9 Statutes of Limitation
James J. Fawcett
- Statutes of limitation — Overriding mandatory rules — Public policy — Rome Convention — Rome I Regulation and choice of law — Jurisdiction and the English courts — Limitations on jurisdiction — Scope of the law applicable under the Rome II Regulation
1. The Right-Remedy Approach
9.01 It was noted in Chapter 2 that the traditional common law approach to the classification of substance and procedure was based on the right / remedy distinction. According to this distinction, where a law merely prevents enforcement of a remedy it was considered procedural but where the law extinguished the right it was classified as substantive. The right / remedy distinction had its most direct application in the area of statutes of limitation. Certain statutory provisions (especially from European civil law countries) were considered to be ‘prescriptive’ and to extinguish the claimant’s cause of action (‘the right’) if not complied with, while others were thought only to bar a claimant’s right to relief in respect of the right (‘the remedy’). Most Commonwealth statutes were regarded as barring the remedy only, as they were usually expressed in terms such as ‘an action (p. 262) shall not be brought except within the time stated after the action arose’.1 Application of forum law may also have been justified by a more general concern that access to forum courts was an exclusively local matter.2 There were, however, statutory exceptions, such as where a provision provided that a right of ownership by virtue of adverse possession extinguished the claimant’s right.3 Such a provision, classified as substantive, was accordingly applied by the forum when it was part of the law of the cause of action. Another exception was where a limitation provision was included in a statute which created a new cause of action such as a right to workers’ compensation. In a number of decisions courts held that such a limitation provision, because it was annexed to a new statutory right, was substantive.4
9.02 The consequence of the right-remedy view and the fact that most Commonwealth limitation provisions were considered procedural meant that claimants could bring actions in the forum under a local, unexpired limitation statute even where the action was barred under the limitation law of the cause of action.5 Clearly this position encouraged forum shopping as claimants would seek out common law jurisdictions with the most attractive limitation periods, regardless of the position under the law of the cause of action. A defendant could only circumvent this result by persuading the forum court that the limitation statute of the law of the cause of action was substantive. In such a case the matter could not then proceed in the forum because the claimant’s right, not merely their remedy, was extinguished.6
9.03 Two other situations which could arise under the traditional common law view could lead to absurd results. The first situation was where the forum limitation statute was classified as substantive and the provision in the law of the cause of action procedural. Such a case raises the problem of ‘gap’ in choice of law, discussed in Chapter 3,7 where application of the rules on classification yields no applicable law, with the result that no limitation period applies. Such a result was reached by a German court in (p. 263) an 1882 decision.8 The problem of ‘gap’ has, however, frequently arisen in recent decisions in South Africa.9 The second situation is where the forum limitation period was classified as procedural but the provision in the law of the cause of action substantive, with the result that both periods could apply. Such a case raises the issue of ‘cumulation’ in choice of law, also discussed in Chapter 3.10
9.04 The common law approach was not, however, adopted in most European civil law countries, where all forms of limitation—whether barring the right or the remedy—have long been considered substantive and governed by the law of the cause of action, subject to a public policy exception where the foreign period was too brief or too long.11 The European position has also been adopted in a number of major international conventions.12
2. The Substantive Trend
9.05 The traditional common law position on limitation statutes is, however, fast disappearing in the Commonwealth. In a series of decisions by the Supreme Court of Canada in Tolofson v Jensen13 and the High Court of (p. 264) Australia in John Pfeiffer Pty Ltd v Rogerson14 the courts stated that, henceforth, all statutes of limitation will now be classified as substantive. The reasoning was that since all statutes of limitation, whether barring the remedy or the right, have a direct impact on the rights and liabilities of the parties to the litigation15 (in that they determine whether an action may proceed), application of the law of the cause of action is appropriate. Uniformity of result and the discouragement of forum shopping are both enhanced by such an approach. Moreover, statutes of limitation have little connection to the mode or conduct of court proceedings and foreign limitation provisions are not especially difficult or inconvenient to find or apply. While such statutes may also reflect important forum policies in preventing stale claims and encouraging expeditious litigation, such concerns can be accommodated, in exceptional cases, through the public policy defence.16
9.06 In Canada, lower courts in decisions since the Tolofson case have dutifully and uniformly treated limitation periods as substantive.17 Similarly, in Australia, while the conclusion in Pfeiffer on the status of limitation provisions was strictly only obiter, the decisions of lower courts have unanimously confirmed that foreign limitation laws are substantive.18 In the Australian context, the position taken in Pfeiffer was also partially preempted by legislation enacted in the early 1990s which requires an Australian court to apply the limitation law of the law of the cause of action where such law is that of another Australian State or Territory or New Zealand.19 Public policy is not likely to be available to exclude a limitation period of the law of the cause of action under such legislation, at (p. 265) least where such law is that of an Australian sister-state.20 The principle in Pfeiffer remains relevant, however, where the law of the cause of action is not from Australia or New Zealand.21
9.07 In the case of other Commonwealth countries, New Zealand has recently enacted legislation which requires its courts to apply the limitation period of the law of the cause of action,22 subject to the defence of public policy, although this exception is not available in the case of an Australian limitation period.23 However, the traditional right-remedy approach to statutes of limitation appears still to apply in Hong Kong,24 Singapore,25 and India, although in 2005 the Indian Law Commission recommended the adoption of a general substantive classification.26
3. The South African Via Media
9.08 The position in South Africa is worthy of special consideration both given the significant number of recent decisions in which the issue of choice of law and limitation has arisen and the distinctive approach which has been applied. The starting point is South Africa’s own limitation legislation, the Prescription Act 1969, which has been universally interpreted, under the traditional common law view of characterization, as substantive because it extinguishes the cause of action.27 The problem for South African courts, however, is that the traditional common law classification of limitations is still followed with the result that foreign limitation provisions of the law of the cause of action must still be examined to determine whether they bar the right (substantive) or only the remedy (procedural). Where a foreign limitation law is found to bar the right, according to the classification rules (p. 266) of the law of the cause of action,28 then no conflict arises: the court must apply the foreign limitation. Where the foreign law, however, is found only to bar the remedy, then the South African courts are confronted directly with the problem of ‘gap’. Their response has been to devise a method known as the ‘via media’ to resolve this situation which, according to the South African Supreme Court of Appeal, involves application of the limitation law with ‘the closest and most real connection with the legal dispute’.29 Such law has, however, in most cases been found to be the law of the cause of action, with the result that the claimant’s rights are unenforceable in the forum.30
9.09 A number of comments may be made about the South African position. The first observation to note is that much of the legal development in this area has been arguably based on a false assumption. Three of the principal South African (and one Zimbabwean) decisions since 198131 have involved English law as the law of the cause of action and the assumption has been that England still classifies limitation periods as procedural, despite the enactment of the Foreign Limitation Periods Act 1984 (FLPA 1984) which, as discussed at 9.12, was intended to alter the common law in requiring English courts to apply the limitation of the foreign law of the cause of action. This point, combined with the fact that the Rome Convention (in force in England since 1991 and applicable to contracts entered into before 17 December 2009) considers limitation periods to be part of the law of the obligation, means that it is questionable whether an English court would have classified an English limitation period as procedural but a foreign period as substantive, as has been inferred by the South African courts.32 It is arguable that a substantive classification would be applied by English courts to both limitation laws, with the result that no ‘gap’ would exist in the South African proceeding and English limitation law would be applied as part of the law of the cause of action.
(p. 267) 9.10 A second criticism of the South African law is that arguably it reaches the correct result—that the law of the cause of action applies to limitation—but by an unnecessarily convoluted and complex means. Instead of undertaking the onerous and probably inexact task of classifying foreign limitation laws according to the foreign law’s own rules and then weighing this law against the law of the forum to determine which law has the closest connection to the limitation issue, the courts could adopt a simpler and more direct method. This approach would be to adopt a general substantive classification for all limitation statutes, whether barring the right or the remedy, as the Australian and Canadian courts have done.33 Indeed, two judges34 went very close to adopting this approach despite framing their analysis in terms of the via media. A response to this contention may be to say that the via media approach does not necessarily compel the court to apply the law of the cause of action to limitation in every case; it is instead a flexible mechanism which admits the possibility of other laws being applied. While this view may be acknowledged, the reality is that in almost every South African decision since 1981 the law of the cause of action has been applied where a conflict of limitation law was found to exist.35 Consequently, it is suggested that South Africa should now be added to the countries where the substantive classification of limitations has been adopted, despite the veneer of the ‘via media’.
