Report No. 193
In Huber v. Steiner, (1835)2 Bing (NC) 202 (210-212), Tyndal CJ observed as follows:
"So much of the law as affects the rights and merit of the contract, all that relates 'ad litis deisionem' is adopted from the foreign country, so much of the law as affects the remedy only all that relates 'ad litis ordinationem', is taken from the 'lex fori' of that country where the action is brought; and that in the interpretation of this rule, the time of limitation of the action falls within the latter division and is governed by the law of the country where the action is brought and not by the lex loci contractus is evident from many authorities.
Such being the general rule of law, a distinction has been sought to be engrafted on it by the learned counsel for the defendant that 'where the statutes of limitation of a particular country not only extinguish the right of action, but the claim or title itself, ipso facto, and declare it a nullity after the lapse of the prescribed period, that in such cases the statute may be set up in any other country to which the parties remove, by way of extinguishment'. It does indeed appear but reasonable that the part of the lex loci contractus which declares the contract to be absolutely void at a certain limited time, without any intervening suit, should be equally regarded by the foreign country as the part of the lex loci contractus which gives life to and regulates the construction of the contract."
In the above case in Huber v. Steiner, an action was instituted in the English Court of Common Pleas on a promissory note governed by French law and the defence was that the action was barred by the French law of prescription. The Court held that the effect of the French rule was only to bar the remedy and that the French rule was no defence to the English action. The position, according to the exception laid down by Tyndal CJ would be that the English Courts would refuse relief if the French law went further and extinguished the claim or title itself or declared the contract a nullity after the prescribed period.
The above decision has been followed in several cases in India, see for example: Muthukanni v. Andappa, AIR 1955 Mad 96 (FB). Section 11 lays down the same principle as in Huber v. Steiner. Subsection (1) of section 11 states that in respect of contracts entered into either in Jammu and Kashmir or in a foreign country, if an action by suit is brought in India (i.e. other than Jammu & Kashmir), then the law of limitation that is applicable to the case is not the law applicable in the country where the contract is entered into but the law that applies is the Indian Limitation Act.
Under subsection (2) of section 11, the defendant cannot rely on the law of limitation applicable in Jammu & Kashmir or applicable in the foreign country except - (1) where the rule of Jammu & Kashmir or of the foreign country extinguished the contract and (2) the parties were domiciled in that State or in the foreign country during the period prescribed by such rule. It has been accepted that though the section applies to suits only, the principle on which it is based is applicable to execution applications also for enforcing a foreign judgment. In other words, the period of limitation applicable according to Indian Limitation Act, 1963 will apply unless the exception in section 11(2)(b) is attracted.
It appears that, till recently, in all the Commonwealth countries governed by the common law, the law of limitation has been treated as procedural and if an action is filed in a country on the basis of a cause which occurred in another country, the law of limitation that is applicable is the law of the country of the forum and the law of the country of the cause is not applied, unless that law stated that at the expiry of the period, the right itself got extinguished. But, in civil law countries, the law has been that limitation statutes are substantive and the right as well as the remedy would get extinguished at the end of the period and hence the law of limitation of the lex fori would not apply and the limitation law of the country of the cause would apply.
We shall be discussing in Chapter III how the common law countries have recently brought about a change by treating the law of limitation as substantive in relation to transnational litigation which involves more than one country, thus making the foreign law applicable to actions instituted in common law countries.
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