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Report No. 89

Chapter 11

Suits on Foreign Causes of Action

11.1. Section.-Contracts entered into elsewhere.- While section 10 was a negative provision excluding from the scope of the Act certain kinds of suits, section 11(1) is a positive provision to the effect that suits instituted in the territories to which this Act extends on contracts entered into in the State of Jammu & Kashmir or in a foreign country shall be subject to the rules of limitation contained in the Act.

Not content with this positive provision, the section, in sub-section (2), rules out the application of foreign rules of limitation by providing that no rule of limitation in force in the State of Jammu & Kashmir or in a foreign country shall be a defence to a suit instituted in the territories to which the Act extends on a contract entered into in that foreign country or in Jammu & Kashmir unless two conditions are satisfied, namely:

(a) the rule has extinguished the contract, and

(b) the parties were domiciled in that State or in the foreign country during the period prescribed by such rule.

11.2. Principle.- The section is based on the principle well recognised in private international law in the Anglo-American Legal Syste.-that rules of limitation are part of the lex fori. Whether an obligation is to be enforced or not depends exclusively upon the law of limitation of the forum in which the suit is brought. As observed by Story very long ago:1

"It has accordingly become a formula in international jurisprudence that all suits must be brought within the period prescribed by the local law of the country where the suit is brought (lex fori), otherwise the suit will be dismissed."

In contrast, the foreign law of prescription would be applied in a country, because when a law extinguishes the right by reason of lapse of time, the right itself does not survive, and there is nothing to enforce.

1. Story Conflict of Laws, 8th Edn., Article 577, p. 794; Cf. Ruckmaboye v. Lujloobhoy, (1852) 5 Moo IA 233 (265, 267) (PC).

11.3. Position as to rights under Treaty of Rome.- It may be mentioned that in proceedings brought in national courts to enforce rights created by the Treaty of Rome (which established the European Economic Community), the relevant limitation period is that fixed by the State in which the action is brought.1

1. Halsbury's, 4th Edn,, Vol. 28, p. 266, para. 606.

11.4. The English Law.- The traditional English rule is well settled. In Presten and Newson on Limitation of Actions, the authors wrote as follows under the heading "Private International Law".-

"The English courts have adopted a very simple method of dealing with the rules of limitation in private international law. It is common ground between all systems of private international law that matters of procedure are to be determined by the lex fori. In so far as the Statutes of Limitation prescribe periods within which actions may be brought, they are, in English courts, classified as methods of proceeding."

Referring to Don v. Lipmann, (1837) 5 Ci&Fin 1, the authors observed:1

"But a foreign rule of limitation is not classified as a matter of procedure in an English court if it extinguishes the right as well as the remedy. The fact that on expiration of the foreign period the plaintiff's right is to be extinguished does not help a plaintiff who fails to sue in England within the English period, but a defendant may rely on the extinguishments by the foreign period irrespective of whether the English period had elapsed."

1. Presten and Newson Limitation of Actions, (1940), p. 16, quoted in Rodrigue v. R.J. Parker, (1966) 3 WLR 546; Cf. ibid., 1953 Edn., p. 15 (no material change).

2. See Preston & Newson Limitation of Actions, (1940), p. 16, quoted in Rodriguez v. R.J. Parker, (1966) 3 WLR 546 (560).

11.5. Restatement.- The rule has also been incorporated as rule 604 of the Restatement of Law of the American Law Institute thus1:

Rule 6.-Foreign Statute of Limitations

"If action is not barred by the statute of limitations of the forum, an action can be maintained though action is barred in the State where the cause of action arose."

1. A.L.I. Restatement of Conflict of Laws, rule 604.

11.6. Criticism by Cheshire and North.- Cheshire and North have observed1, criticising the English approach as unde.-

"English law in unfortunately committed to the view that statutes of limitation, if they merely specify a certain time after which rights cannot be enforced by action, affect procedure, not substance2...... In the result, therefore, any relevant statute of limitation that obtains in the lex fori may be pleaded while a statute of same foreign law, even though it belongs to the proper law of the transaction, must be disregarded.3 The prevailing view on the continent is to be opposite effect.

This is another example where English law, through its failure to interpret a foreign rule in its context has gone astray".

1. Cheshire and North Private International Law, 10th Edn. (1979), p. 695.

2. Rodriguez v. R.I. Parker (Male), (1967) 1 QB 116 (131-136), and see Pedresen v. Young, (1964) 110 CLR 162.

3. This has been followed even in Australian jurisdiction, Panozza & Co. Ltd. v. Allied Interstate (Old.) Ltd., (1976) 2 NSWDR 192.

11.7. Status quo recommended by U.K. Law Reform Committees.- The U.K. Law Reform Committee in its 21st Report1 took notice of this criticism, but did not make any recommendation in this regard:

"As we have explained English law treats limitation as part of the law of procedure. An English court will, therefore, always apply English law (lex fori), to an issue of limitation, notwithstanding that the substantive rights in question are governed by foreign law.2 In determining the existence of those substantive rights a distinction has to be drawn between a foreign rule of limitation and a foreign rule of prescription:

If the 'proper law' of the transaction (lex causae) extinguishes the right through lapse of time, the English court will give effect to that extinction if, on the other hand, under the relevant lex causae lapse of time merely bars the remedy (as it does in most cases in English law), the English courts will ignore the foreign limitation period and apply English law alone.