4. Limitations and Overriding Mandatory Rules
9.11 The further question of whether limitation provisions may be considered overriding mandatory rules of the forum which must be applied, regardless of the applicable law, has arisen in some European civil law countries, with the prevailing view appearing to be that such provisions are not mandatory (p. 268) either because they are capable of being waived by the parties36 or because they lack a clear intent to apply irrespective of the law of the cause of action.37 This observation will have relevance in the case of the Rome Convention and the Rome I and Rome II Regulations (discussed more fully at 9.24–9.26) where a court may apply overriding forum mandatory rules as an exception to the law of the obligation.38 In common law countries, the argument that limitation provisions are overriding mandatory rules has not, at least until very recently in Canada,39 been raised but the view expressed in respect of the European civil law countries would arguably apply equally. One interesting Australian case40 did not involve a conflict between a common law choice of law rule and an overriding mandatory rule but instead a possible conflict between two forum statutes, one requiring application of the law of the (foreign) cause of action to limitation questions (pursuant to which the claim was barred) and the other decreeing that, because the proceedings in the forum were brought before a specialist tribunal, no limitation period applied.41 The court held that the statute selecting the limitation period of the law of the cause of action must be applied to bar the action, which perhaps again suggests a reluctance to classify forum laws as overriding mandatory rules in this area.
1. The Foreign Limitation Periods Act
9.12 Far reaching legislation was enacted in England in the FLPA 198442 which has now been supplemented by the Rome Convention43 and the Rome I44 and Rome II45 Regulations which, on the issue of limitation, are in broadly (p. 269) similar terms. In the case of contracts entered into before 17 December 2009, the Convention applies and for contracts after that date, the Rome I Regulation. According to the majority of commentators and courts, the Rome II Regulation applies to a tort where the events giving rise to the damage occurred on or after 20 August 2007 and where legal proceedings in respect of such events are commenced on or after 11 January 2009.46 The issue of the temporal operation of Rome II is, however, currently pending before the European Court of Justice.
9.13 Under the FLPA 1984 the general rule is that the limitation provision of the law of the cause of action will be applied in an English court.47 An English limitation period will therefore only be applied where English law is the law of the cause of action. The consequence of this position is that a claimant cannot proceed in England if the action is barred under the foreign law of the cause of action but can bring proceedings in England even if barred under English law, provided that the limitation period of the law of the cause of action has not expired. This second situation has been described as ‘more controversial’48 because it could lead to English courts being saddled with stale or perpetual claims and the establishment of truth being compromised, particularly in cases where oral evidence is significant. It was concluded, however, that the defence of public policy would be available to respond to such circumstances where injustice would result. Where a foreign tort of defamation is involved or any other foreign tort committed before 1 May 1996,49 the ‘double actionability’ test exists as the choice of law rule, which requires that for a suit to proceed in England, the tort must be actionable under both the law of the forum and the law of the place of the wrong. The FLPA 1984 provides that in such a case, the limitation rules of both England and the foreign country must be applied, with the expiry of either period being enough to defeat the action.50
9.14 Note also that under section 3 of the FLPA 1984, where a court in a foreign country has determined any matter by reference to the law of that or any other country (including England and Wales) relating to limitation, the (p. 270) foreign court shall be deemed to have determined the matter on its merits. This provision reverses the effect of Harris v Quine,51 whereby it was possible to bring subsequent proceedings in England on a cause of action which had been dismissed by the foreign court due to the expiry of a statute of limitation, since such statute was only procedural in the English forum. The effect of section 3 is to bar such subsequent proceedings. The same result would also be reached in those Commonwealth countries (such as Australia and Canada) which classify limitation periods as substantive.
9.15 The FLPA 1984 also importantly provides that an English court will apply the foreign provision even if it would be classified as procedural under the choice of law rules of the law of the cause of action.52 In Canada the same result has been reached under common law principles, with one court noting that it was ‘irrelevant’ that a limitation statute of the law of the cause of action would be characterized as procedural under the choice of law rules of such law.53 Under the Neilson ‘no advantage’ principle in Australian law, by contrast, regard may be had to the classification rules of the foreign law of the cause of action in order for the Australian court to apply the same law as would be applied by a court in that country. The impact of the Neilson test on statutes of limitation is explored more fully at 9.28–9.29.
9.16 Further, the law of the cause of action also applies to determine the event which causes the limitation period to commence, for example the breach of obligation or the suffering of injury,54 and also the event or circumstance which causes the limitation period to be extended or suspended.55 Moreover, if a discretion exists under the foreign law of the cause of action to suspend or extend the limitation period, then an English court must attempt to exercise that discretion in the manner in which it would be exercised in a comparable case by the courts of that country.56 An almost identical approach applies under the Australian57 and New Zealand58 legislation referred to above where, in addition, the right to extend time has been held to be substantive under common law principles because of its (p. 271) direct impact on the enforceability of the rights and duties of the parties to the litigation.59 The same position applies in Canada.60
9.17 Note, however, that even under the FLPA 1984 there is still some residual operation left to the law of the forum. First, the time of and manner in which proceedings have been commenced for the purpose of stopping the running of the limitation period is resolved by English law as the law of the forum.61 Consequently, it will be the issue of the writ in the action rather than its service upon the defendant which will be the relevant act. This approach has been justified62 on the ground that considerable delays can be involved where service is required on a defendant located abroad, for example under the procedures of the Hague Service Convention, and it would be unjust to subject the claimant to the rules of the law of the cause of action on this question.63 The same position was adopted by the Nova Scotia Court of Appeal in Vogler v Szendroi.64 That case involved a claimant who was injured in the US state of Wyoming, the law of which was the law of the cause of action. The claimant commenced proceedings in Nova Scotia three years after the accident but did not serve the defendant for another three years, that is, six years after the accident. Under the Wyoming rules, an action is commenced by filing a complaint with the court but if the pleading has not been served within sixty days of filing, the action is not considered to have been commenced until the date of service. The court held the Wyoming provision—in requiring filing and service to initiate an action—to be procedural on the basis that it ‘simply direct[ed] the manner in which an action is commenced’.65 The Wyoming law was thus concerned with process66 or the mode or conduct of court proceedings rather than with substantive rights. The court also found that the characterization of the law of the cause of action was irrelevant to the question.67
(p. 272) 9.18 A second recognition of the law of the forum under the FLPA 1984 is the provision which allows an English court to ignore any foreign rules which require the interruption of the running of the limitation period because of the absence of a party from a given country.68 Such a provision is important to encourage claimants to bring proceedings expeditiously and so prevent defendants from being subjected to almost indefinite liability.69
9.19 Next, where equitable relief (such as an injunction) is sought in an English proceeding, the FLPA 1984 allows the defendant still to rely on discretionary defences under English law, such as laches, to defeat the action even where the law of the cause of action is foreign.70 Where, however, the claim is time barred under the foreign law, it must be dismissed, regardless of the circumstances. Where the claim is not time barred or no period of limitation exists under the foreign law, the English court must take the foreign rules into account in exercising its discretion. It is not entirely clear what this last provision means but, arguably, this equitable defences exception is otiose in the light of the public policy defence.71
2. Public Policy
9.20 The public policy defence to the application of foreign limitation periods is the most significant recognition of forum law under the FLPA 1984. While the FLPA 1984 is silent on the issue, it is clear that where the public policy defence applies, the 1984 Act is excluded and the limitation period of the forum applies. Courts have taken the view that the effect of the public policy defence is to remove the foreign limitation law and insert the relevant English limitation period which applies as part of the procedural law of the forum.72 While such view is no doubt practical and avoids the problem of there being no limitation period at all, it does sit awkwardly with the more contemporary view that limitation periods are substantive because of their impact on the parties’ rights. Consequently, an alternative view may be to say that public policy has the effect of not only disapplying the foreign limitation period but also attracting local limitation law to fill the gap. This approach is consistent with the analysis adopted elsewhere in this work to the effect that public policy is an additional (and often preferable) pathway to forum law in conjunction with the procedural (p. 273) characterization. Note that the same argument could also be made in the case of the public policy defence to foreign limitations under the Rome Convention and the Rome I and Rome II Regulations. The practice of applying forum limitation law pursuant to public policy also avoids absurdity and confusion in the case of Commonwealth countries, such as Canada and Australia, where limitation periods are classified as substantive. If, for example, in those countries, a foreign limitation period were to be disapplied on public policy grounds, forum limitation law could never be applied in default because it would also be treated as substantive and so not applicable where foreign law was the law of the cause of action. The consequence, therefore, is that no limitation period would apply at all. The only way for forum limitation law to be applied in such circumstances is if public policy itself has the effect of ‘selecting’ such law.73
