Facilitation of the Interruption of the Statute of Limitations - International Law Office

International Law Office

Insurance & Reinsurance - France

Facilitation of the Interruption of the Statute of Limitations

June 02 2009

Privity of Civil Interruption
Court of Cassation Decision
Scope of the Decision
Comment


In a decision of February 24 2009(1) the Third Civil Division of the Court of Cassation fell into step with the other divisions of the court and facilitated the interruption of the statute of limitations.

Privity of Civil Interruption

Before the reform of the statute of limitations was introduced by Law 2008-561 on June 17 2008, the civil interruption of the limitation period was, in theory, privy, as it inured to the benefit only of the person from which it originated and harmed only the person against which it was aimed.

The principle of interruption of the statute of limitations resulted from the former Article 2244 of the Civil Code, according to which:

"a service of process, even in interlocutory proceedings, an order to pay or a seizure, on the person which one wishes to prevent from prescribing, shall interrupt prescription, as well as the periods within which an action must be brought."

As applied to the two-year statute of limitations for insurance claims, the result was often severe for the policyholder, which, because of the slow progress of court-ordered appraisals, might omit to interrupt the period of limitation. The policyholder's action frequently became time barred before the end of the appraisal.

Nevertheless, there were some exceptions to the privity of civil interruption. Several Court of Cassation decisions - notably of the First(2) and Second(3) Civil Divisions - distanced themselves from the strict principle of Article 2244, especially in cases involving an expert appraisal.

Under the former system governing the statute of limitations, the Third Civil Division handed down a judgment in line with this case law trend on February 24 2009.(4)

Court of Cassation Decision

In this case the policyholders, who were having a house built, brought interlocutory proceedings for the appointment of an expert against their 'damage to the works' insurer. An expert was appointed by an order dated July 27 1999. As the expert's report was not filed until January 2003, the policyholders' action against their insurer, brought by writ of a summons dated April 22 2003, was held to be out of time. On appeal, the Paris Court of Appeal found in favour of the insurer.

In order to support their appeal to the Court of Cassation, the policyholders alleged that the limitation period began on the date of filing of the expert's report. The Third Civil Division did not answer this argument, even though legal authors were clamouring for judicial determination of the issue under the former system.

Nevertheless, this point has been clarified by the June 17 2008 reform of the statute of limitations system and the amendment of Article 2239 of the Civil Code.(5)

The statute of limitations is suspended when a judge allows an application for an investigation and resumes once the investigation has been performed, for a period of at least six months. The idea behind this is to improve the policyholder's situation, even though the new article complicates the calculation of the period during which it may bring suit.

The policyholders put forward an alternative argument: the breach of a principle established by the First Civil Division in its January 27 2004 decision, which rejected the privy nature of the interruption of prescription implied by Article 2244.(6)

After noticing that a second order was made on April 24 2001 to extend the appraisal, the Court of Cassation quashed the Paris Court of Appeal's decision on the grounds of Article 2244 of the Civil Code and Article L114-2 of the Insurance Code:

"Any judicial decision changing in any way the terns of reference of an appraisal ordered by a former decision interrupts the statute of limitations vis-à-vis all parties, including those who were parties only to the initial proceedings, and this for all heads of damage arising from the loss at issue."

To interrupt the statute of limitations the judge must accede to the application for the variation of the expert's terms of reference. Therefore, a decision which dismisses the application is not grounds for interruption of the limitation period (eg, dismissal of an application for replacement of the expert).(7)

Scope of the Decision

The fact that the court put an end to the privity of the interruption of prescription illustrates its desire to compensate for the shortness of the limitation period, which is disproportionate to the lengthiness of court-ordered appraisals.

Parliament adopted an identical approach in the reform of June 17 2008, removing the ratione personae condition from the new wording of Article 2241, which now states that "[l]egal proceedings, including interlocutory proceedings, shall interrupt the statute of limitations along with the peremtory time limit."

Comment

The rule established in 2004 and adopted by all civil divisions of the Court of Cassation is in consonance with the legislative reform of the rules governing the statute of limitations.

For further information on this topic please contact Carole Sportes at BOPS (SCP Bouckaert Ormen Passemard Sportes) by telephone (+33 1 70 37 39 00) or by fax (+33 1 70 37 39 01) or by email (carole.sportes@bopslaw.com). The BOPS website can be accessed at www.bopslaw.com.

Endnotes

(1) 08-12.746.

(2) Jan 27 2004 (appeal 01-10748).

(3) June 19 2008 (appeal 07-15343).

(4) 08-12.746.

(5) Article 2239, as amended by Law 2008-561 of June 17 2008, Article 1:

"The limitation period shall also be suspended when the judge allows an application for an evidence-gathering measure lodged before any legal action. The limitation period shall resume, for a term that can not be less than six months, as from the date of performance of the measure."

(6) Law 01-10748.

(7) Cass Civ 2, October 2 2008, appeal 07-17511.


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