The importance of complying with time-bar provisions cannot be overstated, as the English Commercial Court’s recent decision in Arab Lawyers Network Company Ltd v Thomson Reuters (Professional) UK Ltd¹ makes clear. The decision, which highlights the importance of considering the effect of time-bar clauses carefully in order to avoid being prevented from bringing claims in the future, will be of interest to all commercial parties, including those contracting under the NEC suite of documents, who must give a notice of dissatisfaction to challenge an adjudicator’s decision and notice of a compensation event within very tight timeframes.
The claimant, Arab Lawyers Network Company Ltd and the defendant, Thomson Reuters (Professional) UK Ltd, entered into an agreement relating to the publication of legal resources for which the defendant undertook to pay the claimant an agreed royalty. The agreement contained a time-bar clause that read:
“No claim…which in any way arises out of this Agreement or the parties’ performance of this Agreement may be made, nor action based upon such a claim brought, by either party more than one year after the basis for the claim becomes known to the party desiring to assert it”.
However, a dispute arose between the parties, leading to the termination of the agreement on 1 February 2015. Eventually, on 13 June 2017, the claimant brought proceedings for:
i. non-payment of the agreed royalty (the “agreed royalty claim”); and
ii. the defendant’s continued use of their publications after termination (the “continued use claim”).
However, the defendant sought summary judgment on the basis that the claims had been brought too late and were therefore time-barred.
The judge set out several key principles concerning the interpretation of time-bar clauses:
i. Time-bar clauses operate similarly to exclusion clauses, restricting a party’s entitlement to exercise a right that would otherwise exist, namely the right to bring a claim within any statutory limitation period. As such, applying the principles applicable to contractual interpretation, where a clause is ambiguous the courts generally take the view that it is unlikely that a party would surrender such rights without using clear wording to that effect. In the event that a time-bar clause is ambiguous, the courts will therefore usually adopt an interpretation that is favourable to the claimant. However, this principle is only relevant where the clause is genuinely ambiguous when due regard is given to the language, purpose, contextual background and place of the relevant provision within the contract as a whole, not just if the language used is simply capable of two or more meanings.