9.21 Turning to the content of the public policy defence under the FLPA 1984, it is first important to note that the doctrine cannot be used to exclude an English limitation period in favour of a foreign one when English law is the law of the cause of action.74 The doctrine only operates to exclude foreign limitation periods and is provided in the legislation in two, interrelated parts. Section 2 provides that ‘(1) In any case in which the application of [a foreign limitation provision] would to any extent conflict (whether under sub-section (2) below or otherwise) with public policy, that [provision] shall not apply … (2) The application of [the foreign provision] shall conflict with public policy to the extent that its application would cause undue hardship to a … party to the action’. The first aspect of public policy, in section 2(1), is the general exclusionary doctrine in private international law which provides that foreign law will not be enforced in an English court where it violates a fundamental principle of justice.75 A limitation provision which was based on racial or other discrimination would be an example.76 In keeping with the narrow scope of this doctrine in (p. 274) English private international law, the defence was intended to be an exceptional one, only available in ‘the most unusual circumstances’.77 Such circumstances would be present where a foreign limitation period was relied upon by a thief or other recipient of stolen property who was not a purchaser in good faith.78 The position, however, may be otherwise if the victim of the theft had delayed in seeking recovery after it had discovered the facts relevant to its cause of action. A foreign period may also be disapplied on general public policy grounds where the defendant’s deliberate concealment of key facts resulted in the action being time barred.79
9.22 The second, more specific, aspect of the public policy defence in section 2(2) of the FLPA 1984 is where application of the foreign limitation would ‘cause undue hardship’ to a person who might be a party.80 Undue hardship may be pleaded by either a claimant arguing that an excessively short period deprives them of a claim or a defendant contending that an unreasonably long period results in a loss of a defence. The ‘undue hardship’ principle, like the general public policy defence, was, however, intended to have a narrow application and to be available only in exceptional circumstances.81 The addition of the word ‘undue’ before hardship means more than just hardship, it ‘means excessive, that is greater hardship than the circumstances warrant’.82 In decisions which have considered the hardship defence the courts have generally maintained this strict line and focused on the effects of applying the foreign rule in a given case, especially by reference to the comparable English limitation provision. The focus is on the party alleging hardship, however, with no ‘balancing’ of interests between claimant and defendant to be undertaken.83 The circumstances in which ‘undue hardship’ may be present have been considered in a number of English cases. In Durham v T & N Noble plc84 the Court of Appeal held that a foreign limitation period is not contrary to public policy simply because it is less generous than the comparative English period.85 Some reason other than the mere length of the period (p. 275) must be identified.86 However, the court in the Durham case did note that, in the case of personal injury, if the foreign limitation period ran from the date of sustaining personal injury irrespective of whether the claimant knew or even could have known of his or her injury at that time, it would be ‘strongly arguable’ that such a rule would cause a claimant undue hardship. On the facts, that test was not satisfied because the foreign law allowed the claimant one year from the date of knowledge in which to bring an action, which was considered reasonable. Similarly, in Yugraneft v Abramovich87 the court saw nothing unjust, by itself, in a foreign time limit of three years from knowledge of the violation of a person’s right. In Arab Monetary Fund v Hashim88 a claimant was also unable to invoke the defence where the foreign limitation period was three years and the claimant had all the material it needed to bring the proceedings and was fully aware of the foreign limitation law before the expiry of the period. Further, it has been held that the absence, in the foreign law, of an escape provision similar to section 33 of the Limitation Act 1980 (UK) (under which a limitation period may, in the court’s discretion, not be applied in actions for personal injury or death) is not sufficient to amount to undue hardship.89 Hardship has, however, been established where the foreign limitation period was only twelve months and the claimant had been led to believe, while recuperating in hospital for the bulk of the limitation period, that her claim would be honoured.90 In another case of reliance, hardship was proven when the parties had agreed to an extension of time which ultimately was not effective under the foreign law of the cause of action.91 By contrast, in another decision involving a twelve-month foreign period,92 a claimant was unable to invoke the defence where the party could not show that it had been misled by legal advice into delaying commencement of its claim until after the period had expired.93 While, on the facts, there was some doubt as to whether the claimant’s advisers were aware of the period, there was no evidence that such lack of awareness caused prejudice to the claimant. Additionally, the court said, the mere fact that there was ‘uncertainty’ about the limitation period was insufficient to amount to hardship; rather the existence of such uncertainty should ‘have made it necessary to (p. 276) bring proceedings sooner rather than later to avoid the risk … of being out of time’.94 Finally, as already noted, the hardship exception may also apply where the foreign law of the cause of action has no limitation period at all or where the period is substantially longer than the one under English law. But if, in such a case, the defendant has ‘been aware of the matters put against him, has done little or nothing to contest liability and has sought to evade the effects of a judgment’ then the defence is unlikely to apply.95 Factors of reliance by the party seeking to avoid the limitation or waiver by the party seeking to enforce it seem, therefore, to be a common element in successful hardship pleas.
9.23 By contrast, the defence of public policy has rarely been invoked in Commonwealth cases to exclude an otherwise applicable foreign limitation period. In Tolofson v Jensen96 La Forest J suggested that for an individual defendant to be protected from stale claims under foreign law would involve ‘policy considerations unrelated to the manner in which a court must carry out its functions and the particular balance may vary from place to place. To permit the forum to impose its views over those of the legislature endowed with power to determine the consequences of wrongs that take place within its jurisdiction would invite … forum shopping…’. Although the judge does not refer to the other situation in which public policy has been commonly invoked—where the claim is time barred under the law of the cause of action but not the forum—the message is clear that primacy must be given to the limitation law of the cause of action with public policy to be applied only in exceptional cases.97
3. The EU Instruments
9.24 It is important to note first that under section 8 of the FLPA 1984, sections 1, 2, and 4 of that Act will have no application where the rules of the Rome I or Rome II Regulation apply. The FLPA also does not apply to proceedings under the Rome Convention. Nevertheless the position under the Convention and the Regulations with respect to limitation is likely to produce similar outcomes to those produced by the FLPA 1984 in most cases. Under the Convention and the Rome I Regulation, the applicable law of the contract will ‘govern the various ways of extinguishing obligations and prescription and limitation of actions’,98 while under the Rome II (p. 277) Regulation the applicable law of the obligation will ‘govern … the manner in which an obligation may be extinguished and rules of prescription and limitation of actions, including rules relating to the commencement, interruption and suspension of a period of limitation’.99 It is suggested that this reference to ‘commencement’ in Rome II refers only to the issue discussed at 9.16, under the FLPA 1984, that is, the event which causes the limitation period to commence (such as breach of obligation or incurring of injury) rather than the means of commencing proceedings in a court (the event which stops the running of the limitation period). This second matter remains governed by English law as the law of the forum,100 an analysis which would accord with both the FLPA 1984 and the common law discussed earlier. Two additional points should be noted which may limit the role of the law of the forum in limitation cases under the Convention and the Regulations when compared to the 1984 Act. First, there is no express provision in the EU texts that allows a forum court to ignore any foreign rules which require the interruption of the running of the period because of the absence of a party from a given country. Dickinson suggests that such a foreign rule could possibly be classified as procedural and so outside the scope of the Regulations;101 alternatively, in an extreme case where a defendant relied upon such a provision to wilfully obstruct the proceedings public policy could presumably be applied to exclude the foreign rule. Secondly, it is likely that the ‘equitable defences’ exception mentioned at 9.19 would not apply to proceedings under the Regulations, unless English law was the law of the obligation, given that rules relating to the grant of a remedy would fall within the scope of both texts.102
9.25 It is most likely that the classification of limitation periods under the Convention and the Regulations will, at least before English courts, be conducted in accordance with the rules of the forum, as is the case with the FLPA 1984, although there is no express provision to that effect. Other EU Member States, however, may choose to classify foreign limitations according to the rules of the law of the cause of action. Such an approach will not yield differences in result because under the Convention and the Regulations, in contrast to the FLPA 1984, limitation periods are designated as part of the applicable law of the obligation, that is, they are substantive. Another EU court applying English limitation law under the (p. 278) Convention or the Regulations can assume, therefore, that an English court would also classify the period as substantive.103
9.26 The application of a provision of the law of any country specified by the Convention or the Regulations on limitation may be precluded where to do so would be ‘manifestly incompatible with’ English public policy.104 Public policy is not defined in the European instruments but some commentators have felt that the use of the word ‘manifestly’ in the Convention and the Regulations means that a higher standard for parties to satisfy has been created compared to the FLPA 1984, at least as regards the ‘undue hardship’ defence.105 Yet, even if this view is correct, it is suggested that English courts should still look to the decisions under the 1984 Act on ‘undue hardship’ for assistance in determining whether or not to disapply a foreign limitation under the Convention and the Regulations. English courts have generally been circumspect in their application of the public policy/undue hardship defence under the FLPA 1984 and such caution would seem consistent with the text and spirit of the EU instruments. In addition, hardship is arguably a useful criterion for identifying breaches of public policy in the context of foreign limitations.
