Report No. 193
Conclusion:
The principle that a forum country applies the procedural law of the forum country and the substantive law of the country of cause is well settled. So far as the law of limitation is concerned, the following is the result of the above discussion.
In civil law countries, the law of limitation is treated as 'substantive' in the sense that on the expiry of the period of limitation, not merely the judicial remedy is barred but the right itself gets extinguished. In common law countries (including India), the right remains but the judicial remedy gets barred. This continues to be the position in India even today, subject to the special provisions (like section 11 of the Indian Limitation Act, 1963) in respect of transnational problems, which were governed by special rules.
In the matter of transnational situations, if an action is instituted in a forum country which followed the common law system, then in respect of a cause arising outside the common law country, the position previously was that the procedural law of the forum country applied, including the law of limitation of the forum country. The sole exception, as stated in the earliest case Huber v. Steiner, (1835) 2 Bing (NC) 202, by Tyndal CJ, was that if in the country where the cause occurred, the law was that the right itself stood extinguished, then the forum country would not grant relief even if the action was filed in the forum country within the period of limitation as prescribed by the law of limitation of the forum country.
As commerce increased and new notions of justice were developed, the principle that Courts should not allow 'forum shopping' became quite prominent and some common law Courts, as a matter of judicial decision, as in Canada and some Courts in USA, moved towards treating the law of the country of the cause as substantive law and applying the same in the forum country. If the period was shorter in the country of the cause, then the right would, as a matter of substantive law, stand extinguished, precluding the party from instituting the action in another country where the period of limitation was longer. Incidentally, when the case law moved in this direction, the period of limitation in the country of cause even if it was longer than that in the forum country, was necessarily applied.
One of the reasons for the Courts to change the law was to prevent 'forum shopping'. The second reason was to remove 'uncertainty'. The third was that there was no 'inconvenience' in applying the law of the other State. The fourth was that the principle of comity among countries had greater recognition today.
In States or countries in which the case law did not move in the direction as in Canada and some US States, as stated above, the legislature made laws specifically treating the law of limitation of the State or country of the cause as substantive law and thereby, the Courts in the forum country were compelled to apply the law of limitation of the country of cause. The English Act of 1984 and the various Acts in the States in Australia, the amendments to the New Zealand Act and the statutes of some of the States in US which followed the Uniform Conflict of Laws, Limitation Act, 1982, are examples.
In this background, we shall proceed to deal with the position in India in the next Chapter.
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