Statute of limitations runs anew after postponement of payment: A new resolution of the Supreme Court
Recently, the Supreme Court of Poland adopted an important resolution specifying the rules for running of the statute of limitations after a postponement of payment (creditor’s extension of the payment deadline). Under the resolution, if payment is postponed, the statute of limitations begins to run again from the new payment deadline. Thus, the view expressed by the Supreme Court allows the repayment of the debt to be divided into instalments along with postponement of the due date, and thus postponement of the beginning of the limitation period.
Supreme Court of Poland resolution of 11 September 2020 (case no. III CZP 88/19)
Pursuant to the resolution, “If as a result of the postponement of the deadline for performance, the claim ceases to be due and payable, the limitation period on the claim begins to run again only upon expiration of the new deadline.” The resolution was taken in connection with a legal question whether, under the principle of freedom of contract, the parties may agree to change the due date of a claim after the claim has become due. The resolution manifests a tendency to relax the legal rigours of the statute of limitations for claims by allowing the parties greater freedom in this regard.
In the resolution, the Supreme Court accepted a situation in which the limitation period is not counted from the original due date of the claim, but from the new due date of the claim agreed by the parties as part of a deferral of payment (e.g. payment in instalments). Thus, the court acknowledged that such action by the parties does not violate the prohibition under Art. 119 of the Civil Code, according to which limitation periods may not be shortened or extended by a legal action.
In the opinion of the Supreme Court, Civil Code Art. 119 does not preclude a change in the due date of a claim that has already fallen due; thus, a change in the start of the limitation period is also permissible. Otherwise, according to the resolution, there would be an unjustified restriction of the freedom of contract. This could be manifested by depriving the parties of the possibility of scheduling payment of the debt in instalments if the extended payment deadline falls after the expiry of the limitation period calculated according to the original rules (based on the original due date).
In this regard, the Supreme Court cited other cases of disposition of a claim by the parties after the due date (e.g. renewal or discharge of debt). In the case of deferred payment, a situation arises in which the creditor cannot assert a claim and the debtor cannot be held liable. In the court’s opinion, since the debtor is not obliged to satisfy the claim during the period prior to the new due date and the creditor cannot effectively pursue it, the originally specified limitation period should not run.
According to the court, postponement of the payment deadline may also be in the interest of the creditor who, due to the debtor’s bad financial situation, cannot obtain payment on the original payment date. Thanks to the postponement, the creditor does not have to take actions to interrupt running of the limitation period which are doomed to fail (e.g. bringing legal action) and incur additional costs on this account. This way, providing the creditor with a de facto extension of the statute of limitations may encourage the parties to settle matters amicably.
The Supreme Court also acknowledged that the mandatory nature of the statute of limitations (in particular, the ban on shortening and extending it) does not exclude the possibility of the parties to a specific legal relationship setting the due date of a claim. As a result, in light of the resolution, the due date determines the beginning of the limitation period; in other words, by regulating the due date in their own discretion, the parties also shape the limitation period.
This issue was not addressed consistently in the earlier rulings by the Supreme Court. In the judgment of 12 March 2002 (case no. IV CKN 862/00), the court distinguished between the due date (understood as the earliest moment when the creditor is entitled to demand performance) and the payment deadline (the final moment before the debtor is in arrears or in default). At the same time, the Supreme Court held that a prolongation or shortening of the payment deadline made after the date when the claim became due and payable does not have any impact on the performance being due, and thus on the beginning of the limitation period (Civil Code Art. 124 §1). Otherwise, according to that ruling, there would be a circumvention of the ban arising from Art. 119 of the Civil Code.
Agata Jóźwiak, attorney-at-law, Dispute Resolution & Arbitration practice, Wardyński & Partners