Unusual ways to interrupt the limitation period

Below you will read about various legal instruments that a creditor may use to interrupt the limitation period. 

In Polish civil law, the limitation period for a claim may be interrupted as a result of actions taken by the creditor (Article 123(1)(1) of the Civil Code) or as a result of acknowledgement of the claim by the debtor (Article 123(1)(2) of the Civil Code). Creditor’s actions to stop the limitation period from running include, but are not limited to, bringing an action, putting his claim on the list of claims or taking the other party to arbitration if the claim has been submitted to an arbitration court. In turn, the debtor may acknowledge the claim by means of proper acknowledgement (e.g. concluding an agreement with the creditor in which the debtor confirms the claim) or improper acknowledgement (uznanie niewłaściwe). 

In this article, we will answer the questions – when, who and under what conditions such improper acknowledgement is effected? We will also provide examples of actions that are most often classified as improper acknowledgement of a claim, as well as controversial cases.

The prevailing view presented in legal commentaries today is that improper acknowledgement is a declaration made by the debtor that he knows about the claim made against him. Such acknowledgement classified as a declaration of knowledge rather than a declaration of intent makes the requirements for the qualification of persons who make such a declaration somewhat less stringent than for a declaration of intent. Moreover, the circle of people who can make declarations of acknowledgement of debt on behalf of legal persons is wider. It is also assumed that a debtor acknowledging debt does not have to intend to interrupt the limitation period, and to make such acknowledgement effective, it is sufficient to establish post factum that such a declaration might have given the creditor a reasonable belief that the debtor intended to satisfy the claim. It is emphasised that the creditor generally does not have to be the direct addressee of the debtor's acknowledgement declaration. It is sufficient that he is aware of the debtor's declaration made in accordance with his will. 

The most common examples of improper acknowledgement are: payment of interest on the principal amount, a request to the creditor to postpone the payment deadline, to forgive debt or to split it into instalments. 

Although most studies and commentaries on Article 123 of the Civil Code point to partial payment of a claim as one of the classic examples of improper acknowledgement, not every partial payment will have the effect of acknowledgement. It should be emphasised that, since acknowledgement is a declaration of knowledge and may be made through implied actions of the debtor – the debtor acknowledging the debt is not required to specify its exact amount or legal basis. Accordingly, in the typical case where the creditor holds a single debt from the debtor, partial payment of that debt (without additional stipulations) will constitute an acknowledgement of the entire debt and will interrupt the limitation period for the debt in its full amount. However, if the debtor states that he believes that his partial payment of the debt satisfies the full amount of the debt, because he disputes its existence in the remaining amount – the limitation period for the remaining amount will not be interrupted, as the creditor cannot be considered to have expected the satisfaction of the remaining part of the claim. 

According to the Supreme Court’s judgment of 7 March 2003, file no. I CKN 11/01, where a debtor has several debts to the creditor, as they are in regular business relations, partial payment of one of them, without specifying which debt should be satisfied, is not an acknowledgement of any of them, as it is not possible to identify the claim the debtor acknowledges as existing against him. 

In its judgment of 11 August 2011, file no. I CSK 703/10, the Supreme Court concludes that a declaration made by one member of the company's management board saying that he or she is willing to pay debt in instalments qualifies as improper acknowledgement of the debt, even though the company uses joint representation. The Supreme Court explains that improper acknowledgement is a declaration of the debtor's knowledge, i.e. confirmation of the debtor's awareness of its debt, and the awareness of one of the members of the management board as the body in charge of the company's affairs is sufficient.

In another case, the Court of Appeal in Cracow (judgment of 24 September 2018 – I ACa 1453/17) found that irregular payments of amounts lower than those agreed in the loan agreement between the party and the bank could not give rise to a reasonable belief on the part of the bank that the obligation would be satisfied in full. Consequently, the Supreme Court held that those payments did not qualify as improper acknowledgement of the debt.   

To sum up, in most cases, a partial payment of the claim will give grounds to assume that the limitation period has been interrupted for the entire obligation, but there are also rarer situations in which such a conclusion will be unfounded. 

Confirming balances with business partners is an obligation of business entities under the Accounting Act. Its purpose is to have the amount of existing debt or receivables confirmed by the business partner. In judicial decisions, the issue of whether a balance confirmation can be considered an improper acknowledgement of debt has existed for almost thirty years and the view on this issue has evolved a lot over the years.

According to older case law, a balance confirmation sent to a business partner might be treated as improper acknowledgement of debt provided that it was signed by persons authorised to represent the entity (Supreme Court’s judgment of 26 April 1995 – III CZP 39/95). By adopting this view, the Supreme Court treated the balance confirmation the same as other actions taken by the management board on behalf of the company. As a result, the balance confirmation signed by the chief accountant (which is the most common practice) had no value for the company's business partner as he could not derive any legal rights from it. 

However, the Supreme Court has now abandoned its strict approach and current case law states that a balance confirmation issued by an authorised accountant is sufficient to assume that the debt has been acknowledged by the company (Supreme Court's judgment of 10 November 2020 – V CSK 628/18). It is assumed that the declaration of knowledge is merely a confirmation of the company's awareness of its liabilities and that its employees are entitled to make such declarations within their competence arising from the contractual relationship between them and the company. Imposing any additional restrictions in this respect would be incompatible with the essence of an acknowledgement of debt as a declaration of knowledge.

When looking for ways to extend the time to bring an action, the creditor may use such legal instruments as debt acknowledgement, improper acknowledgement or, under certain conditions, balance confirmation and partial payment.

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