4. Renvoi and Limitations
9.27 The issue of renvoi under the FLPA 1984 and the Regulations requires some consideration. Section 1(1) of the Act provides that ‘where in any action … in a court in England and Wales the law of any other country falls in accordance with the rules of private international law applicable by any such court to be taken into account in determination of any matter—(a) the law of that country relating to limitation shall apply’. Section 1(5) then provides that ‘“law” in relation to any country shall not include rules of private international law applicable by the courts of that country’. The effect of these provisions is to exclude reference to foreign choice of law rules on the issue of limitation, that is, once an English court has determined the (p. 279) applicable law on the substance of the dispute, as a hypothetical example, Mollovian law, then it must apply the domestic limitation law of Mollovia without regard to whether a Mollovian court would apply its limitation law on the facts of the case. Hence, if Mollovia had a rule that provided that its limitation provision should only apply to proceedings in the courts of Mollovia, an English court should ignore the restriction and apply the provision. A slightly different position operates where the English choice of law rule on the substance of the case itself includes renvoi, that is, it requires the application of the choice of law rules of Mollovia, such as in the area of succession to property. Where application of Mollovian choice of law rules would lead to Mollovian domestic law, then again Mollovian law and limitation would be applied as in the earlier example. Where, however, application of Mollovian choice of law rules would select English domestic law as the law of the cause of action, then the English court must apply its own law both to the cause of action and to the issue of limitation even if the Mollovian court would not apply the English limitation law because, for example, that court regarded the English provision as procedural. Similarly, where application of Mollovian choice of law rules would select the domestic law of a third country, Espirita, as the law of the cause of action, then the English court must apply Espiritan law both to the cause of action and to the question of limitation even if the Mollovian court would not apply the Espiritan limitation law because, again for example, that court regarded the provision as procedural. Such conclusions flow from the fact that the FLPA 1984 requires the English court to ignore the choice of law rules of the foreign law on the issue of limitation.
9.28 The approach of the FLPA 1984 to renvoi has been criticized on the ground that it impedes ‘the objective of uniformity of decision’106 and would almost certainly not apply in Australian law under the Neilson ‘no advantage test’107 of choice of law. Consistent with Neilson, an Australian court, for example the Western Australian Supreme Court, would apply Espiritan law (in the above example) to the cause of action and to the limitation but only if the Mollovian court would itself have applied Espiritan limitation law, because, for example, that court would have classified it as substantive (rather than procedural),108 would not have excluded the law on public policy grounds, and Mollovian law recognized no doctrine of renvoi. Similarly, if Mollovian choice of law rules had selected the law of the (p. 280) forum (Western Australia) as the law of the cause of action, then the Western Australian court would apply Western Australian law to the cause of action and to the issue of limitation but again only if Mollovia classified the Western Australian limitation provision as substantive.109 While the Neilson approach yields a sensible result in the examples discussed, in other situations it may cause confusion. For example, what would have happened under the example above if Mollovia (like Australia) had also adopted the double renvoi principle and referred the matter to Espiritan law which included its choice of law rules and approach to renvoi? An inextricable circle would potentially be created with no domestic law of the cause of action or statute of limitation capable of being selected. In Neilson itself this problem could have arisen since the action in that case was time barred under the law of the cause of action (China) but not the law of the forum (Australia). The dilemma was, however, avoided by a majority of the Australian High Court rather contentiously finding that a Chinese court would not apply renvoi and would only remit the matter back to Western Australian domestic law and its statute of limitation with the result that the action was not barred. In the later decision of O’Driscoll v J Ray McDermott SA110 the problem of the inextricable circle was also avoided where an Australian claimant sued in Western Australia for breach of his employment contract which was entered into in Singapore but involved working on a barge in Indonesian territorial waters. The defence was that the claim was barred by Singapore limitation law. The court first determined that the governing law of the contract was Singaporean and that under Australian choice of law rules, the Singapore limitation was substantive. Applying the Neilson ‘no advantage’ test, the court then considered how a Singapore court would have handled the claim. The court found that, under Singapore choice of law rules, limitations statutes were classified as procedural and applicable in Singapore regardless of the law of the cause of action. Hence the Singapore limitation applied in Australia and there was no conflict between Australian and Singaporean choice of law rules. Similar to the Mollovia-Espirita example at 9.27, however, the matter could have become much more complex if Singapore choice of law rules had selected the law of a third country (for example Indonesia) as the law of the cause of action.
(p. 281) 9.29 The other difficulty with applying the ‘no advantage’ principle in cases of limitation is that it may be very difficult to replicate precisely what the foreign court would do in a given situation. Assume, on the example discussed earlier, that an Australian court applied Mollovian choice of law rules which selected Espiritan law as the law of the cause of action and the Espiritan limitation period. Assume also that the Espiritan period was very short, for example three months, compared to a Mollovian period of three years and an Australian period of six years and that there is no public policy defence to the application of unjust laws under the law of Mollovia. Would an Australian court be able to rely upon the public policy defence under Australian law to exclude the Espiritan limitation period or would it have to adopt, as far as possible, the approach of Mollovia, in which case the Espiritan limitation law would have to be applied? Such complexities are best avoided by restricting the operation of renvoi in limitations cases as much as possible, as has occurred under the FLPA 1984.
9.30 In the Rome Convention and the Rome I and Rome II Regulations, the exclusion of renvoi goes further than under the FLPA 1984, given that those texts deal with more than simply the question of limitation. Under all three instruments111 it is provided that ‘the application of the law of any country specified by this [Convention/Regulation] means the application of the rules of law in force in that country other than its rules of private international law’. The result of this, according to the example discussed, is that if an English court, applying the choice of law rules of the Convention or the Regulations, selected the law of Mollovia to govern the substance of the dispute, there would be no scope for the operation of Mollovian choice of law rules on either the cause of action or the issue of limitation. Mollovian limitation law would be applied by the English court in every case where Mollovia was the law of the obligation subject to the defence of public policy under forum law.
5. Filling the Gaps in the UK Statutory Regime
9.31 There are also other matters concerning limitations and applicable law not fully covered by the FLPA 1984 or Rome I and II where judicial decisions may be relevant. For example, the New South Wales Court of Appeal has allowed a claimant to amend its statement of claim to correct a mistake in the name of the defendant112 and to add claims under foreign law113 even though the claims were time barred under the foreign law of the cause of (p. 282) action. In both cases, the original statement of claim had been filed within time under that law but the amendment was filed after the time bar. The court described the right to obtain leave to amend a claim as a rule which ‘touch[ed] the conduct of forum proceedings’.114 Handley JA dissented on this point in both decisions, saying that the duty on the forum court to treat foreign limitation periods as substantive meant that the original period must be applied without alteration by the procedural rules of the forum. In both of these cases, the majority judges identified the key issue as a matter of pleading rather than a question of limitation and so it was properly the subject of forum law. In the Dyno decision, it should perhaps also be noted that the claims under foreign law which were sought to be added were identical in substance to those originally pleaded under forum (New South Wales) law, being actions under the Papua New Guinea equivalent of the Lord Cairns Act. A question may be raised as to whether the majority judges would have been so willing to allow the amendment had the claims been radically different in nature from the original pleadings. In such a case the majority might have been more inclined to adopt a substantive classification of the amendment issue.
