The Commission said that in the international sphere where a contract is entered into or any other kind of legal obligations arises in a foreign country and the judicial remedies are resorted to in another country, the distinction as to whether the law of limitation is `procedural' or `substantive' becomes important.

G. Srinivasan

New Delhi, Jan. 3

THE Law Commission has proposed some important amendments to the Limitation Act, 1963, taking due cognisance of expansion of India's international trade and liberalisation in the economic policies.

The proposed amendments to the Act recognise the fact that a very key aspect of the law governing disputes arising in transnational litigation is about the applicability of the law of limitation and the choice of law.

In its latest report titled "Transnational Litigation Conflict of Laws Law of Limitation," tabled in Parliament recently, the Commission said that in the international sphere where a contract is entered into or any other kind of legal obligations arises in a foreign country and the judicial remedies are resorted to in another country, the distinction as to whether the law of limitation is `procedural' or `substantive' becomes important.

Explaining this position, the Chairman of the Law Commission, Mr Justice M. Jagannadha Rao, said that if the period of limitation applicable for vindicating a right in a foreign country is substantive and the foreign party files an action in India, the

lex fori

will apply to the `procedure' in India while the substantive rights will be governed by the substantive law of the foreign country in relation to that right.

In as much as Indian law treats the law of limitation as procedural, the foreign party can, in case the judicial remedy has become barred in the foreign country, file an action in India, if the period of limitation is longer in India than in the foreign country. The only exception as contained in Section 11 of the Limitation Act 1963 where the Indian courts can refuse relief is where the foreign law has extinguished the contract and in addition all the parties were domiciled in the foreign country during the relevant period.

If the law of limitation remains `procedural' as in India, it gives scope for `forum shopping' and that is why over the period of 50 years, leading writers on Private International Law highlighted the advantages that would accrue if the foreign law of limitation is treated as substantive, for then the foreign limitation period will apply even if an action is filed in another country. Forum shopping would stop.

Stating that the extant Sec. 11 deals only with the law of limitation concerning contracts entered into abroad and even as leading authors in India have said that the Act must provide rules of limitation for all other obligations arising abroad, such as those arising under torts, the Law Commission said that it has "accepted this suggestion."

Again the Indian law in its sole exception, says under Sec. 11(2) that if the foreign `contract gets extinguished' under the foreign law, and all parties are domiciled in the foreign country during the relevant period, the Indian Courts will not grant relief to the foreigner who files his suit here. Indian commentators have said that the requirement of domicile abroad is an anachronism and should be deleted.

"We have accepted this suggestion also," the Commission said, subject to the provisions of ss 4 to 24 of the Indian Limitation Act.

As for the execution of foreign decrees is concerned, in India, the principle underlying sec 11 has been applied as there is no specific section or article dealing with the subject.

Hence a separate section is being introduced as Sec. 11A which will apply the principles underlying Sec. 11 (i.e., ss 4 to 12 too) and a new Art 136A is being proposed to be introduced under which in respect of execution of foreign decrees (i.e., decrees passed by superior courts in `reciprocating territories' as stated in sec 44A of Code of Civil Procedure, 1908), the period of limitation as stated in the foreign law for execution of its domestic decrees will apply in India and the commencement of the period will be the date of filing a certified copy thereof in the District Court.

As far as decrees passed within Jammu & Kashmir are concerned, the subject is covered by sec 43 of the Code of Civil Procedure, 1908 according to decided cases and "we do not propose to disturb that position".

The Commission said that it has taken care to see that the proposed changes are prospective in the sense that the proposed sec 11, which applies to suits filed in India in respect of causes of action arising in the State of J& K or in any foreign country, will not apply to causes of action which would have arisen before the date of commencement of the proposed amending Act.

(This article was published in the Business Line print edition dated January 4, 2006)
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