Classification of limitation is not itself part of the law of limitation but of private international law and therefore not within our terms of reference. For that reason, we make no positive recommendation about it. Nevertheless we received from Dr. F.A. Mann a memorandum arguing persuasively in favour of making a change in the English rule (which has been heavily criticised by academic writers)3 and we think it right to mention the matter so that it may be considered as a possible subject for reform."

1. Law Reform Committee, 21st Report (Cmd. 6923) (September, 1977), p. 30.

2. Harris v. Quine, 1869 LR 4 QB 653.

3. E.g. J.D. Falconbridge Essays on the Conflict of Laws, 2nd Edn., Ch 12; Cheshire Private International Law, 9th Edn., pp. 687-690.

11.8. Critici.-Sykes and Pryles.- Besides Cheshire another team of distinguished authors1 have also attacked this principle of English law thus:

"Statutes of limitation in the familiar sense usually prescribe that no court proceeding shall be brought to enforce a right after the lapse of a certain period of time. Sometimes however they provide that the right or title is extinguished.2 It is only statutes of the latter type that the English classificatory technique regards as pertaining to substance. The other type of statute of limitations which merely extinguishes the remedy is regarded as procedural.3

This means that a plaintiff can sue in an Australian court on a cause of action which, though barred by the proper law of the transaction, is not barred by Australian law:4 it also means that an action cannot be brought in Australia if barred by an Australian statute of limitations, though action would still be competent by the proper law5.

It is suggested that such applications rest on no intelligible principle, nor is the distinction between extinction of right and extinction of remedy meaningful in this context. A statute can hardly be regarded as prescribing a mode of regulating the course of litigation if it simply says that no litigation can take place."

However, they a.-

"Nevertheless, the tide of English decisions has probably set so firmly in the direction of the dichotomy between extinction of right and extinction of remedy hat no movement is now possible."

1. Sykes and Pryles Australian Private International Law, (1979), p. 130.

2. As (in the English context) in the case of so-called adverse possession of land and in some cases of failure to take action in respect of chattels.

3. Huben v. Stainer, (1835) 2 Bing (NC) 202: 132 ER 80; see Subbotovsky v. Waung, (1968) 3 NSWR 261 (Nagle, J.).

4. Harris v. Quine, 1869 LR 4 QB 653 (Court of Queen's Bench).

5. British Linen Co. v. Drummond, (1830) 10 B&C 903: 109 ER 683.

11.9. Correct approach.- We have devoted considerable thought to this aspect. With great respect the criticism made by Cheshire of the traditional English Rule (which has been substantially followed in section 11), appears to be based on one faulty concept of reasoning. The law of limitation may not be a part of the law of "procedure" in the narrower sense, but it is certainly a part of adjective law in the widest sense.

The criticism does not do justice to the juristic aspect mentioned above. Procedure may be a narrow field, but adjective law is a wider one, covering the entire process of litigation, including the time and manner of pursuing a remedy in the Courts of a country. It is but fair that the courts operating within a country should have regard only to the law of that country, so far as the pursuit of remedies in those courts is concerned.

Limitation is certainly concerned with the actual process of litigation; the need for invoking a rule of limitation arises only if and when the plaintiff invokes the aid of the judicial process. In this sense, limitation is very much concerned with the enforcement of the remedy within the portal of the court and is therefore rightly regarded as belonging to adjective law.

We may quote the views of an American author1 who has beautifully described the distinction between remedy and righ.-

"A broken promise is not repaired by the passage of a period. False words that stain a name are not made true because twelve months go by. Pain may recede in memory, but that does not mean it was not suffered when the victim was assaulted. If these things are recognised as deserving reparation, they deserve it no less the day after the term is reached than they did the day before. Time does not heal all wounds; homily is fatuous.

Thus, limitation appears to be not a matter of substantive right, but a practical device. It is difficult to deal with an event long after it has happened. Memories fade, witnesses die, documents vanish, proof one way or the other is hard to find. Moreover, even with all the evidence at hand, the outcome of a law suit will not necessarily coincide with truth. Much depends on the hazards of litigation, on the wisdom and honesty of judges and jurors, the luck of testimony.

Hence it is only reasonable that the alleged wrong doer (in most instances, we will not be certain he did wrong) should one day be entitled to repose. Final.-most important and scarcely ever mention.-if all disputes were kept alive forever, then there would be an infinity of litigation. In the management of a polity there needs to be an end of things."

1. Charles Rembar The Law of the Land, (1980), p. 81.

11.10. Some theoretical aspects answering the criticism.- It has been stated by the critics of the traditional rule that "a statute can hardly be regarded as describing a mode of regulating the course of litigation, if it simply says that no litigation can take place." However, this criticism is itself open to criticism.

The procedural law contains so many rules which bar the very entertaining of a suit on procedural grounds and nobody has ever said that such rules are not regarded as falling appropriately within the domain of procedure. Our own Code of Civil Procedure contains examples of such rules in section 11, section 47, section 66, section 80, section 86. Order 2, rule 2, Order 7, rule 11, Order 9, rule 8, Order 23, rule 1 and so on.



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