Interruption of the statute of limitations: how to prevent the loss of your claim

Interruption of the statute of limitations: how to keep a claim alive

Statute of limitations is a silent killer of claims. Anyone who believes that a debtor will pay in two months, and harbors that hope for four years, can lose the claim without a judge ever having been involved. This is because the statute of limitations operates by operation of law, meaning that a debtor only needs to invoke it when you finally initiate legal proceedings. At that moment, the claim is legally dead, no matter how justified it may be on the merits. Interrupting the statute of limitations is the instrument to prevent this, provided it is executed correctly.

The relevant limitation periods

The Dutch Civil Code provides for different limitation periods, depending on the type of claim. The general period of Article 3:307, paragraph 1, of the Civil Code is five years for claims for performance of an obligation arising from a contract to give or to do something. For claims for damages, Article 3:310 of the Civil Code applies: five years after the injured party became aware of both the damage and the liable person, with an absolute period of twenty years after the event.

For periodic payments such as rent, lease, or interest, a term of five years per installment applies pursuant to Article 3:308 of the Dutch Civil Code. For consumer purchases, a term of two years applies pursuant to Article 7:23 of the Dutch Civil Code, calculated from the date of notification by the buyer of the alleged non-conformity. Anyone working with multiple types of claims must therefore determine which term applies to each claim.

How do you legally interrupt

Article 3:317, paragraph 1 of the Dutch Civil Code stipulates that the interruption of a claim for performance is effected by a written demand or notification in which the creditor unequivocally reserves his right to performance. That wording is crucial. A non-binding email stating that you “will respond to the invoice shortly” does not constitute a legally valid interruption. The Supreme Court has confirmed in settled case law that the notification must make it sufficiently clear that the creditor maintains his claim.

The letter or email must sufficiently specify the debt, contain a demand for payment or, in the alternative, expressly maintain the claim for performance, and be demonstrably received by the other party. Sending by registered mail or by email with a read receipt is therefore advisable. In the event of a dispute, the burden of proof regarding both content and receipt lies with the creditor.

After a valid interruption, a new limitation period begins to run for the same duration as the original (Article 3:319 paragraph 2 of the Dutch Civil Code), with a maximum of five years if the original period was longer. An interruption must therefore be repeated periodically as long as the claim remains outstanding.

Other ways of interruption

In addition to a written demand, the Dutch Civil Code provides for other grounds for interruption. Issuing a summons interrupts the limitation period pursuant to Article 3:316 of the Dutch Civil Code. Acknowledgment of the debt by the debtor also interrupts the limitation period, even implicitly through, for example, a partial payment or a payment arrangement. In the case of arbitration or mediation, specific rules apply that are laid down in the agreement or the regulations.

In practice, it is often forgotten that informal email communication in which the debtor acknowledges the debt also interrupts the limitation period. Anyone with an ongoing dispute would do well to carefully retain correspondence in which the counterparty acknowledges the principal amount or the basis of the claim.

When interruption is insufficient

Interruption extends the time limit but does not resolve the underlying problem. With persistently defaulting debtors, extending the statute of limitations is rarely the appropriate response. In such cases, litigation or attachment is the recommended course of action. Interruption is particularly useful for good customers experiencing temporary payment difficulties, during ongoing disputes regarding performance, or in claims for damages where the full picture of the damage is not yet crystal clear.

Follow-up action

Do you have old receivables on your balance sheet about which you doubt whether they are still collectible, or is a statute of limitations approaching? Our lawyers assess their legal validity and, where necessary, draft letters to interrupt the limitation period that will hold up in legal proceedings. A legally valid interruption is cheaper than a lost lawsuit.