9.32 The position under English law is more restrictive than in Australia but is likely to yield the same results in most cases. Section 1(3) of the FLPA 1984 refers to section 35 of the Limitation Act 1980 (UK) (LA 1980) which addresses the inclusion of new claims introduced by amendment to a statement of case. Similarly to the position in Australia, if such new claims or parties are accepted, they are considered as having been brought on the date of the original filed claim for the purposes of the applicable limitation law, which includes a foreign limitation under the FLPA 1984. Yet section 35(3) of the LA 1980 then provides that such amendments will only be permissible to add new claims or parties if the relevant rules of court are satisfied. The Civil Procedure Rules (CPR), rule 17.4 allows amendments to statements of case after the end of the limitation period and CPR, rule 19.5 similarly allows the addition or substitution of a party after the expiry of the period where certain conditions are satisfied. The requirements of CPR, rule 17.4 have been liberally applied by English courts in the context of applications to amend claims which had expired under foreign limitation provisions applicable under the FLPA 1984.115 The question that arises is whether it is appropriate for the forum to use its procedural rules effectively to extend the limitation period, bearing in mind that both the FLPA (p. 283) 1984 and the Australian legislation (for example the Choice of Law (Limitation Periods) Act 1993 (NSW)) have indicated that the statutory powers to extend a limitation period are substantive. The view of Handley JA at 9.31, to the effect that forum procedural rules should not be applied to undermine foreign limitation periods, is also apposite. While the power to amend a statement of claim is an integral part of the administration of litigation, whether involving local or foreign elements, the act of doing so plainly has outcome determinative effect and, most importantly, weakens the impact of the foreign limitation.116
9.33 Consideration should therefore be given to requiring a claimant to adduce evidence of the procedural rules of the foreign law of the cause of action on the question of whether an amendment should be granted. Only if such rules permitted an amendment or at least did not prohibit it could a Commonwealth court grant the request. In effect, the issue of amendment in the context of expired limitation periods would cease to be one of pleading (procedural) and become one of limitation (substantive). This situation would seem to be a highly appropriate one for the admission in the forum of foreign procedural rules, a general point advocated throughout this work, which in any case is already provided for under the FLPA 1984 on the issue of extending the limitation period. This approach also addresses the issue raised by Dickinson that foreign limitation periods applicable under article 15(h) of the Rome II Regulation are not the subject of the statutory rights to amendment under section 35 of the LA 1980. According to this argument, such an omission is of no consequence since the right to amend after expiry of a limitation period would be a matter to be resolved by the procedural rules of the law of the obligation.
9.34 Another issue not covered by the FLPA 1984 or the Rome Convention and Regulations is waiver of the limitation period. In Canadian decisions it has been held that the requirement to plead a limitation period is a procedural matter governed by the law of the forum,117 since it is again considered to be a matter of pleading. Canadian courts have also held that the consequence of a failure to plead a limitation period, namely the waiver of the right to rely on the defence, is also a matter governed by forum law.118 Given the clear trend in favour of applying a substantive classification to most issues concerning limitations, due to their direct impact on the rights and liabilities of the parties, a good argument may be (p. 284) made that waiver should be similarly treated.119 Support for a substantive view may also be found in the analogous cases of estoppel by representation and convention discussed in Chapter 7.120
1. Choice of Law and Limitations in Jurisdictional Disputes
9.35 Under the traditional English test of forum non conveniens from the Spiliada case,121 adopted in all Commonwealth countries (with a variation in Australia), it is well established that a claimant can avoid a stay of forum proceedings if it can show that it would be denied a legitimate personal or juridical advantage by the court declining to exercise jurisdiction. Lord Goff in Spiliada gave an example of such an advantage as the situation where a claimant was time barred in the jurisdiction which the defendant alleged to be the ‘more appropriate forum’ but whose action could proceed in the forum.122 Such an analysis appears to assume that statutes of limitation are procedural and that each forum will apply its own; a view which of course no longer applies in England after the FLPA 1984, the Rome Convention and the Rome I and Rome II Regulations. The effect of these instruments, as already noted, is that an English court, subject to public policy, must apply the limitation of the law of the cause of action. In theory, therefore, a claimant should no longer be able to argue that it would be denied the ‘advantage’ of English limitation law if a stay were granted, where English law is not the law of the cause of action, since foreign law should apply wherever the case is adjudicated. Where English law, by contrast, is the law of the cause of action (as was the case in Spiliada), the claimant also should likewise not be able to rely on the fact that English limitations law will be applied in England but not in the foreign court unless it can produce clear evidence that the foreign court would not apply English law. Another effect of the FLPA 1984, the Convention, and the Regulations has therefore been to reduce jurisdictional disputes over limitation matters, a trend which is both desirable and noticeable in recent English litigation.
9.36 Interestingly, however, in other Commonwealth countries such as Canada, where it is also well established that questions of limitation are generally (p. 285) substantive, in a number of cases involving applications for a stay of proceedings on forum non conveniens grounds, courts have assumed without argument that forum law applies to limitation issues. For example, in Kelner Pilatus Center v Charest123 an Ontario court made no reference to the principle in Tolofson concerning limitations and accepted that the action would be barred in the interprovincial (Quebec) court but not in the forum. Yet it should have been relatively easy for the court to establish that Quebec would apply the law of the cause of action to limitations,124 with the result that as Ontario law was the law governing the cause of action, its limitation law was likely to be applied in either jurisdiction. Consequently, a key assumption upon which the Ontario court refused the stay—that the matter was time barred in the Quebec court—was almost certainly incorrect. The same comment may be made about an earlier Ontario decision, Gotch v Ramirez,125 where a stay in favour of litigation in Pennsylvania was refused on the assumption that the action would be statute barred in the foreign court but not in the forum, despite the law of the cause of action being that of the foreign country, with the result that the foreign bar should also have applied in Ontario (subject to public policy). The position would, however, be different if forum law governed the cause of action and under this law the matter was not barred but it was shown that the foreign court would apply its own law in any event to bar the action. Canadian courts in other stay cases126 have shown an awareness of the rule that limitation questions are substantive and consequently placed little reliance on limitation as a factor in the stay determination since the same result would be reached in either of the competing jurisdictions.
2. Avoiding a Foreign Limitation by Displacing the Applicable Law
9.37 An alternative mechanism for avoiding a foreign limitation period and reinstating the law of the forum exists in the area of torts or non-contractual obligations in most Commonwealth countries except Australia. This avenue is important to consider because, if widely available, it would represent (p. 286) a further method of forum control in the area of limitation in Commonwealth countries and would further qualify the shift towards the law of the cause of action. First, in jurisdictions which still apply the double actionability rule to foreign torts there is a flexible exception to the law of the place of the wrong which enables the forum to apply its law to any issue with which it has the most substantial connection.127 Conceivably, the issue to be displaced could be a foreign limitation period, and this occurred in at least one decision. In Ennstone Building Products Ltd v Stanger128 the court would have applied English law to allow the action to proceed instead of the law of the place of the tort, where it was barred, because the advice which formed the basis of the claim was rendered in England and both parties were English companies.129 By contrast, in Durham v T & N Noble plc,130 the exception was not applied since all relevant connections were with the foreign law of the cause of action. A similar exception may exist in Canada, where the double actionability choice of law rule for torts has been replaced by presumptive application of the law of the place of the wrong. So in Tolofson v Jensen it was suggested that, at least in the case of international as opposed to interprovincial torts, rigid application of the law of the place of the wrong may be avoided only where it would cause ‘an injustice’.131 Yet, this exception was held not to apply to the situation where a claimant was seeking to rely on forum law to circumvent an expired foreign limitation period in Roy v North American Leisure Group Inc.132 In the Roy case the claimant was an Ontario resident who suffered personal injury while on a cruise in the Caribbean and sued (among others) the English owner of the vessel. The court held that English law was the law of the place of the wrong and so its limitation law must also be applied. Conceivably, had there been more facts connecting the issue with Ontario, the court might have taken a different view on the applicable law.
9.38 In the case of proceedings under the Rome II Regulation, a similar approach is likely to prevail to that existing under the previous legislation, the Private International Law (Miscellaneous Provisions) Act 1995. Under section 11 of the PILA 1995 the basic choice of law rule in torts cases was the law of the country in which the relevant events occurred, but under section 12 this law could be displaced in favour of another law (such as the law of the forum) where the connections between the tort and the forum were so significant that it was substantially more appropriate for forum law to be (p. 287) applied to issues arising in the case or any of those issues. This test is similar to the common law ‘flexible exception’, since it allows the court to identify a particular issue in the litigation, such as limitation, and displace the foreign law on this matter. Alternatively, the forum court may consider that the circumstances of the case, such as the residence of the parties and the place where the relevant events that constituted the tort occurred, require displacement of the entire foreign law. Section 12 was applied to displace the law of the place of the tort (where the action was barred) in favour of the law of the forum in one English decision,133 involving an English claimant who was recruited to work in the UAE by an English employment agency and suffered injury there while working for a German contractor. The court held, in proceedings against both companies, that since the claimant’s presence in the UAE was purely temporary, his contract of employment was governed by English law and all of the parties to the litigation had little connection with the UAE, it would be more appropriate to apply English law, with the result that the claim was not time barred. It is suggested that such a result could equally be reached under article 4(2) of the Rome II Regulation where the law of the parties’ common habitual residence must be applied in preference to the law of the place of the wrong, and article 4(3) which allows a court to displace the law of the place of the wrong where the tort is ‘manifestly more closely connected’ with another country. English law would have been the law of the common habitual residence in the action against the English company and England would also arguably have been ‘manifestly more closely connected’ with the claim against the German company.
