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universul juridic magazin

The limitation and fidic dispute settlement procedures (1999) under the romanian private law

One of the most delicate issues, especially in the case of contractor agreements with foreign origin element, having as a model FIDIC contracts but subject to Romanian law, is related to the incidence of limitation for the actions derived from these contracts, given that in compliance with Decree no. 167/1958, the rules on prescription are considered imperative, of public policy, in contradistinction to the New Civil Code system, effective since October 1st, 2011, where the limitation, although of public interest, is governed by mainly non-mandatory, private policy rules.

In general, under the system of Decree no. 167/1958, the limitation within the actions derived from the General Conditions of FIDIC Contracts (1999) involves serious problems that may still be overcome through systematic interpretation of the legal provisions and taking into account the specifics and purpose of the mandatory pre-arbitral contractual procedures, which either adjourn or determine the birth of the right of action and, therefore, the beginning of the prescription course – the Engineering notice procedure (Sub-Clause 20.1) and possibly DAB procedure (Disputes Adjudication Board) (Sub-Clause 20.1-20.4) –, either defers the prescription course – the conciliation / settlement procedure prior to referral to the arbitral tribunal (Sub-Clause 20.5) – or, finally, calls off the prescription course of the right to the arbitral (or judicial) proceedings, of course, as far as DAB procedure is, for the above-indicated reasons, a genuine pre-arbitral jurisdiction procedure, so as starting this procedure must be also effective in terms of negative prescription.

Hence, without losing sight of the fact that, as for international contracts, where one party is a foreign natural or legal person, the provisions of Decree no.167/1958, although binding in national law, no longer bear the character of public policy provisions, so that their enforcement should be carried out taking into account both the nature and specifics of the contractual relations with foreign origin element, as well as the contracting parties’ interests, including the indispensability of possible procedures of alternative contractual dispute settlement.

Instead, under the system of the New Civil Code, the provisions on prescription mainly have a non-mandatory character. Consequently, the parties may waive these provisions by developing, in many respects, the limitation regime, both in terms of the beginning of prescription, as well as in terms of its suspension or adjournment (Article 2.515). For example, in terms of FIDIC Contracts (1999) it may be established that pre-arbitral contractual procedures have or produce different effects in terms of limitation, namely they may postpone the beginning of prescription – especially for the Engineering notice procedure (Sub-Clause 20.1) – or may suspend the prescription course – for the amicable dispute settlement procedure (Sub-Clause 20.5). Furthermore, as far as the DAB procedure is concerned, it may be designed either as a suspensive condition to exercising the right of action, resulting in the postponement of the beginning of prescription, or as a suspensive pre-arbitral procedure of the prescription course or rather, given its jurisdictional character, as a procedure with interruptive character of the prescription course of the right to the arbitral (or judicial) proceedings.

Of course, in default of an agreement relating to prescription, the NCC provisions are enforced, relating to the beginning, suspension and interruption of prescription in the light of which it may be argued that, in principle, in default of the Engineering notice procedure and, therefore, in default of a dispute, the prescription fails to take effect (Article 2.523) and, if it is acknowledged that DAB procedure is a prerequisite for exercising the arbitral (or judicial) proceeding, then the beginning of prescription is also conditioned by the execution of this procedure (Article 2.524 par. 3). Furthermore, the existence of a previous mandatory procedure of amicable settlement of the dispute is a ground for suspending the prescription course (Article 2.532 section 7).

Finally, since in our opinion, the DAB procedure, unless it can be considered an exercise condition of the arbitral (or judicial) proceedings, it meets the characteristics of a genuine jurisdictional procedure, so that such procedure should have stronger effects on the prescription course bringing about the interruption of the prescription course (Article 2.537 Section 2).