| ||1. Judicial proceedings
In all legal systems judicial proceedings affect the running of a limitation period in either of two manners. Judicial proceedings can cause an interruption of the limitation period, so that a new limitation period begins when the judicial proceedings end. Alternatively, judicial proceedings can cause only a suspension, so that a period that has already lapsed before the judicial proceedings began will be deducted from the applicable period, the remaining period starting at the end of the judicial procedure. This Article adopts the latter solution (see also Article 13 of the UN Limitation Convention).
2. Commencement of proceedings
The requirements for the commencement of judicial proceedings are determined by the law of procedure of the court where the proceedings are instituted. The law of procedure of the forum also determines whether the raising of counterclaims amounts to the instituting of judicial proceedings in regard to these claims: where the counterclaims raised as a defence are treated as if they were brought in separate proceedings, raising them has the same effect on the limitation period as if they had been filed independently.
1. A purchases from B a truck that turns out to be defective. A notifies B of the defects but, because of other pending contracts between A and B, A does not press the matter for 24 months. When the negotiations between A and B on the other contracts break down, B turns down a request by A to cure the defects, asserting that the defects were caused by A’s mishandling of the truck. A files a law suit against B by depositing it with the clerk of the competent court. Under the procedural law applicable in that court, this is sufficient to initiate litigation with respect to A’s claims. The running of the limitation period is suspended, until a final decision is handed down. This includes not only a decision of the court of first instance, but also, if appeal is allowed, that of a higher court on any available appeal. If the parties reach a settlement or the plaintiff withdraws its complaint, this ends the litigation if it is so regarded under the applicable domestic procedural law.
2. B initiates litigation for the purchase price of goods by filing a complaint as required by the procedural law of the country of the competent court. A raises claims under an asserted guarantee either as counterclaims or by way of set-off. The limitation period for A’s warranty claims is suspended until there is a final decision on the counterclaims or a settlement or withdrawal of A’s counterclaims.
“Termination” by a final decision or otherwise is to be determined by the rules of procedure of the forum. These rules decide when a decision is final and therefore brings the litigation on the litigated subject-matter to an end. These rules also have to decide whether and when the litigation comes to an end without a final decision on the merits, e.g. by the withdrawal of a complaint or by a settlement of the parties.
4. Suspension by insolvency or dissolution proceedings
For the purpose of this Article, insolvency and dissolution proceedings are regarded as judicial proceedings (Article 10.5(1)(b) and (c)). The dates of the commencement and ending of these proceedings are determined by the law governing the proceedings.