3. A Legislative Return of the Law of the Forum?
If it is determined in an action that the law of a jurisdiction other than British Columbia is applicable and the limitation law of that jurisdiction is, for the purposes of private international law, classified as procedural, the court may apply British Columbia limitation law or may apply the limitation law of the other jurisdiction if a more just result is produced.
(p. 288) Some Canadian scholars134 have argued that this provision is redundant after the Tolofson decision, given that all Canadian provinces now classify the issue of limitation as substantive. This view is only correct if (a) a limitation provision of another Canadian province is before a British Columbian court, in which case it will always be applied (subject to public policy), or (b) a limitation provision of any other jurisdiction is before the court and the court applies its own rules of classification, ignoring the classification rules of the law of the cause of action.135 If, however, such foreign rules are applied by the British Columbian court and the limitation provision is from a Commonwealth jurisdiction or US state where limitations are still generally regarded as procedural, then section 13(1) will be relevant. This precise situation arose in Ruwenzori Enterprises v Waji,136 where a British Columbian court applied the limitation law of the law of the cause of action—Texas—under section 13(1) after finding that the provision would have been classified by Texan courts as procedural. The Court found it unjust to apply British Columbian law, given the paucity of contacts that the forum had with the parties and the action.137
The limitations law of the Province shall be applied whenever a remedial order is sought in this Province, notwithstanding that, in accordance with conflict of law rules, the claim will be adjudicated under the substantive law of another jurisdiction.
Legislative provisions in Saskatchewan138 and Newfoundland and Labrador139 are to the same effect. The Albertan provision was the subject of an important and controversial decision of the Supreme Court of Canada in Castillo v Castillo.140 The Castillo case concerned a husband and wife, both residents of Alberta, who were involved in a single car accident in California. The wife brought an action against her husband in Alberta within the province’s limitation period but after the California limitations period had expired. The wife argued that although the law of the place of (p. 289) the wrong was California, which meant that after Tolofson California limitation law should be applied, this outcome was statutorily reversed by section 12 of the Alberta Limitations Act. The Supreme Court of Canada, however, held that the Californian limitation statute must be applied pursuant to Tolofson to bar the action and that section 12 does not revive an action time barred by the substantive law of the place of the wrong.141 In addition, a majority of the court said, the effect of section 12 is to create a further and additional time bar to that under the law of the cause of action so that if a suit, for example, is within time under the foreign applicable law, it may still be subject to a shorter period in Alberta which would bar the suit.142 The reasoning of the court, with respect, is brief and conclusory and seems to underplay the fact that a legislature can (subject to constitutional constraints) enact overriding mandatory rules to alter common law choice of law rules. Also, to give section 12 the double-barrelled operation suggested seems hard to justify on the text of the provision. It is submitted instead that the provision is an overriding mandatory rule, which requires Albertan courts to apply Albertan limitation law to all proceedings in Alberta regardless of the law of the cause of action.143 Properly read, the provision therefore reverses the decision in Tolofson and a similar analysis would apply in the case of the Saskatchewan and Newfoundland enactments, particularly since those provisions appear to have all been enacted subsequent to the Tolofson decision.
The comprehensive nature of the [Albertan] Act is reinforced by s 12, a provision that appears specifically designed to counteract the effects of this Court’s decision in Tolofson in a conflict of laws situation … [Section 12] ensures that all proceedings brought within the province are subject to the local limitation period, notwithstanding that any other limitation period may also be applicable pursuant to a conflict of laws analysis like that performed in Tolofson.
These observations, however, must be read in the light of the fact that in 2007 (after Castillo but before Yugraneft) section 12 was amended to embody the decision in Castillo. A new section 12(2) was added which provides that where a matter arises before an Albertan court in which foreign law is the law of the cause of action, the limitation period of that country or province will apply where it is shorter in length than the period provided under the law of the forum. Hence, it now appears (at least in Alberta) that although section 12(1) still on its face reverses the effect of Tolofson (as noted by the Supreme Court in Yugraneft), section 12(2) effectively restores the common law position by providing that foreign law will apply in every case where it provides a shorter limitation period (presumably subject to forum public policy).
9.42 Finally it is worth noting that another Canadian province, Ontario, has enacted legislation which gives statutory recognition to the Tolofson principle. Section 23 of the Ontario Limitations Act 2002 provides that ‘for the purposes of applying the rules regarding conflict of laws, the limitations law of Ontario or any other jurisdiction is substantive law’. In most cases, such a provision will be unnecessary since Ontario courts, applying Tolofson, would reach the same result. Yet the provision may be useful where, for example, a foreign limitation period is before an Ontario court, yet under the choice of law rules of the foreign country, the provision would be classified as procedural. Presumably section 23 will have the effect of directing an Ontario court to ignore such a characterization and apply the foreign limitation law regardless. Also, section 23 may have some utility as a ‘self-characterizing statute’ (see 3.07) with foreign courts, in deciding whether to apply Ontario limitation law, given clear instruction that according to Ontario choice of law rules, it is to be considered substantive. Such an instruction may be particularly useful in jurisdictions such as Australia, where the ‘no advantage’ approach to (p. 291) choice of law may require an Australian court to determine whether the foreign court would apply its own limitation period if the matter arose before that court.148
4. Time Provisions Other Than Limitations
9.43 Time limits in rules of court governing issues arising during the pre-trial and trial stages of a proceeding, such as a period for the filing of a defence, complying with an order for disclosure, or filing an appeal, are governed by forum law as they are part of the court’s powers to manage litigation.149 The same position is adopted in most European civil law countries.150
9.44 Another issue which may arise is where parties to a contract include a provision which contains a shorter time period for bringing claims than the relevant limitation period of the law of the cause of action. Since such a time period is incorporated in a document governing the rights and obligations of the parties rather than being in legislation enacted by the state, it is appropriately considered to be substantive and governed by the applicable law of the contract.151 Notice before action requirements in legislation, at least where they extinguish obligations, should be treated similarly.152
5. The US Position
9.45 The US position on choice of law and limitation is too diverse to be fully treated in a work of this nature and so an outline of the main approaches must suffice, again with an eye to an overall assessment of the degree of forum control in this area. The starting point for consideration of US law in this area is the Supreme Court decision in Sun Oil Co v Wortman.153 In that case it was decided that the adoption by one state of a procedural characterization of statutes of limitation was entirely consistent with the (p. 292) state’s obligation to confer full faith and credit on the laws of other states under the US Constitution. Consequently, each US state may either adopt a substantive or procedural characterization of limitation legislation of other states consistently with its constitutional obligations.
9.46 Statutes of limitation have been, in a similar way to Commonwealth law, traditionally classified in US law as procedural, unless they are annexed to a statutory cause of action or are in the form of a ‘statute of repose’ which bars an action (typically against a product manufacturer) after a stated number of years, regardless of when the cause of action accrued.154 However, from the 1970s, some US courts began to adopt a substantive characterization of all limitation statutes,155 while others, applying more flexible choice of law methodologies, applied the law which has the closest connection to, or greatest interest in, the issue of limitation.156 This last, issue-specific approach departs from the strict choice of law dichotomy seen in Commonwealth countries, where only the law of the forum or the law of the cause of action can apply to limitations. Such a view, by isolating limitations as a distinct issue for choice of law purposes, raises the possibility of a law being applied other than the two mentioned. Section 142 of the Restatement (Second) of the Conflict of Laws (1988 revised version) adopts neither a substantive nor procedural characterization with regard to statutes of limitation but provides that they should be subject to the law of the state with the most significant relationship to the limitation issue, regardless of the law of the cause of action. Yet the provision then qualifies this open-ended direction by stating a general preference for the application of forum law. Specifically it is provided in §142(1) that, in the absence of exceptional circumstances which would make the result unreasonable, the forum will apply its own statute of limitation to bar the claim. This view is justified by the need to ensure accurate determinations in forum litigation by precluding adjudication of stale claims157 and to give defendants peace from possibly indeterminate litigation under foreign law. By contrast, the Restatement then provides in § 142(2) that the forum’s statute of limitation will be applied to allow an action to proceed unless there is no substantial forum interest and the claim would be barred by a statute of limitations of a state (or country) having a more significant (p. 293) relationship to the parties and the occurrence. In applying this provision, US courts have been equally divided in selecting forum or foreign law.158 By contrast, the 1982 Uniform Conflict of Laws Limitations Act (UCLLA), adopted in six states,159 classifies statutes of limitations as substantive and governed by the law of the cause of action,160 subject to a hardship-type defence.161
9.47 Another important inroad into forum control in limitation matters in the United States has been made by ‘borrowing’ statutes, which have been enacted by a majority of US states. While such statutes are not uniform in their terms, they generally operate to bar an action in the forum if it is already barred by the corresponding law of the place where the cause of action arose or accrued or alternatively the place where the defendant or both parties resided. In effect, the forum is required to ‘borrow’ the limitation statute of the other jurisdiction to prevent forum shopping by plaintiffs. Such statutes, however, may be criticized as one-sided as they allow the forum court only to borrow a shorter limitation period of the foreign jurisdiction. Borrowing statutes do not therefore address the issue of whether it might be unjust for a claimant to be subjected to an expired foreign limitation when its claim is still permissible under forum limitations law.162 The other weakness of borrowing statutes is that they also borrow the ‘tolling’ provisions of the other jurisdiction. Tolling provisions normally operate to stop the running of the limitation period where the defendant is absent or not resident in the forum state.163 While some US courts164 have held that the tolling rules do not apply where the defendant is amenable to personal service, the result is often burdensome for defendants (where they apply) and, as noted at 9.18, was wisely avoided in the English FLPA 1984.
