The awkward drafting of the act has had Cypriot lawyers scratching their heads to work out the interim provisions, but essentially the new act has stated that any party wishing to bring an action for a breach of contract (including a counterclaim) must do so within 6 years of the contract (the primary limitation period).
As many foreign currency loans were entered into from 2006, some even before that, people who have not tackled their foreign currency predicament by issuing proceedings will find the door closed to them after the expiry of six years. Likewise people who are “waiting” in the hope that a solution will come about through existing litigation will lose their rights even if some remedy does arise subsequently.
The change in law – which some cynics might suggest was prompted by a desire to stem the flow claims currently flooding the Cypriot courts – is bound to give rise to human rights issues for those who will find themselves shut out. However the laws of most countries require a party to bring an action as soon as it comes to their attention, and litigants who delay in bringing actions may find themselves locked out in the cold.
Moreover as the law applies to counterclaims, it means that people waiting for banks to bring claims first before doing something will find themselves in dire straits. The law does not apply to a bank bringing a claim on a running bank account – so the banks could wait until a party is “beyond limitation” before bringing their claim, safe in the knowledge that under the new law, the borrower will not be able to bring a counterclaim or defend.
The advice of Christofi Law to anyone who thinks they are approaching limitation is to issue proceedings as soon as possible to preserve their position, and in any event within the six year limitation.
About the author
Chris Christofi is a solicitor of the Senior Courts of England and Wales and a partner in the law firm of Christofi Wells Strong, which operates from Temple which is in the traditional legal and business sector of London – often referred to as “the City”.
Editor’s note
To avoid possible confusion, the law does not seek to prevent claims being made in actions which had not been started before the law was passed. For this reason the limitation period will not expire before July 2013 in any case. Effectively, a one year grace period was given when the law came into effect last year.
Furthermore, the time period runs from the date the cause of action arose, which is not necessarily the date the contract was entered in many cases.