The limitation period in loan agreements: is a demand an interruption?

In recent collection proceedings the debtor argued that the limitation period had expired for the claim in question. The District Court ruled, in first instance, that this was the case. But the Court of Appeal disagreed. When is there an interruption and which requirements apply? Dutch debt collection lawyer Thomas van Vugt explains.

Termination of a loan agreement

The claimant lends money to the respondent. Quite an amount, over €90,000. In the beginning the respondent pays back on time, but then he stops paying. The claimant terminates the loan on 1 December 2006, and requests the respondent to pay the remainder, €50,000. The respondent fails to comply with this request. Subsequent letters yield no result. The claimant send the respondent monthly demands, from 31 August 2009 up to and including 1 July 2011, in which he demands payment of the debt, increased with (ever higher) interest.

Invoking limitation period in collection proceedings

The claimant finally starts collection proceedings. In these proceedings the respondent invokes expiry of the limitation period. The claim for payment is the result of the termination of the loan. So the claim dates back to 1 December 2006. The claimant only started proceedings in 2014. The limitation period, however, is 5 years. The respondent states that the letters and demands by the claimant did not interrupt the limitation period, because the claimant did not unambiguously reserve his right to compliance. The court agrees and reject the claimant’s claim due to expiry of the limitation period.

Court of appeal: limitation period interrupted by demand

The claimant institutes an appeal. The Court of Appeal states, first of all, that legally there is an interruption if there is either a summons or a notice in writing in which the creditor unambiguously reserves his right to compliance. However, for the demands sent by the claimant, these do not have to contain this unambiguous statement about reserving the right to compliance. This means that the claim of the claimant was interrupted and is granted by the Court of Appeal as yet.

Notice in writing: unambiguous reservation

Breaking a current limitation period is called ‘interruption’. Interruption occurs by an act of prosecution, (submitting a claim by means of a summons), by a demand in writing or a notice in writing or by acknowledgment by the debtor. In a notice in writing, the creditor has to unambiguously reserve his right to compliance. The reason for this is that the debtor should have fair warning that he has to take into account that, also after the limitation period has expired, the creditor can still institute a claim. In that way the debtor can retain certain documents and evidence to defend himself against the claim, if necessary.

AMS Lawyers for debt collections and legal claims

In this case the Court of Appeal also noted that the letters sent prior to the demands already caused the interruption. According to the Court of Appeal, these letters could only be interpreted as stating that the respondent was warned that the claimant would not relinquish his right to repayment. But that is not always the case. Expiry of limitation periods happen more often than one would think. If you want any advice on this, please contact our firm.