On 21.11.2024 the General Assembly of the Civil and Commercial Chambers of the Supreme Cassation Court (“SCC”) adopted Interpretative Ruling No. 3/2023, which settled in a definitive and decisive manner a controversial issue, brought also to the attention of the public, concerning loan agreements.

The question, that has been ambiguously resolved in the case law so far is the following - in the case of an agreed repayment in instalments of a monetary debt (i.e. with a repayment plan), when does the statute of limitations for the principal and the remuneration interest starts to run – as of the maturity date for each individual instalment or as of the final maturity of the entire debt?

The Interpretive Ruling comes in response to an isolated ruling of SCC from 2022. The latter justifies the position that the statute of limitations for all instalments of the repayment plan begins to run only when the deadline for repayment of the entire loan occurs. In other words, according to the cited previous ruling of SCC, the statute of limitations does not run at all (for any of the instalments of the loan) until the last instalment of the repayment plan matures or until the loan has been accelerated (i.e. declared prepayable by the creditor) due to the debtor’s misconduct.

In the ruling issued earlier this month, the SCC finally brought clarity and legal certainty to the matter and unanimously upheld the view taken in the prevailing case law, namely that: when the repayment of a monetary debt is agreed in separate instalments with different maturity dates (even if it is not a periodic receivable, but a uniform debt that is repaid in parts due to the parties’ agreement), the statute of limitations for each individual instalment begins to run as of the moment of its respective maturity date.  

Respectively, if the loan is accelerated prematurely by the creditor, the statute of limitations for the instalments that have not become due yet, shall start to run namely from the acceleration date.  

The quoted ruling is based on arguments related to the essence and purpose of the statute of limitations, according to the material law and the interpretative practice of SCC, and the common legal and life logic.

Accepting the opposite understanding would lead to a number of absurd scenarios, as the reasoning of the SCC sets out. Such are, for example: 1) Disregarding the consent of the parties to have different maturity dates of each of the instalments under the agreement; 2) Permitting a situation where the creditor can seek enforcement on the due instalment of the repayment plan and charge interest on it, but at the same time the debtor cannot benefit from the statute of limitations, in case of creditor’s lack of action (this would substantially disturb the balance in the contractual relationship between the parties); 3) Seeking enforcement of an unpaid instalment decades after the due date (for instance, more than thirty years, if the repayment plan is of significant duration in time); 4) In the event of a default in the repayment of agreed instalments, the commencement of the statute of limitations for these instalments will depend solely on the creditor’s will, based on his decision to either accelerate the loan or refrain from any action; 5) The lodging of a claim before a court for the instalment in question will not have the effect of suspending or interrupting the statute of limitations, since it would not have begun to run at all, notwithstanding that the claim will be accepted as valid and grounded by the court.

We consider the ruling to be strongly positive in direction of achieving the necessary better legal and economic balance in the contractual relationship between lenders and borrowers.