Limitation as a matter for the applicable law: latest decision

In cross-border litigation, the Rome II Regulation – which still applies in the UK, although now as “retained EU law” – provides that the applicable law shall govern matters such as liability and quantum as well as “the manner in which an obligation may be extinguished and rules of prescription and limitation, including rules relating to the commencement, interruption and suspension of a period of prescription or limitation” (article 15(h) of the Regulation).

How this works where the limitation process or period also includes requirements about service – which is generally regarded as procedural and something for the law of the forum (ie the court with jurisdiction) rather than for the substantive applicable law – was examined recently in Johnson v Berentzen, a road traffic claim pursued in England by an English resident claimant against a German resident defendant and relating to an accident in Scotland.

There was no dispute that Scottish law was the correct applicable law, it being the law of the country in which the damage occurred (the test in article 4.1). That provided for a limitation period of three years, as in English law. In Scottish law, however, proceedings must be served within the three years in order to interrupt the period. In English law it is sufficient that proceedings are issued within three years and served within 4 months of doing that.

Proceedings had been served a few weeks after the three year period had expired. On the facts of the case, if Scottish law as the applicable law governed limitation then the claim would be barred (but subject to judicial discretion to extend). If English law,  the law of the forum, operated then the claim could proceed as of right without the need for judicial discretion.

This precise point surfaced last year in Pandya v Intersalonika, a claim pursued in England but under Greek applicable law which required issue and service in order to interrupt its five year limitation period. The claimant had attempted to argue that service was merely procedural and therefore issuing alone within 5 years should allow her to proceed.

She failed, with the judge reasoning that “Service of the claim cannot be severed, carved out or downgraded to a matter of mere procedure which falls to be dealt with under English Civil Procedure Rules …  The clear intention of the Rome II Regulation is to promote predictability of outcomes and, in that context, it seems to me that such an outcome is not what the Regulation intended to happen in these circumstances.” Subsequently, the claimant’s application for permission to appeal was dismissed by the Court of Appeal on the basis that “it is not reasonably arguable that the requirement to serve a copy on the Defendant is merely a procedural requirement and therefore excluded from the ambit of Article 15(h).”

That outcome meant that the claimant in Johnson would have to argue that Pandya was wrongly decided in order not to fall foul of the Scottish limitation provisions. In her decision of 26 April 2021, Stacey J described this as “an admittedly stiff task” and found it was one in which the claimant must fail.

She could find no flaws in the reasoning in Pandya and observed further that: “Certainty will be provided by all aspects of limitation being governed by the same law which, by Art 15(h), is stipulated to be the lex causae [ie the substantive applicable law].

What this latest decision underlines very clearly is the importance of paying close attention to every aspect of limitation where it is governed by another country’s applicable law and it reinforces the fact that English procedural rules on service are simply irrelevant and of no assistance if that limitation period has expired.

Unlike in Pandya, where the applicable law (Greek) did not allow judicial discretion to extend the limitation period, in the present case the claimant was able successfully to invoke the judicial discretion available under Scottish limitation law in order to proceed. She had “established cogent factors to merit depriving the defendants of what would have been a complete defence to the claim. The defendants were unable to point to any significant prejudice beyond having to defend the claim.”

Alistair Kinley at BLM
Alistair Kinley, Director of Policy and Government Affairs at BLM

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