Report No. 193
How English law changed in 1984:
Until 1984, English law stated that the statutes of limitation, if they merely specified a certain time after which rights could not be enforced by action, they affected procedure and not substance. Hence, the forum law would apply the local law of limitation. (Black-Clawson International Ltd. v. Papierwerke Waldhof - Aschaffenburg AG, (1975 AC 591 at 630). M Chestire and North (ibid p 73) then refer to the only exception in the pre- 1984 law as follows:
"Where, however, it could be shown that the effect of a statute of limitation if the foreign applicable law was not just to bar the other plaintiff's remedy but also to extinguish his cause of action, (examples are provided by acquisitive prescription under the English Prescription Act, 1832 or express extinction of the former owners' title under the UK Limitation Act 1980 ss 3 & 17), then the English Courts would be prepared to regard the foreign rule as substantive and to be applied here". Harris v. Quine, (1869) LR 4.Q.B. 653) (656).
The above exception was also contained in Huber v. Steiner, already referred to. Then the authors state that the common law rule has been criticised in a number of common law jurisdictions (British Law Commission Report No. 114 (1982) paras 3.3 to 3.8), and that the said rule tends to have no counterpart in civil law systems which usually treat statutes of limitation as substantive. (British Law Commission Working Paper No. 75 (1980) (paras 25-26)).
They say that furthermore, the 20Contracts (Applicable Law) Act, 1990, implementing the European Community Convention on the Law Applicable to Contractual Obligations (1980) provide that the law which governs the essential validity of a contract is to govern "the various ways of extinguishing obligations, and prescription and limitation of actions". In 1982, in its Report No.114, the British Law Commission concluded that "there is a clear case for the reform of the present English rule", and their recommendations formed the basis of the Foreign Limitation Periods Act, 1984 (see Carter (1985), 101 Law Quarterly Review 68 and Stone (1985) LMCLQ. 497).
The general principle adopted in the 1984 Act is that it abandons the common law approach which prefers the application of the domestic law of limitation. Now, the English Courts have to apply the law which governs the substantive issue according to English choice of law rules, and this new approach is applied to both actions and arbitrations in England. The authors, Cheshire and North welcome the change stating as follows: (ibid p.74)
"There is, of course, a significant difference between a rule under which a claim is to be held to be statute-barred in England if statute barred under the governing law, a reform which seems widely to be welcomed and a further rule that, if the claim is not statute barred abroad, it must be allowed in England."
Of course, if the foreign period is too long, then the statute of 1984 permits such a period not to be applied on grounds of public policy. In the article 'The Foreign Limitation Periods Act, 1984' above referred to by Mr. P.B. Carter (1985)(101 Law Quarterly Review pp 68-78), the author states (p.68):
"The tradition of English private international law is that issues of limitation of actions are to be classified as procedural. Thus the rules of English domestic law limiting the time within which a remedy may be sought in an English Court have been applicable even though the law governing substantive issues in a case has been the law of some foreign country. Conversely, actions have been entertained in England although statute-barred under the law governing substantive issues, provided they were not also statute-barred under English domestic law."
He says that in adopting the above approach, the tradition of the common law has been in marked contrast to that of many civil law countries, and few judges or jurists have been able (or seemingly have even tried) to justify it. After referring to Tindal CJ's observations in Huber v. Steiner, (1835) 2 Bing N.C. 202 (already referred to) and after stating that the distinction of the law of limitation as procedural is not based on any clear logic, Carter says:
'An action, which is statute-barred (whether by way of extinction of the right or by way of extinction of the remedy) under the lex causae (of another country), ought not to be entertained in England'. Or else, we would be inviting 'forum shopping' by plaintiff seeking to bring statutebarred foreign actions into England. The law, therefore, needs reform and he says that that has been achieved by the (UK) Foreign Limitation Periods Act, 1984.
We find that several jurists and judges have stated that in the matter of transnational litigation, there is need to change the common law concepts so that "forum shopping" may be eliminated. In some countries, the Courts have stepped in to alter the principle by judge-made law while in some other countries where the Courts differed or were stuck with the common law position, legislatures intervened to change the applicable principles. Among common law countries, the UK Act of 1984 is perhaps one of the earliest to change the position mandating the limitation law of the country where the cause of action accrued to be applied, when an action was filed in United Kingdom.
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