with the Claimant. The Respondent’s recipient of the money did not mean that the title belonged to them. Article 155 of the 2015 Civil Code stipulated that “The time bar did not apply in the following cases:” ...2. Request for protection of ownership rights...” and “Request for protection of ownership rights” included a request for property claim. Property claim was a measure to protect property ownership rights as prescribed in Clause 2, Article 164 of the 2015 Civil Code as follows: “...Owners, entities/individuals with other rights to property had the right to request the Court, other competent state agencies to force the persons committing acts of infringement of the right to return property, stop acts of illegally obstructing the exercise of ownership rights, other rights to property and claim compensation for damages”. Therefore, the Arbitral Tribunal decided not to apply the time bar in this case or in other words that the resolution of this dispute was not affected by the 2 year time bar under Article 33 of the 2010 Law on Commercial Arbitration as follows: “Unless otherwise provided for by specialized law, the time bar according to arbitration procedures was 2 years from the time of infringement of legitimate rights and interests”.

Time was not included in the time bar

A transport company (the Claimant) signed an insurance contract (hull policy) with an insurance company (the Respondent). In the letter dated January 3, 2017, the Claimant informed the Respondent that its ship had a marine accident. The Respondent already received the letter and many times then asked the Claimant to supply more documents, waiting for the survey report of loss and damage. After receiving the survey report, on February 13, 2020, the Respondent informed that the loss and damage were not covered by insurance liability and that the time bar expired. The Claimant sued at arbitration. The Arbitral Tribunal found that right after the accident, the Claimant had sent a letter (of notice) in writing dated January 3, 2017 and the Respondent acknowledged receipt of the letter. In the letters dated January 6, 2017, January 12, 2017 and February 28, 2017, the Respondent requested additional documents because the Respondent’s scope of insurance liability was unclear. In some later letters, the Respondent said he was asking the inspection company to collect more documents to complete the survey report of loss and damage in order to settle the claim for the Respondent.

The Arbitral Tribunal found that from January 3, 2017 to before February 13, 2020, the Claimant did not receive any letter denying the Respondent’s insurance liability. On the contrary, the Respondent only asked the Claimant to supply more documents, waiting for the result of the loss and damage assessment by the inspection company. Thus, the case was still in the review process, the Claimant was still waiting for the Respondent’s conclusion and had not exercised his right to sue. Clause 1, Article 156 of the 2015 Civil Code stipulates as follows: “Time that did not included in the time bar for a civil case, ...was the period of time when one of the following events occurred: ... objective obstacles caused entities having the right to sue, the right to request could not initiate lawsuits, request within the time bar” and “...objective obstacles are obstacles caused by objective circumstances affecting the rights and obligations holders who could not know that their legitimate rights and interests had been infringed upon or unable to perform their civil rights and obligations”. Therefore, the period from January 3, 2017 to February 13, 2020 was not included in the time bar. Thus, the time bar (3 years) had not expired, so the Claimant still had the right to sue the Respondent.

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Disputes on time bar