Is another call for a settlement test an action leading to the interruption of the limitation of the claim?

Issues related to calling for a settlement attempt as an act to break the statute of limitations of the claim, even though they have been the subject of the doctrine for many years, as well as judicial case law, are still capable of providing interpretation problems.

On the one hand, ease of calling the debtor to a settlement attempt and the bulkiness of this phenomenon leads to an uncontrolled extension of the statutory limitation periods for specific claims under Article 118 Act on 23 April 1964 Civil Code 1 ((c) which consequently undermines the certainty of economic turnover.

On the other hand, to the legislature did not specify whether any subsequent call for such an attempt interrupted the limitation of the claim.

Practice shows that creditors, especially those specialised in handling large debt portfolios 2 , often and repeatedly call for a settlement attempt, but not to make such a deal, but to stop the limitation period for the claim.

Renewing such trials at a time when a time limit is approaching when a claim would again be subject to limitation allows creditors to extend the limitation period beyond the statutory time limits.

The purpose of this publication is to discuss the institution's call for a settlement attempt in terms of the interruption of the limitation period of the claim.

1. Or just first Does any subsequent call for a settlement attempt interrupt the statute of limitations? – the position of doctrine

The starting point for this issue is Article 123(1)(1) k.c., which provides that the limitation period shall be interrupted by any act before a court or other body designated to recognise or enforce claims of a given type or before an amicable court, undertaken directly to investigate or determine or satisfy or secure the claim.

In doctrine they developed two different views. By first of them, if first the request for a settlement trial interrupts the limitation period, and the subsequent calls for the same dispute need not result in such a interruption.

The assessment of the consequences of subsequent calls for a settlement trial depends on the circumstances of the case, or more specifically on whether there were events between the parties (e.g.

as a result of negotiations or mutual arrangements or concessions) which, in effect, approximate the possibility of reaching a settlement before a court[3]. The basic argument raised for such interpretation is the clarity of the results of the linguistic interpretation.

Direction means no intermediation, so the criterion contained under Article 123(1)(1) k.c. meet activities that do not require additional action to achieve the objectives set by the legislator.

Therefore, calling for a settlement trial is such an act, since the effect of the conciliation procedure and of judging the claim following a lawsuit may be the same. Another argument is the similarity between conciliation and mediation, which by virtue of the explicit provision of the provision Article 123(1)(3) k.c.

interrupts the limitation period. It is also claimed that there are necessary activities which do not meet the criterion of ‘directness’ in the linguistic sense and that their qualification as interruptions of the limitation period may result in postponement of the end of that period[4].

According to second view, with Article 123(1)(1) k.c. does not result in a direct ban on the repeated performance of an act which each time results in interruption of the limitation period.

The provisions do not prohibit repeated use of this institution and do not have to lead to a settlement to result in a limitation period, therefore not only first, but also another call for a settlement attempt breaks the statute of limitations. Supporters of this interpretation of the provision Article 123(1)(1) k.c.

denies that the results of linguistic interpretation are unambiguous and that a functional interpretation is necessary.

Assuming that the concept of ‘direct actions’ means activities potentially capable of achieving the objectives listed by the legislator causes the limitation to fail to fulfil its functions, while showing in practice the rare example of a call for a settlement test not as an invitation to negotiate but as a way to prevent the expiry of a limitation period[5].

The dispute in the doctrine therefore boils down to a different interpretation of the passage of the provision ‘directly for investigation’.

1. Or just first Does any subsequent call for a settlement attempt interrupt the limitation period? – the position of the case law

The problem of calling for a settlement trial has also been seen in the case law and as in doctrine they have clarified themselves two opposing views. By first of them, the next call breaks the limitation period only exceptionally, while according to second another call should interrupt the limitation period.

Court of Appeal in Warsaw in judgment of 6 June 2014 6 leaned to first the view: ‘Assessing whether a further request for a settlement trial interrupts the limitation period, it should be noted that the interruption of the limitation period is not the primary objective of the conciliation institution and that it cannot be considered legally permissible to interrupt the limitation period indefinitely with subsequent requests for a settlement attempt’.

