New Limitation of Actions Law
Limitation of Actions
It is common amongst common law jurisdictions to have laws that prescribe the maximum time after an event that legal proceedings based on that event may be instigated. This is called a statute of limitation of actions.
In Cyprus, the limitation of actions is governed by the Limitation of Actions Law, Chapter 15 of the Laws of Cyprus (the “Cap.15”). However, Cap.15 has been effectively suspended due to the political events of the 1960s and the effects of the 1974 Turkish invasion (the “Suspension Laws”). A series of amendments repeals and extensions to the Suspension Laws muddled the waters and created uncertainty. On May 31, 2012, the House of Representatives enacted the Limitation of Actionable Rights Law of 2012, L.66(I)/2012 (the “Amendments”) modernising the law in relation to the limitation of actions. Subject to what is stated in paragraph (VI) below, the Amendments are effective as of July 01, 2012 and, among other, abolish Cap.15.
We set out a summary of the most important changes effected by the Amendments:
I. General Limitation Period
1. The Amendments provide that unless otherwise provided for in any other law, no action shall be brought upon, for, or in respect of, any cause of action after the expiration of 10 years from the day of completion of the basis of the claim. Note that “basis of the claim” is defined “as all events that give rise to an actionable right concerning a claim.”
II. Specific Limitation Periods
A. Mortgages and Pledges
1. For any mortgage or pledge, the limitation period is 12 years from the day of completion of the basis of the claim.
B. Torts (Civil Wrongs)
1. Unless otherwise specified in the Amendments, for civil wrongs the limitation period is 6 years from the day of completion of the basis of the claim.
2. In relation to negligence, nuisance or breach of statutory duty, the limitation period is 3 years from the day of completion of the basis of the claim.
3. In relation to defamation or malicious falsehood, the limitation period is 1 year from the day of completion of the basis of the claim.
1. Unless otherwise specified in the Amendments, for contracts the limitation period is 6 years from the day of completion of the basis of the claim.
2. In relation to any contract or quasi-contract for any remuneration, fee or charge of, amongst others, any advocate, medical practitioner, dentist, architect, civil engineer, the limitation period is 3 years from the day of completion of the basis of the claim.
3. In the case of loan agreements which are secured by mortgage or pledge, the limitation period is 12 years from the day of completion of the basis of the claim.
4. The period of limitation period for loan agreements which (a) do not provide for the repayment of debt at a fixed or determinable or up to a fixed or up to a determinable date and (b) do not require as condition precedent to repayment of the debt the giving of prior notice to the debtor, shall not commence before the serving of a written notice by the lender (or where there are co-lenders, from or on behalf of one of them) to the borrower.
D. Bills of Exchange
1. The limitation period for the following shall be 6 years from the day of completion of the basis of the claim:
a. any book debt due to or from a credit institution,
b. bills of exchange,
d. promissory note,
e. bonds in a customary form,
f. any obligation due to or from, amongst others, a credit institution deriving from, among other, hire-purchase, purchase, use of credit card or overdrafts or any other product that from to time is represented as a banking product except loans.
1. For any judgment, the limitation period is 15 years from the date on which the judgment became final.
F. Fraud or mistake
1. In the case of any action, for which:
a. the right of action is concealed by the fraud of the defendant;
b. the action is for relief from the consequences of a mistake,
the period of limitation shall not begin to run until the claimant or his agent or any person whose actions bind him has discovered the fraud or mistake, or could, with reasonable diligence, have discovered it.
2. A deliberate breach of duty in circumstances which would make discovery especially difficult shall be equivalent to a deliberate concealment of fact in relation to such breach.
III. Suspension of Limitation Periods
1. The period of limitation shall be suspended, in, among other, the following circumstances:
a. If in the last 6 months of the applicable period of limitation, the claimant was prevented to commence proceedings due to a moratorium or force majeure.
b. If in the last 6 months of the applicable period of limitation, the defendant or any other person for whom the defendant is responsible prevented the claimant from instigating proceedings.
c. If in accordance with the applicable law on mediation, it is deemed that the mediation commenced and for so long as the mediation lasts for.
2. In computing the period of limitation, any time during which the person against whom the period of limitation runs is under the age of 18 or due to illness or medical condition is not in a position to manage his affairs shall be excluded from such period.
IV. Disruption of Limitation Period
1. The period of limitation shall be reset in, among other, the following circumstances:
a. If the obligor recognises in writing a right to an action against him.
b. In the event of a monetary debt, if the obligor pays at least 50% of the aggregate owed sum, including any accrued interest.
c. With the commencement of arbitration proceedings (as defined in the Amendments)
d. If the court orders that the arbitration award is annulled or ceases to have effect.
V. Miscellaneous Provisions
1. Any payments made by an obligor who was unaware of the expiry of the period of limitation shall not be recoverable.
2. The court, at its discretion, and if it is equitable and reasonable, may extend the period of limitation up to a maximum of 2 years.
3. A court in determining an action shall not on its own initiative take account of the limitation of actions.
4. The Amendments do not apply and do not prejudice any public law rights or obligations.
VI. Transitional Provisions
1. Any cause of action which accrued before July 01, 2012, must be brought the latest by December 31, 2013, unless the period commencing on the day of completion of the basis of the claim and ending on December 31, 2013 is shorter than the limitation period provided for by the Amendments for the same cause of action. In that case, the limitation period shall be the one set out in the law.
2. By way of illustration, assume that A Ltd has a contract with B Ltd. Under the Amendments the limitation period is 6 years from the day of completion of the basis of the claim and in this respect:
a. If A Ltd breached the contract on September 30, 2012, then the action must be brought by September 30, 2018.
b. If A Ltd breached the contract on September 30, 2004 then the action must be brought by December 31, 2013.
c. If A Ltd breached the contract on September 30, 2010, then this would trigger the provisions detailed in paragraph (1) above and there would be an extension in the limitation period to match the limitation period provided for in the law. This is because the period from September 30, 2010, to December 31, 2013, is 3 years and 3 months whereas had the breach occurred after July 01, 2012, the limitation period would have been 6 years. The limitation period therefore, will be extended until September 30, 2016 i.e. 6 years from the day of completion of the basis of the claim.