Resolution of Economic Disputes: litigation
Resolution of Economic Disputes: litigation
III. Statute of Limitations
1. Concept of statute of limitations
Statute of limitations refers to the system whereby the right of an obligee will not be protected by law if the claim is not exercised within the statutory period. According to the General Principles of the Civil Law of the PRC (hereinafter referred to as the "General Principles of the Civil Law"), The statute of limitations in the PRC has the following characteristics: ① The statute of limitations is conditional on the fact that the obligee fails to exercise their statutory rights. ② Upon the expiry of the statute of limitations, the right to win the case, rather than the substantive right, is extinguished. After the expiration of the statute of limitations, the obligor's voluntary fulfillment of their obligations is not subject to the statute of limitations. Provided, however, that if the obligor reneges on the ground of expiry of the statute of limitations after fulfilling their obligations, such a claim will not be sustained. ③ The statute of limitations is universal and mandatory, and the parties shall apply it generally without making any changes, unless otherwise provided by law.
2. Concept and types of statute of limitations
The statute of limitations refers to the statutory period during which an obligee may file a claim to the people's court for protecting their civil rights. According to the General Principles of Civil Law, the statute of limitations shall be counted from the date when an obligee knows or should have known that their rights had been infringed upon. However, if more than 20 years have passed since the right was infringed, the people's court will not protect it. The people's court may extend the statute of limitations under special circumstances.
The statute of limitations for litigation is statutory, and can be divided into the following two types according to the different provisions of the law on the statute of limitations: ① General statute of limitations. It refers to the universally applicable statute of limitations stipulated by civil common law. According to the General Principles of Civil Law, the general statute of limitations is 2 years. ② Special statute of limitations. It refers to the statute of limitations stipulated by civil common law or special law, which applies only to specific civil legal relationships. For example, the General Principles of the Civil Law states that the statute of limitations shall be one year in case of a claim for compensation for bodily injury, sales of substandard goods without declaration, delay or refusal to pay rent, or loss or damage of bailed property. According to Article 129 of the Contract Law, a dispute arising from an international contract for sales of goods or technology import and export contract shall be referred to litigation or arbitration within four years, counting from the day when the party knows or should have known that their rights had been infringed upon.
3. Suspension, interruption, and extension of statute of limitations
The suspension of the statute of limitations refers to the system whereby the counting of the statute of limitations is temporarily suspended, with the previously passed statute of limitations still valid, due to the occurrence of certain statutory reasons that prevent the obligee from exercising their right to claim, and continues to be counted after the reasons that hinder the statute of limitations disappear. The reasons that hinder the statute of limitations refer to force majeure and other obstacles. Other obstacles refer to the objective circumstances, other than force majeure, that prevent the obligee from exercising their right of claim. For example, if a person without or with limited civil capacity for civil acts whose rights have been infringed upon has no legal representative, or the legal representative dies, or the legal representative has lost his capacity, it may be deemed an obstacle preventing the person from exercising the right of claim. According to the General Principles of the Civil Law, the statute of limitations may only be suspended if any such statutory reason occurs within the last six months of the statute of limitations. If such a statutory reason occurs before the last 6 months of the statute of limitations and has been eliminated by the beginning of the last six months, the counting of the statute of limitations shall not be suspended. But if the statutory cause continues to exist in the last 6 months, the counting of the statute of limitations shall be suspended from the beginning of the last 6 months until the obstacle is eliminated.
The interruption of statute of limitations refers to the system whereby the counting of the statute of limitations is terminated, with the previously passed statute of limitations invalidated, due to the occurrence of certain statutory reasons, and is restarted after the reasons for interruption disappear. According to the General Principles of the Civil Law, the counting of the statute of limitations is interrupted if: ① the obligee brings a lawsuit; ② the obligee requests the obligor to perform their obligations; or ③ the obligor agrees to perform their obligations;
The extension of the statute of limitations refers to system whereby the people's court may extend the statute of limitations that has expired under special circumstances. Special circumstances refer to the situations where the obligee is unable to exercise the right of claim during the statutory statute of limitations due to objective obstacles, and are specifically determined by the people's court. This is a discretionary power granted to judicial organs by law.
Robert Zhang 
Steve Li 