22.12.2016 Interruption of limitation in banking law

The law firm JURIS’prudence has recently represented a client from Luxemburg in a litigation against a debt collection company who had acquired a claim against the Luxemburg client from a bank in bankruptcy. The Luxemburg client argued that no reminder whatsoever had been addressed to him from the bank for a period of more than 10 years and that as a consequence the claim had been time-barred according to the Limitation Act and no longer existed. At the time of filing the legal action against the Luxemburg debtor limitation was 10 years for this kind of claims. The debt collection company had presented as proof of interruption copies of reminder letters that should have been sent to the debtor in Luxemburg by normal post 9 years earliere and which would have interrupted the duration of limitation. The Luxemburg debtor denied having received any of these letters.

The question that was presented to the Danish courts was whether the reminder letters could be considered sufficient proof of an interruption of the duration of limitation or whether the claim had been time-barred before the legal action against the Luxemburg client.

The court of first instance ruled in favor of the debt collection company as this court found that the company had lifted the burden of proof by presenting copies of letters which had allegedly been sent to the Luxemburg debtor approximately 9 years and 10 months before the lawsuit.

The Appeal Court however ruled in favor of the Luxemburg client and rejected the company’s claim. The Appeal Court stressed that the burden of proof for the sending og receiving of the reminder letters lies with the creditor and in absence of other elements than the copies (receipts, witness statements, client files notes etc…) it was not possible to establish with certainty that the letters in question had actually been sent AND in particular been received by the debtor.

The decision is interesting because the Appeal Court takes a postition on the requirements needed to lift the burden of proof. In our view, the decision is in line with recent Supreme Court jurisprudence on the issue. This leading jurisprudence has come after a reform of the Limitation Act which reduced the duration of limitation from 20 to 10 years for this kind of claim and reinforced the rules on interruption. Today a creditor must take legal action to interrupt the duration of limitation if the debtor has not acknowledged the debt.

The debt collection company has filed a request to obtain authorization to bring the case before the Supreme Court. The decision regarding authorization should normally come in January 2017.