Extension of limitation period for civil claims – a key feature in China’s progression towards a Civil Code
The Statute of Limitations is an example of a key piece of legislation which has been amended by the General Rules and subjected to judicial clarification.
In an interpretation issued by the Supreme People’s Court on 22 July 2018 (the Interpretation), the Court clarified that the 3-year limitation period, introduced by the General Rules, will not have any retrospective effect. Article 188 of the General Rules increases the limitation period for bringing a civil action from 2 to 3 years, unless otherwise provided by law. Time starts running from the date when the party bringing the claim knows or should have known (a) that their rights have been infringed; and (b) the identity of the party in breach.
The Court further stipulated 2 situations where the longer limitation period will apply:
- Where the period for the statute of limitations commences after the implementation date of the General Rules, namely on 1 October 2017; and
- Where the period for the statute of limitations has not exceeded 2 years or 1 year (whichever is applicable) under the General Principles of 1986 on the implementation day of the General Rules.
The Interpretation came into force on 23 July 2018 and will only apply as above – in other words, the Interpretation will not be applicable to cases where the final trial was completed before the Implementation date and the matter is pending a re-trial.
This is an important development which impacts on cross-border litigation as the extension of the limitation period not only allows parties to a dispute more time to collect the necessary evidence and resolve their conflict by legal means but more importantly, permits proceedings (parallel or otherwise) to be brought in offshore jurisdictions. Where conduct which impacts on offshore litigation has taken place in PRC, reliance on the limitation period in PRC may be necessary in the offshore proceedings. Additional time before limitation expires to bring a claim means that claimants have a better opportunity to access the court system whether in BVI, Cayman or in the PRC.