“Interpretation of the Supreme People's Court on Several Issues concerning the Application of the Extinctive Prescription Rules in the General Provisions of the Civil Law of the People's Republic of China” (“Interpretation”) shall come into force on July 23, 2018.
Since the implementation of “General Provisions of Civil Law” on October 1, 2017, the difference on the Extinctive Prescription Rules between this law and “General Principles of Civil Law” has not been solved. Recently, the Supreme People’s Court issued the “Interpretation”, and clarified several rules. The details are as follows:
1.The two-year or one year prescriptive period has been abolished.
Where the prescriptive period begins after “General Provisions of the Civil Law” come into force, the provision of Article 188 of “General Provisions of the Civil Law” on a three-year prescriptive period shall apply. A party’s claim for the application of the provision of “General Principles of the Civil Law” on a two-year or one year prescriptive period shall not be supported by a people’s court.
2.The retroactivity of the new extinctive prescription rules
Where the two-year or one year prescriptive period has been expired before the implementation of “General Provisions of the Civil Law”; relevant cases has been finalized, the party applied for retrial, or relevant cases has been order to retrial before the implementation of “Interpretation”, for such cases, the new extinctive prescription rules shall not be applied.
3.The solution to the suspension of extinctive prescription
According to “Interpretation”, before the implementation of “General Provisions of the Civil Law”, if the reason for the suspension has not been eliminated, the rules related to the suspension of extinctive prescription stipulated in “General Provisions of the Civil Law” shall be applied.
However, “Interpretation” has not mentioned the problems related to the continuous debts, and the interruption of extinctive prescription. For those two problems, you can take ”Reference Opinion of Beijing Higher People’s Court on the Application of the Extinctive Prescription Rules in the General Provisions of the Civil Law” for reference. The key points are as follows:
1.For those continuous debts, in which the liquidated damages agreed upon on a daily basis, the daily liquidated damages shall be deemed as a separate debt which shall be decided on the application of the Extinctive Prescription Rules case by case. If the creditor filed the lawsuit before 30th Sept. 2017, then the liquidated damages shall be calculated for 2 years before the date when the case was filed. If the creditor filed the lawsuit between 1st Oct. 2017 to 30th Sept. 2018, then the liquidated damages shall be calculated from Oct. 2015 to the date when the case was filed.
2.In the event of interruption of the Extinctive Prescription, if the interruption was happened before 30th Sept. 2017, the two-year prescriptive period shall be applied, however, if the period from the date of recalculation to 1st Oct. 2017, which did not exceed 2 years, then the three-year prescriptive period shall be applied.