A similar position was taken by the Court of Appeal in Warsaw in its judgment of 16 January 2014 7 , in which he stated that ‘Article 5 k.c. states that the right of use which would be contrary to the social and economic purpose of that right cannot be exercised.

Such action or omission of the rightholder shall not be regarded as exercise of the right and shall not enjoy protection. Objective Article 123(1)(1)(3) k.c. is the protection of a creditor who takes due care of his affairs and acts with the competent authorities in due time. Objective Article 123(1)(2) k.c.

is a protection against a dishonest debtor who, in the absence of this provision, could make a declaration to the creditor of the satisfaction of his debt and then cover himself with a limitation charge.

However, the purpose of these legal standards is not to allow the creditor to extend the limitation periods indefinitely and to postpone the decision to bring an appropriate action.’

The similar view was expressed in the judgment of the Court of Appeal in Warsaw of 23 May 2018, in which the Court of First Instance indicated: ‘In principle, a further call for a settlement trial should be accepted as an act which interrupts the limitation period, with the exception that it must meet the condition of the undertaking directly in order to determine the under Article 123(1)(1) Act on 17 November 1964 – Code of Civil Procedure 8 and cannot constitute an abuse of a personal right within the meaning of Article 5 k.c.

The next call is an action that may result in the expected effect under Article 123(1)(1) k.c. but only if, in the circumstances of the facts, there is a basis for assessing that the act was undertaken directly for the purpose indicated in that provision.’

Similar position was taken by the Supreme Court in the judgment of 19 February 2016, 9 in which he stated that ‘Approval of the position of a judicature that first the call for a settlement trial interrupts the limitation period does not prejudge any degree of occurrence or absence of the same legal effect with regard to the subsequent call for a settlement trial.

The subsequent call for a settlement test is an activity that may result in the envisaged effect under Article 123(1)(1) k.c., but only if, in the circumstances of the facts, there is a basis for assessing that this action has been undertaken directly for the purpose indicated in that provision.

The occurrence of that condition or its failure will be decided only on the occurrence of the effect of the subsequent call for a settlement test provided for in that provision.

Therefore, there is no basis for generalising the assessment that the purpose of any subsequent settlement attempt is merely to interrupt the limitation period, because it cannot be ruled out that there is a legal effect and such effect, but only in the event that the direct objective of the undertaking also appears to be a subsequent settlement attempt, similar to the initiation of mediation, was not to investigate or establish or satisfy or secure the claim.’

A similar view was expressed by the Supreme Court in its judgment of 28 January 2016 10 , in which he pointed out that ‘It first the call for a settlement trial interrupts the limitation period does not prejudge any degree of occurrence or absence of the same legal effect with regard to the subsequent call for a settlement trial.

The subsequent call for a settlement test is an activity that may result in the envisaged effect under Article 123(1)(1) k.c. but only if, in the circumstances of the facts, there is a basis for assessing that the act was undertaken directly for the purpose indicated in that provision.’

On the other hand, Court of Appeal in Krakow in judgment of 20 November 2018 11 He agreed to the contrary view rather than the above, stating that, “By making a further request for a settlement attempt from the debtor, the creditor not only gives the debtor another chance to enter into a settlement, thus assuming a concession on his own part, but, above all, expresses his willingness to obtain satisfaction from the debtor in respect of a claim directed towards the course of legal proceedings, but in alternative conciliation. When making such a request, the creditor shall, in any event, express his knowledge of the existence of a claim due and express his clear determination to benefit from the justice system and shall take the direct action to obtain satisfaction from the competent court.’

The reading of the statement of reasons for the above judgment leads to the conclusion that the Court of First Instance did not see the abuse of a personal right, considering that any call for a settlement attempt led to the interruption of the limitation period of the claim.

