What do you need to know about the limitation period in the UAE?
Limitation period refers to the time period within which a claim has to be submitted before the rightful forum or court. When a claim is submitted before the limitation period closes, the same will be accepted by the courts, and in the case of the latter, it will be subject to further rules and, in most cases, such a claim can be rejected for exceeding the time limit prescribed by law. The limitation period can, in this sense, be better understood as a technical rule of qualification for a claim. There are many reasons for this rule of practice; one such rule is to ensure that a claim is being submitted for adjudication within a reasonable time period. Lack of this rule can, in other words, create a chaotic litigation system that wouldn’t serve the purpose of reasonableness or justice.
The limitation period is, however, much more than a simple rule referring to a specific time limit, and in fact, it cannot be summarized in a single rule. There exist different time limits applicable for different types of claims. Such rules will be discussed in this article, along with the supplementary conditions that are to be satisfied when ascertaining the applicable time limits.
Limitation period applicable for various types of claims:
As we discussed, there are different time limits or limitation periods that apply to different types of matters. For instance, the limitation period that applies to a contractual claim would be different than what applies to an employment dispute claim.
- General Contracts: Generally, for contractual claims, the limitation period is set to run for fifteen years and lapses upon reaching this time period when there does not exists any valid legal excuse for further extension in time (Article 473).
- Commercial Contracts: The above limitation of fifteen years runs for general contracts, while for commercial contracts, the limitation period is limited to ten years instead of fifteen.
Construction Contracts: For construction contracts, the period of limitation runs for ten years or longer, if so, agreed between the parties, and for this time period, both the architect and the contractor remain liable for defects that can endanger the solidity or security of the building (Article 880).
Contract for sale of goods: When a matter concerns the sale of goods or a claim for terminating a contract of sale of goods or reducing the price for the goods etc. the general norm is that the limitation period shall run for one year from the date of delivery of the goods (Article 524).
- Employment Disputes: For employment disputes, pursuant to the latest changes introduced by the ‘ministerial decision no. 47/2022 on regulating labour disputes and complaints procedures’, either the employee or the employer may submit a labour complaint within thirty days of any breach of the obligations of either of them towards the other as stated in the employment contract or as per the employment law and its executive regulations.
Other Rules concerning limitation period:
As we discussed earlier, the limitation period is much more than a few simple rules referring to the time limit and include amongst others the following rules in its application:
- The limitation period shall run only from the day on which the debt has become due or from the day on which the claim conditions have been realized (Article 478).
- Further, the period of limitation is calculated in days, with the first day not being counted. The time limitation shall end on the last date of the prescribed limit; however, if the said date is an official holiday, then the time limit shall be extended to the following day (Article 480).
- The limitation period can be interrupted in between whenever there exists a lawful excuse to gain such exemption and, thereby, the period for which such lawful excuse runs could be exempted from the overall time limit applicable (Article 481(1)). Similarly, the limitation period also gets interrupted upon the institution of a court claim or any legal proceedings instituted by the creditor claiming his right (Article 484). The limitation period can also be considered to have been interrupted when there is an express or tacit admission of the right by the debtor (Article 483). Further, whenever the time period of limitation gets interrupted pursuant to Article 485 (1), a new prescription period shall commence, which shall have the same duration as that of the former one.
- It is also not permissible for parties to agree upon the term for limitation other than what has been fixed by the law (Article 487).
The limitation period constitutes a crucial technical ground for the admissibility of a claim. However, that said, the parties can still make submissions explaining the delay in the submission of a claim when lawful excuses exist. In such instances, the court would decide the justification of such lawful excuse, and the admissibility of the claim pursuant to the rules governing limitation shall be subject to preliminary adjudication. It is critical to gain a thorough understanding of the rules governing limitations in order to avoid potential losses in the future.