Cross-Border Litigation, Limitation Periods & Overriding Mandatory Provisions

Are limitation periods "overriding mandatory provisions" within the meaning of both the Rome II and Rome I Regulations, so that a forum court can override a shorter limitation period in the applicable law selected under either Regulation?

This was the key question that arose in the European Court of Justice's important decision handed down today (31 January 2019) in Case C-149/18 da Silva Martins -v- Dekra Claims Services Portugal, a case which arose in the context of the Rome II Regulation but where the guidance given by the ECJ is equally applicable to the Rome I Regulation and indeed, the Rome Convention 1980. For a copy of the decision see here.

The facts

Da Silva Martins involved a simple every day road traffic accident. The Portuguese claimant had sued in Portugal for damages arising out of a road traffic accident which had occurred in Spain. There was only one problem: while the claim was within time under Portuguese law (where the relevant limitation period was 3 years), it was out of time under Spanish law which was the law applicable to the claim under Article 4(1) of the Rome II Regulation.

In such circumstances, to allow the claim to proceed and to defeat the limitation defence, could the Portuguese court declare its own limitation rules to be "overriding mandatory provisions" within Article 16 of the Rome II Regulation and effectively "overrule" the shorter Spanish limitation period?

The Court's Findings

The ECJ observed that:

1. Article 15(h) of the Rome II Regulation provides that the law applicable to a non-contractual obligation under that regulation is to govern, in particular, the rules of prescription and limitation. No other provision of EU law establishes specific requirements with regard to the limitation period for such actions.
2. However, Article 16 of the Rome II Regulation authorises the application of the provisions of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the non-contractual obligation.
3. Although the concept of 'overriding mandatory provisions' was not defined in the Rome II Regulation, Article 9(1) of the Rome I Regulation defined such provisions as those where the respect for which is regarded as crucial by a State for safeguarding its public interests, such as its political, social or economic organisation, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract under that regulation: (see e.g. Michael McParland "The Rome I Regulation on the Law Applicable to Contractual Obligations" (OUP 2015) (Chapter 15, paragraphs 15.02-15.91).
4. The requirement for consistency in the application of the Rome I and Rome II Regulations supports the harmonisation, wherever possible of the interpretation of the concepts used by those two regulations which are, in functional terms identical. This was so, even if different terminology was used in the different language versions.
5. As had been pointed out in relation to the Rome Convention (1980), the Court had declared such rules must be interpreted strictly. In that context, it was for the national court in the course of its assessment of whether the national law which it proposes to substitute for that expressly chosen by the parties to the contract is a 'mandatory rule', to take account not only of the exact terms of that law, but also of its general structure and of all the circumstances in which that law was adopted in order to determine whether it is mandatory in nature in so far as it appears that the legislature adopted it in order to protect an interest judged to be essential by the Member State concerned
6. By analogy, the ECJ considered that it must be held that, with regard to the possible identification of an 'overriding mandatory provision' within the meaning of Article 16 of the Rome II Regulation, a national court must find, on the basis of a detailed analysis of the wording, general scheme, objectives and the context in which that provision was adopted, that it is of such importance in the national legal order that it justifies a departure from the applicable law, designated pursuant to Article 4 of that regulation.
7. In those circumstances, as the European Commission had pointed out, the application to an action seeking compensation for damage resulting from an accident of a limitation period other than that laid down in the law designated as applicable would require:

8. Accordingly, the ECJ concluded the concept of an overriding mandatory provision for the purposes of Article 16 of the Rome II Regulation: