• ICAR


- By Aachman Shekhar

Keywords: law of limitation, applicable law, international arbitration

One of the most important components of any developed legal system is its Law of Limitation. In the words of the U.S. Supreme Court, statutes of limitation “are approved in all systems of enlightened jurisprudence. They promote repose by giving security and stability to human affairs. An important public policy lies at their foundation. They stimulate activity and punish negligence…”[1] Accordingly, important policy considerations underly any application of limitation laws; respondents are protected from stale claims, claimants are exhorted to be expeditious and finality is promoted. Despite the widespread recognition of their fundamental role, there is no international uniformity in the rules governing limitation periods, with different States adopting differing standards of treatment for the same. [2]

It is the settled position of Private International Law that a forum applies its own law to determine procedural rules and the law governing the contract to determine substantive issues. [3] However, a major problem with the application of this principle to limitation law has arisen in international commerce because some States classify it as a procedural issue, notably common law jurisdictions such as the UK and India, while others classify it as a substantive issue. [4] This problem is compounded in the international arbitration regime given the large number of laws that have to be taken into account, such as the lex arbitri, laws of the seat of arbitration, governing law of the contract, laws applicable to the arbitration agreement, laws of the place of enforcement and provisions of the New York Convention. This issue of classification not only affects the rights of the parties but can also have a huge impact on the scope of the tribunal’s power to determine this issue since arbitration statutes distinguish between the tribunal’s authority to determine procedural issues (usually, discretionary) and its authority to determine substantive issues (usually, tribunals are required to take out a conflict of laws analysis to determine the applicable law).

In light of this, there seems to have emerged an international consensus that limitation should be treated as a substantive issue, and consequently should be governed by the law applicable to the contract. Numerous States, including England, Singapore, Australia and Canada, have made the requisite legislative changes to import this position into their law. [5] This position has also been viewed favorably by both academic commentaries and arbitral tribunals. [6] Advocates of this position highlight that classifying limitation law as a substantive issue leads to it getting tied-up with one system of law which prevents any kind of forum shopping, a problem which is pervasive in regimes that classify limitation law as a procedural issue. Moreover, it is generally believed that applying the rules of limitation of the law governing the contract is in line with the expectations of the parties to the contract. [7]

This is supplemented by States shifting from the traditional ‘rules-based classification’, where the classification of the limitation laws depends entirely on its precise wording and whether that wording extinguishes the right or merely bars the remedy, to an ‘issue-based classification’ approach, where the issue of limitation is classified as either substantive or procedural (usually substantive, as demonstrated above), irrespective of the precise wording of the statute of limitation involved. This has solved the dual problems of an artificial distinction between rights and remedies and a possibility for application of multiple laws to the same issue pervasive in the ‘rules-based classification’ approach and has consequently led to greater predictability in the domain of litigation.

However, this ‘issue-based classification’ approach does little good in the context of international commercial arbitration. This is because of three major reasons. First, no guidance is provided to the tribunal to handle situations where the parties have selected a governing law that does not have any reference to limitation. For instance, the parties may select the United Nations Convention on Contracts for the International Sale of Goods [“CISG”] to be the governing law, which does not contain any provisions on limitation. On top of that, no gap-filling mechanisms can be used either because its drafters never intended CISG to govern limitation periods. [8] Second, a similar situation can arise if the parties select ‘general principles of law’ to be the governing law. Given the variations in the limitation regimes of various countries, it is almost impossible to determine a “general” principle of limitation law. It can be argued that the UNIDROIT Principles represent the general principles of law, including those relating to limitation. However, the Third World Approaches to International Law (TWAIL) line of argumentation can be effectively used to discredit the representative nature of the UNIDROIT Principles, considering that they were drafted by a handful of primarily European scholars. This will force the tribunal to resort to a conflict of laws analysis to determine the appropriate limitation law. Therefore, treating limitation as a substantive issue does not necessarily obviate the need for a conflict of laws analysis. While domestic courts have well-established rules of private international law, tribunals are not bound to apply any one particular system of private international law and might have to undertake a “conflict of conflict of laws” analysis on top of the conflict of laws analysis. [9]

Third, Article III of the New York Convention provides that, “each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon”. [10] Accordingly, States are required to recognize and enforce arbitral awards under their own rules of procedure. Such rules would logically include the relevant limitation law of the particular State, which means that the States will impose their limitation period for the said recognition/enforcement. Hence, the effect of a blanket categorization of limitation as a substantive issue is still not entirely clear, as was highlighted by the Supreme Court of Canada in Yugraneft Corp v. Rexx Management Corp where the court adopted an independent procedural classification for the sake of Article III. [12] The question then is would other national courts also impose a limitation period as a procedural rule under Article III, even though the relevant limitation law itself treats it as a substantive issue?

Therefore, a substantive classification of limitation does not by itself relieve the tribunals from the burden of undertaking a conflict of laws analysis (and sometimes, conflict of conflict of analysis too), which is both expensive and time-consuming.

What then is the way forward? I submit that eschewing the traditional model of classification and giving the tribunal discretion over the determination of the relevant limitation regime is the best way to resolve the problems associated with limitation in international arbitration. In doing so, the tribunals can be required to take into consideration relevant factors such as the intentions of the parties and considerations of fairness. This discretionary power will, in most cases, lead to the application of the limitation regime of the governing law of the contract. Moreover, this will also take care of situations where the governing law does not provide adequate or fair answers. Taking parties’ intentions will also promote the broad objectives of predictability and certainty within the regime.

This is not a novel concept, with several States having express provisions allowing the court to take into consideration whether the application of a specific rule of limitation might be against public policy or might cause undue hardship to either party. [13]

This makes the process of determination of the limitation period both simple and non-controversial since it is in line with the practice of granting tribunals the discretion to determine various aspects of the arbitral process, such as the seat of the arbitration and the governing law when there is no prior agreement between the parties. Further, any abuse of discretion can be taken care of at the setting aside or enforcement stage.

For these reasons, arbitral tribunals should be granted the discretion to decide the applicable law of limitation for the given dispute. At the national level, this can be done by inserting specific provisions to this effect in the relevant arbitration legislations. At the international level, a provision can be inserted in the UNICTRAL Model Law to encourage such a change.

Aachman Shekhar is a penultimate year law student, studying at the prestigious NALSAR University of Law, Hyderabad. He is the convenor of the Alternative Dispute Resolution Cell of his college.

Preferred Method of Citation – Aachman Shekhar, ‘Determining the Applicable Law of Limitation in International Arbitration: Identifying Key Issues and Attempting to Resolve Them’ (ICAR, 6 November 2020) <>.


[1] Wood v. Carpenter, 101 U.S. 135, 139 (1879).

[2] Gary B. Born, International Commercial Arbitration (Kluwer Arbitration, 2ed. 2014), 2669, 3727 (hereinafter as BORN).

[3] James J. Fawcett & Janine M. Carruthers et. al., North & Fawcett: Private International Law (14th Ed. 2008) 75; Luther L. Mcdougal Iii et al., American Conflicts Law (5th Ed. 2001) 403.

[4] Huber v. Steiner [1835] All ER 159; McKain v. R.W. Miller & Co. (S.A.) Pty. Ltd. (1991) 174 CLR 1, 41 (Austl.); Law Commission of India, Report No. 193, Transnational Litigation-Conflict of Laws of Limitation, 20 (2005).

[5] England Arbitration Act 1996, S. 13; Foreign Limitation Periods Act 1984, c. 16, § 1 (Eng.); Limitation Act 1950, § 28C(1) (N.Z.); Tolofson v. Jensen, [1994] (3) S.C.R. 1022 (Can.).

[6] BORN at 2669; DANIEL HUSER, ‘Determining the Relevant Limitation Period for International Sales Contracts Before International Arbitral Tribunals’, 33(4) ASA BULLETIN, 839 (2015); Case No. 16247, Final Award, ICC Bull. No. 1, 2016 (ICC Int‟l Ct. Arb); Case No. 12700 of 2004, Final Award (ICC Int‟l Ct. Arb).

[7] BORN at 2670.

[8] Ingeborg Schwenzer & Simon Manner, The Claim Is Time-Barred’: The Proper Limitation Regime for International Sales Contracts in International Commercial Arbitration’, 23 ARB. INT‟L 293, 298 (2007), at 293, 302.

[9] FILIP DE LY, ‘Conflicts of Law in International Arbitration- An Overview’, in Franco Ferrari & Kroll Stefan, Conflict of Laws In International Arbitration (2010), at 3.

[10] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, Article III.

[11] BORN at 3727.

[12] Yugraneft Corporation. v. Rexx Management Corporation, [2010] S.C.R. 16 (Can.).

[13] See The Arbitration and Conciliation Act, No. 26 of 1996, §§ 20, 28 (India), which permits the tribunal to determine, respectively, the seat of the arbitration and the law applicable to the merits of the dispute, in the absence of party consensus.

The views and opinions expressed in the article are those of the author(s) solely and do not reflect the official position of the institution(s) with which the author(s) is /are affiliated. Further, the statements of the author(s) produced herein should not be construed as legal advice.


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