(p. 294) 9.48 Another restriction on forum control in this area is found in those US states which, despite adopting a procedural classification of limitations, recognize the right of parties to choose the law applicable to the issue of limitation in their contract. Some courts have construed general choice of law clauses (’this contract is governed by the laws of New York’) as implicitly embracing issues of limitation,165 while others have required an express intention by the parties to apply a certain limitation law in their contract on the basis that questions of limitation are still classified as procedural and a general choice of law clause only governs ‘substantive’ matters.166
9.49 Overall the US experience is broadly consistent with the Commonwealth practice in terms of the diminishing degree of forum control over limitations matters. While the procedural characterization still holds sway as a presumptive rule, its application is so qualified by exceptions as to make the application of forum law (particularly to allow a suit barred under the law of the cause of action) less frequent than might have been expected. While the various approaches to choice of law and limitations under US law are more nuanced and factually responsive, arguably the simpler Commonwealth approach, where the law of the cause of action is applied directly, is preferable both from a practical perspective and in serving the important policy interests involved. Limitations may therefore be an area where the relevant choice of law options are properly confined to the law of the cause of action and the law of the forum.
7 See 3.02 above.
9 See 9.08–9.10 below.
10 See 3.02 above.
11 For Quebec see the Civil Code, art 3131: ‘prescription is governed by the law applicable to the merits of the dispute’. For France see B Audit, Droit International Privé (Economica, 3rd edn, 2005) para 445; Société Nationale de Recouvrement v Y  ECLY 724 (Court of Cassation, First Civil Chamber, 3 June 2003); F Hage-Chahine, ‘La Prescription Extinctive en Droit International Privé’ (1995) 255 Hague Recueil 229; and B Fauvarque-Casson, ‘La Prescription en Droit International Privé’ in Droit International Privé Travaux du Comité Français de Droit International Privé Année 2002–2004 (Editions Perdone, 2005) 235. For Germany see R Geimer, Internationales Zivilprozeβrecht (OUS Verlag Dr Otto Schmidt, 5th edn, 2005) para 351. For Belgium see F Rigaux and M Fallon, Droit International Privé (Larcier, 3rd edn, 2005) para 11.13. For Switzerland see Statute of Private International Law, art 148(1). For the Netherlands see HR 24 January 1986 NJ 1987 56 (Dutch Supreme Court), cited in R Plender and M Wilderspin, The European Private International Law of Obligations (Sweet & Maxwell, 3rd edn, 2009) para 14-051, n 105. cf Italy, however, where Italian statutes of limitation appear to be classified as procedural and applicable where the law of the cause of action is foreign (Cass 1 August 2000, n 10026 Foro it Rep (2000) Diritto Internazionale Privato, n 59) unless there is pleaded a foreign limitation law which would be classified under its own choice of law rules as substantive, in which case, that law will be applied (App Firenze, 5 October 1989, Foro it Rep (1991) Trasporto marittimo, n 88). See also V Sinisi and A Sculli, ‘Italian Conflict-of-Law Rules’ (2007) 29 The Comparative Law Yearbook of International Business 207, 211.
12 See eg Hague Convention of 4 May 1971 on the Law Applicable to Traffic Accidents, art 8(8) and the Hague Convention of 2 October 1973 on the Law Applicable to Products Liability, art 8(9) (1972) 1 ILM 1283.
15 ibid paras 99–100; see also Dyno Wesfarmers Ltd v Knuckey  NSWCA 375, paras 45–46 (Handley JA) and E Lorenzen, ‘The Statute of Limitations and the Conflict of Laws’ (1919) 28 Yale LJ 492, 496: ‘a right which can be enforced no longer by an action at law is shorn of its most valuable attribute’.
16 P Stone, ‘Time Limitation in the English Conflict of Laws’  LMCLQ 497, 501; see 9.20–9.23 below.
17 See eg Stewart v Stewart (1997) 30 BCLR (3d) 233 (BCCA); Michalski v Olson (1997) 123 Man R (2d) 101, para 23; Caspian Construction Inc v Drake Surveys Ltd (2004) 184 Man R (2d) 284, para 19; Brill v Korpaach Estate (1997) 200 AR 161, paras 7, 23 (CA); Pawlus v Banque Nationale de Paris (Canada) (2001) 277 AR 80, para 44 (CA); Ferguson v Arctic Transportation Ltd (1998) 147 FTR 96, para 52; Wong v Lee (2002) 58 OR (3d) 398, para 20 (CA); Bank of America v Maas 2010 ONSC 4546 (affd 2010 ONCA 833).
26 See Law Commission of India, 193rd Report on Transnational Litigation—Conflict of Laws—Law of Limitation (2005) at <http://lawcommissionofindia.nic/in/reports/Report193.pdf> (accessed October 2011) which proposes a new s 11(2) to the Limitation Act 36 of 1963.
27 See eg Kuhne & Nagel AG Zurich v APA Distributors (Pty) Ltd 1981 3 SA 536 (High Court of Witwatersrand); Laconian Enterprises Ltd v Agromar Lineas Ltd 1986 3 SA 509 (Durban High Court); Laurens v von Hohne 1993 2 SA 104 (High Court of Witwatersrand).
28 South African courts have generally classified the limitation period of the foreign law of the cause of action according to that country’s rules of classification: see eg Laurens v von Hohne 1993 2 SA 104. The same analysis would apply, however, even if the forum’s rules of classification were employed.
29 Society of Lloyds v Price 2006 5 SA 393, para 26; Monokandilos v Générale des Carriers et des Mines SA  ZAGPPHC 184, para 15 (Pretoria High Court). The ‘via media’ approach is derived from the writings of the Canadian scholar Falconbridge, see J Neels, ‘Falconbridge in South Africa’ (2008) 4 JPIL 167, 170.
31 Laconian Enterprises Ltd v Agromar Lineas Ltd 1986 3 SA 509; Society of Lloyds v Romahn 2006 4 SA 23 (Cape High Court); Society of Lloyds v Price 2006 5 SA 393; and Coutts & Co v Ford 1997 1 ZLR 440 (Harare High Court).
33 This view has been advocated by some South African commentators; see Neels (n 29 above) 192, 196–7 and S Eiselen, ‘Laconian Revisited—A Reappraisal of Classification in Conflicts Law’ (2006) 123 South African LJ 147, 158–9 but cf C Forsyth, ‘Mind the Gap Part II: the South African Court of Appeal and Characterisation’ (2006) 2 JPIL 425, 429, n 14, who acknowledges the trend in favour of the law of the cause of action in limitation cases but still sees a role for the via media approach in other conflicts disputes.
35 Kuhne & Nagel AG Zurich v APA Distributors (Pty) Ltd 1981 3 SA 536; Laurens v von Hohne 1993 2 SA 104; Society of Lloyds v Price 2006 5 SA 393; Society of Lloyds v Romahn 2006 4 SA 23; Coutts & Co v Ford 1997 1 ZLR 440; Monokandilos v Générale des Carriers et des Mines SA  ZAGPPHC 184. cf Laconian Enterprises Ltd v Agromar Lineas Ltd 1986 3 SA 509 where the law of the forum was applied although in that case the action was proscribed under neither the law of the forum nor the law of the cause of action, a point noted by the Supreme Court of Appeal in Society of Lloyds v Price 2006 5 SA 393, para 24.
