The agreement contained a strict contractual limitation period in clause 14.2: lawyers divide their hair on limitation clauses that damage a claim after a certain period of time, as opposed to those that simply serve as a time limit for making a claim. Since an arbitration agreement by definition excludes the jurisdiction of a court to settle a particular dispute, the distinction should be purely theoretical, since the dramatic outcome for a claimant is the same in both cases. A recent High Court decision provided useful guidance on the interpretation of a contractual limitation clause: Arab Lawyers Networks Company v Thomson Reuters (Professional) UK Limited  EWHC 1728 (Comm). An example of a specific time bar clause is the Centrocon clause. The judge held that “the basis of the claim” refers to the facts and circumstances that constitute a right or cause of action, that is, the ingredients of an accumulated cause of action. The judge therefore focused on determining when all the circumstances were known which, if invoked, would give rise to a contractual request by ALN to claim the royalties. With respect to the claim for unpaid royalties, the judge had to decide when the “basis of the claim” was known and what the parties meant by that term. Therefore, to the extent that ALN`s claims related to royalties accrued prior to June 13, 2016, the judge concluded that the claims were time-barred. TR argued that the level of “knowledge” required to trigger the limitation clause should not be higher than the level of knowledge required under sections 11, 12, 14 and 14A of the Limitation Act 1980.
TR relied on the Supreme Court`s decision in AB v. Ministry of Defence  UKSC 9 to argue that the notion of “knowledge” is inherently subjective. TR stated that ALN had a sufficiently confident subjective belief in the claim no later than October 13, 2015, when ALN wrote to TR to indicate a claim against it. This meant that the applicant had until October 13, 2016 to submit his application in order to avoid a waiting period; while the application was only issued on June 13, 2017. The judge also noted that in determining whether a statute of limitations defence is available, the court should presume that the plaintiff`s allegations are true. On June 13, 2017, ALN filed claims against TR regarding (a) the alleged non-payment of certain royalties and (b) the alleged continued use of its publications after the termination of the agreement. TR applied to the High Court for a summary judgment against ALN, arguing that ALN had no real prospect of success because the claims were time-barred under clause 14.2 and that there was no other compelling reason why the claims had to be settled at trial. Using this test, the judge ruled that the plaintiff had a real prospect of defeating the limitation period defence, since the claim for continued use was not known until after June 13, 2016 (i.e., one year before the claim form was issued). ALN`s evidence was that the statements contained in its letter of 13 October 2015 were nothing more than a suspicion based on a lack of information on the part of TR. The question of when ALN had the necessary knowledge for the purposes of Article 14.2 would require an evaluation of the evidence, which the court could not provide summarily.
That was one thing for the process. The judge did not accept TR`s arguments on this point. He disagreed that the meaning of “becomes known” under clause 14.2 of the Agreement was the same as the meaning of “knowledge” under the Limitation Act, 1980. There was nothing in the agreement to indicate that the parties intended to define knowledge according to legal meaning. “Knowledge” has therefore taken on its natural and ordinary meaning: he first outlined a number of principles relevant to the interpretation of limitation periods: such a clause replaces all the limitation periods that may be provided for by a law of general application, a limitation period. Calendar clauses usually prescribe much shorter deadlines. The clause prevented one of the parties from making a claim more than a year after “being brought to the attention of the party who wishes to assert it”. In deciding on an application for summary judgment filed by the defendant, the court took into account what was meant by the term “basis of the claim” and what it meant that an application was “known” to a party. The decision is particularly interesting because of its analysis of the extent to which the Limitation Act 1980 was relevant to the interpretation of the contractual limitation clause. The article used, perhaps inevitably, words or concepts similar to those of the Statute. However, the judge concluded that there was nothing in the agreement to indicate that the words of the contract should be defined in accordance with their legal meaning.
This meant that the term “knowledge” of a claim took on its natural and ordinary meaning and not the legal definition (which could have made the limitation period coincide earlier in time). Although each clause of a contract is interpreted in its own terms and context, these words (or those similar to them) are often used within limitation periods – and the court`s decision will therefore be of interest to parties with potential claims subject to contractual limitation periods. The decision shows that applicants are well served by careful management of the limitation period, as the judge concluded that at least part of the applicant`s application was time-barred. The CMA case is not an isolated case and provides a clear warning to contractors. From the point of view of contract management, it must always be assumed that the limitation period is applied in accordance with its conditions. There may also be other ways to relieve, depending on the circumstances. TR terminated the Agreement by termination and it terminated on February 1, 2015. A typical construction contract requires the contractor to complete an agreed range of services at an agreed price within an agreed time frame. CMA Assets Pty Ltd v. John Holland is a recent example of a rather extreme set of facts where a limitation period has been applied. Limitation periods prevent a party from exercising a right under a contract outside a prescribed period.
The general rule is that expiration periods are enforceable, although there may be exceptions. .