It is not possible to agree with this view, since, above all, it is necessary to examine the motives behind creditors who use this institution in bulk, distorting its original application.

In the following part of the judgment, the Court of First Instance held that ‘Such an attitude does not deserve to be sanctioned, as it cannot be considered that, when making a subsequent settlement application in respect of the same claim, the creditor did not behave loyally to the debtor, and thus that such an action would not benefit from the protection provided for Article 123(1)(1) k.p.c.

In particular, there is no reason to believe that, when initiating the conciliation procedure again, the creditor abuses his rights in the sense adopted under Article 5 k.c.

or worsens the situation of a debtor who should not be regarded as an injured party, the more he should not be considered as an entity entitled to express a critical assessment of the actions taken by the creditor, as such approach obscures the actual arrangement of obligations and powers of the parties.’

This interpretation of the conciliation procedure cannot be accepted, since the debtor without the right to contest the assessment of the actions undertaken by the creditor becomes a hostage to that procedure. Consequently, as has already been noted above, the time limits for the limitation of the claim cease to have a role.

It is also worth quoting, on the basis of the problems of this publication, the final part of the justification for the judgment in question, in which the Court of First Instance stated that ‘The possibility of repeated application based on Article 184 k.p.c.

does not pose any risk to legal trade, in particular does not create an uncertain state of uncertainty between the parties.

If, in fact, the debtor disputes the obligation to comply with a certain benefit to the creditor, it should not wait either for a further settlement by the creditor or for a legal action to be brought by the creditor, because he may seek a plea to establish that there is no legal relationship or a law on which the creditor bases the claim covered by the subsequent settlement application, since the debtor may, in this way, remove any possible uncertainty, be prevented from further conciliation by the creditor.’

The Court of First Instance’s finding that a sufficient means of defending the debtor against the abuse of a personal right is clearly not acceptable to the application to establish that there is no legal relationship.

According to the author, this statute of limitations plays a key role as a defense measure, as it exerts pressure on rightholders to make their claims timely, creating a threat to the rightholder of refusal to pursue a claim after a long period of time[12].

Consequently, it is not possible to consider the position presented in that judgment to be correct.

In the vast majority of judgments – especially the Supreme Court 13 – However, in recent years, it is noted that repeated calls for settlement trials do not result in a limitation period, as it should not be accepted without proof that further such attempts are made directly to pursue the claim.

Therefore, whether they are, it requires an examination by the Court of First Instance. This view must be considered to be definitely correct, and it can be seen that in recent years it has gained an advantage 14 over the opposite position.

For this reason, it is not sufficient to accept the conclusion that any such request is intended to do so and that the limitation period is interrupted. This possibility still needs to be verified by ensuring that the applicant’s motives are met.[15]. Following current events, one can hope that the problem presented in this publication will eventually be resolved by the enlarged composition of the Supreme Court[16].

3. Summary

In conclusion, the author of this publication takes the view that not every subsequent call for a settlement attempt leads directly to the interruption of the limitation of the claim, bearing in mind that under Article 123(1)(1) k.c. it is vain to seek a call for a settlement test as a result.

This provision only lists the characteristics of the action to produce such an effect, i.e. any action taken directly to pursue the claim. Therefore, it is necessary to demonstrate first the existence of these characteristics and not to assume their existence a priori for each call for settlement.

There is also no obstacle to such proof ex post, i.e. in exploratory proceedings conducted after prior invitation to a settlement. The value of the parties' confidence in their legal situation should give way to another value, which is to counter the distortion of the limitation institution.

It cannot be considered to be a proper situation in which full control of the length of the limitation period – and therefore of the institution serving the interests of the debtor – has a creditor calling for a settlement, because in this way it depends on its exclusive decision on the time limit for the limitation period.

If it is indeed intended to pursue a claim, the limitation period will be interrupted; when its motives are of a different kind, the limitation period will not be interrupted. However, these motives need to be examined and established, for example in the subsequent delivery process.

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