37 M Bonell, ‘Limitation Periods’ in A Hartkamp et al (eds), Towards a European Civil Code (Kluwer Law International, 3rd edn, 2004) 517; see also Trans Grupo Vialle Iberica (Société) v X  ECLY 29 (French Court of Cassation, 12 July 2010).
39 See 9.40–9.41 below.
42 The legislation was passed on the recommendations of the Law Commission; see England and Wales Law Commission, Classification of Limitation in Private International Law  EWLC 114. See, for Scotland, the Prescription and Limitation (Scotland) Act 1984.
46 For more detailed reference to the decisions and commentary on this issue, see 11.01 below.
49 The Private International Law (Miscellaneous Provisions) Act 1995 (PILA 1995) applies to torts committed after that date but before the date when the Rome II Regulation came into force. Defamation, however, remains excluded from both instruments and the common law choice of law rules continue to apply; see PILA 1995, s 13.
52 FLPA 1984, s 4(2); Law Commission Report (n 42 above) para 4.4.
57 See eg Choice of Law (Limitation Periods) Act 1993 (NSW), s 6; Mason v Murray’s Charter Coaches and Travel Services Pty Ltd (1998) 88 FCR 308, 320 (Drummond J), and 330 (Sackville J); Pulido v RS Distributions Pty Ltd  ACTSC 61, para 59; Berriman v Cricket Australia (2007) 17 VR 528, para 25; and Carslake v Gadens Lawyers  SASC 9, para 12.
62 J Walker, ‘Twenty Questions (about Section 23 of the Limitations Act, 2002)’ in W Gray, L Kerbel-Caplan, and J Ziegel (eds), The New Ontario Limitations Regime: Exposition and Analysis (Ontario Bar Association, 2005) 95, 110.
69 Law Commission Report (n 42 above) para 4.27.
71 Stone (n 16 above) 511.
72 The Komninos S  1 Lloyd’s Rep 370, 377 (Bingham LJ); Arab Monetary Fund v Hashim  1 Lloyd’s Rep 589, 600 (Saville LJ); B Doherty, C Thomann, and K Scott, Accidents Abroad International Personal Injury Claims (Thomson Reuters, 2009) 11.030 para.
73 The editors of Dicey, Morris and Collins are slightly ambiguous on this point. They note that the effect of public policy on disapplying a foreign limitation is that ‘the issue is then governed by the common law principles under which the limitation principles prescribed by English law as the lex fori will be applied’; L Collins (ed), Dicey, Morris and Collins on the Conflict of Laws (Sweet & Maxwell, 14th edn, 2006) para 7.050. This statement could indicate support for the view expressed in The Komninos above (ie that English limitation applies by default because it is procedural) or the alternative view proposed here that public policy attracts forum law by itself.
75 Law Commission Report (n 42 above) paras 4.43–4.44; Loucks v Standard Oil Co of New York 224 NY 99, 111 (1918) (Cardozo J); Kuwait Airways Corp v Iraqi Airways Co (Nos 4 and 5)  2 AC 883, para 18 (Lord Nicholls),
76 ibid para 4.45; cf Oppenheimer v Cattermole  AC 249 (HL).
77 ibid para 4.39 cited in City of Gotha v Sotheby’s The Times, 8 October 1998 (QBD).
86 Law Commission Report (n 42 above) para 4.46.
90 Jones v Trollope Colls Cementation Overseas Ltd The Times, 26 January 1990; see also Law Commission Report (n 42 above) para 4.46.
95 Dubai Bank Ltd v Abbas Commercial Court, 15 October 1997; Law Commission Report, (n 42 above) para 4.47.
101 ibid para 14.49.
102 See Rome II, art 15(c); Rome I, art 12(1)(c); Dickinson (n 100 above) para 14.49.
103 Plender and Wilderspin (n 11 above) paras 14-052, 16-082.
105 See Doherty (n 72 above) paras 11.028, 11.035; Dickinson (n 100 above) para 14.49. But cf Dicey, Morris and Collins (n 73 above) paras 7-052, n 19, 32-209, where it is argued that public policy should receive no stricter interpretation under the Regulations compared to the FLPA 1984. This position may, however, have been qualified in the recent Fourth Cumulative Supplement (2010) para 7.049, where the authors state: ‘the public policy exception in s 2 of the [FLPA] . . . does not apply where the Rome I or II Regulation is applicable; and it will be necessary to refer exclusively to the public policy derogations in the Regulations’. See also Fiona Trust and Holding Corp v Privalov  EWHC 3199 (Comm) para 133, where it was said that the public policy exception under the EU instruments is ‘in different terms from those of the 1984 Act’.
106 Stone (n 16 above) 507; P Carter, ‘The Foreign Limitation Periods Act 1984’ (1985) 101 LQR 68, 72–4.
108 If the Mollovian court classified the Espiritan limitation as procedural, then presumably the Western Australian court would apply Espiritan law to the cause of action but Mollovian limitation law as this would be the result reached by the Mollovian court.
109 Similar to the Espiritan example above, if Mollovian law classified the Western Australian limitation as procedural, then the Western Australian court would apply its own law to the cause of action but Mollovian law to the issue of limitation because, again, this would be the result reached by the Mollovian court.
116 See Doherty (n 72 above) para 11-034.
120 See 7.52–7.53 above.
125 (2000) 48 OR (3d) 515; see also Lilydale Cooperative Ltd v Meyn Canada Inc (2007) 84 OR (3d) 621 (affd 2008 ONCA 126) where a stay was refused with again the key reason being that the action would be statute barred in the courts of the law of the cause of action (Alberta) but not in the forum (Ontario). A similar false assumption seems to have been made in Bulmer Aircraft Services Ltd v Bulmer 2005 NBQB 396, para 17 and Dempsey v Staples 2011 ONSC 1709, paras 48–50.
142 ibid para 6; Bastarache J, while concurring in the result, found the Limitations Act 2004 (Alta), s 12 to be inapplicable to the case on the basis that it was unconstitutional on either the claimant’s or the defendant’s suggested construction of the provision.
149 Tolofson v Jensen (1994) 120 DLR (4th) 289, 322; Stern v Dill 442 NW 2d 322, 324 (Minn 1989); A Lowenfeld, Conflict of Laws: Federal, State and International Perspectives (LexisNexis, 2nd edn, 2002) 73.
151 Dicey, Morris and Collins (n 73 above) para 7.54; Law Commission (n 42 above) para 4.52. It is acknowledged that in Allan J Panozza and Co Pty Ltd v Allied Interstate (Q) Pty Ltd  2 NSWLR 192, 196 the New South Wales Supreme Court held that a provision in a contract requiring a person to give notice of loss to a carrier within five days of the date of delivery, before bringing proceedings, was procedural. Yet the authority of this case is doubtful as it pre-dates the redefinition of substance and procedure in Pfeiffer v Rogerson.
152 See 6.28 above.
157 McDougal (n 2 above) 427; but see R Weintraub, Commentary on the Conflict of Laws (Foundation Press, 4th edn, 2001) 76 and E Scoles, P Hay, P Borchers, and S Symeonides, Conflict of Laws (Thomson West, 4th edn, 2004) 130, who criticize the provision for being too forum-biased.
158 cf De Loach v Alfred 960 P 2d 628 (Sup Ct Ariz 1998); Weitz Company LLC v Travellers Cas & Suty Co 266 F Supp 2d 984 (SD Iowa 2003) and Jackson v Chandler 61 P 3d 17 (Az 2003) (forum law applied) with Nierman v Hyatt Corp 808 NE 2d 290 (Sup Jud Ct Mass 2004); Washburn v Soper 319 F 3d 338 (8th Cir 2003) and Huynh v Chase Manhattan Bank 465 F 3d 992 (9th Cir 2006) (foreign law applied).
159 Washington, Colorado, Oregon, North Dakota, Montana, and Minnesota. See Hein v Taco Bell Inc 803 P 2d 329 (Wash Ct App 1991). Note that in Louisiana, its 1991 Conflict of Laws Code includes a provision (art 3549) which allows application of the law of the cause of action to the issue of limitation as an exception to the law of the forum where there are ‘compelling considerations of remedial justice.’
162 Weintraub (n 157 above) 70.
163 McDougal (n 2 above) 438.