Convention on the Limitation Period in the International Sale of Goods
Date of adoption: 14 June 1974
Date of adoption of amending protocol: 11 April 1980
Entry into force: 1 August 1988
The Limitation Convention establishes uniform rules governing the period of time within which a party under a contract for the international sale of goods must commence legal proceedings against another party to assert a claim arising from the contract or relating to its breach, termination or validity. By doing so, it brings clarity and predictability to an aspect of great importance for the adjudication of the claim.
Why is it relevant?
Most legal systems limit or prescribe a claim from being asserted after the lapse of a specified period of time to prevent the institution of legal proceedings at such a late date that the evidence relating to the claim is likely to be unreliable or lost and to protect against the uncertainty that would result if a party were to remain exposed to unasserted claims for an extensive period of time. However, numerous disparities exist among legal systems with respect to the conceptual basis for doing so, resulting in significant variations in the length of the limitation period and in the rules governing the claims after that period. Those differences may create difficulties in the enforcement of claims arising from international sales transactions. In response to those difficulties, the Limitation Convention was prepared and adopted in 1974. The Limitation Convention was further amended by a Protocol adopted in 1980 in order to harmonize its text with that of the United Convention on Contracts for the International Sale of Goods (CISG), in particular, with regard to the scope of application and admissible declarations. Indeed, the Limitation Convention may be functionally seen as a part of the CISG and, as such, considered as an important step towards a comprehensive standardization of international sales law.
The Limitation Convention applies to contracts for the sale of goods between parties whose places of business are in different States if both of those States are Contracting States or when the rules of private international law lead to the application to the contract of sale of goods of the law of a Contracting State. It may also apply by virtue of the parties' choice.
The limitation period is set at four years (art. 8). Subject to certain conditions, that period may be extended to a maximum of ten years (art. 23). Furthermore, the Limitation Convention also regulates certain questions pertaining to the effect of commencing proceedings in a Contracting State.
The Limitation Convention further provides rules on the cessation and extension of the limitation period. The period ceases when the claimant commences judicial or arbitral proceedings or when it asserts claims in an existing process. If the proceedings end without a binding decision on the merits, it is deemed that the limitation period continued to run during the proceedings. However, if the period has expired during the proceedings or has less than one year to run, the claimant is granted an additional year to commence new proceedings (art. 17).
No claim shall be recognized or enforced in legal proceedings commenced after the expiration of the limitation period (art. 25(1)). Such expiration is not to be taken into consideration unless invoked by parties to the proceedings (art. 24); however, States may lodge a declaration allowing for courts to take into account the expiration of the limitation period on their own initiative (art. 36). Otherwise, the only exception to the rule barring recognition and enforcement occurs when the party raises its claim as a defence to or set-off against a claim asserted by the other party (art. 25(2)).
Relation to private international law and existing domestic law
The Limitation Convention applies only to international transactions and avoids the recourse to rules of private international law for those contracts falling under its scope of application. International contracts falling outside the scope of application of the Limitation Convention, as well as contracts subject to a valid choice of other law, would not be affected by the Limitation Convention. Purely domestic sales contracts are not affected by the Limitation Convention and are regulated by domestic law.
Becoming a party to the Convention has no financial implications for the Contracting States. Moreover, its administration at the domestic level does not require a dedicated body and does not involve any reporting obligations.
The Limitation Convention is accompanied by an explanatory note.