The right belongs to the vigilant, emphasised the Grand Chamber of the Supreme Court in its decision of 31 May 2023, file no. 31 Cdo 3125/2022, concerning the beginning of the limitation period.

Factual circumstances

The Court of Appeal addressed the question of when the limitation period begins to run in a situation, where the parties contractually agreed that remuneration for the provision of services could be invoiced by the mandatary from the moment of proper completion of the activity, but no earlier than 30 June 2015, with payment due within 14 days of delivery of the invoice to the mandator.

The mandatary issued an invoice on 31 May 2018 with a stated due date of 14 June 2018, i.e. before the expiry of three years from the date, on which the invoice could first have been issued. After the mandator refused to pay the invoice, the mandatary filed a lawsuit against the mandator on 30 October 2019. The mandator asserted a statute of limitations defence.

Legal assessment by the court

The Supreme Court followed the case law preceding the new Civil Code, which consistently applied the rule that the start of the limitation period is linked to the date, when the creditor could have first asked the debtor for performance, not to the date, when the creditor actually asked the debtor for performance.  In the present case, the limitation period began to run on the date, on which the mandatary was first informed that the draft grant application, which he had prepared for the mandator in accordance with the contract of mandate, had been recommended for conclusion of the grant agreement.

Practical implications

The purpose of this decision is in particular to prevent situations of legal uncertainty where the creditor postpones invoicing “indefinitely”. According to the Supreme Court, the fact that the parties expressly linked the due date of the claim to the issuance of the invoice does not affect the running of the limitation period. Thus, in the case of such a contractual arrangement, the creditor’s claim may be time-barred without ever becoming payable or enforceable in court – if the creditor fails to issue an invoice within three years of the date, on which he could have first done so.

In light of this case law, however, the question arises as to whether – and under what conditions – the contracting parties may validly agree that the time interval between the proper completion of a performance and the issuance of an invoice for that performance shall be up to three years or more without the creditor risking the limitation of his claim. This issue may have significant practical implications, particularly in industries characterised by both long-term cooperation between contractual partners and a significant degree of flexibility in the timing of performance (e.g. with respect to the amount of the claim or the key importance of the contractual partner).

In any event, it remains good practice to issue invoices as soon as possible after performance – even if the creditor does not intend to insist on immediate payment of the amount due, given the specific relationship of the parties.  The surest solution would then be to use the possibility of explicitly extending the limitation period within the meaning of Section 630(1) of the Civil Code, either for the entire contractual relationship or, as appropriate, in relation to specific claims.

Author: Veronika Odrobinová, Tatiana Rabinovich