Limitation periods in debt recovery: the legal risk and why it matters
In short:
In short: the general limitation period is three years. It is interrupted by issuing a claim, entering mediation or acknowledging the debt. Once it has expired it cannot be revived.
The problem
In commercial life, debt recovery is one of the most common categories of litigation. Yet even with a contract, signed completion certificates and an agreed sum outstanding, a claim can still fail. More often than not the reason is that the limitation period has expired.
The periods and where they come from
Under articles 177 to 180 of the Civil Code of the Republic of Kazakhstan the general limitation period is three years. It applies to all claims for recovery of a debt unless a special period is prescribed by law.
Limitation is applied only on the application of a party to the dispute. If the defendant raises the point before judgment and it is made out, the court dismisses the claim.
Interrupting the limitation period
Under article 183 of the Civil Code, the running of the period is interrupted by:
- issuing a claim in the prescribed manner;
- entering into a mediation agreement;
- acts of the debtor acknowledging the debt. These include a part payment, signing a reconciliation statement, acknowledging the debt in writing, or asking for time to pay.
After an interruption the period starts again. But it is important to understand that once a limitation period has fully expired it cannot be revived. Acknowledging the debt after expiry does not create a fresh period, because the legal basis for it running has already come to an end.
The case law confirms that where a claim is issued after the three-year period and the defendant applies for limitation to be applied, the courts refuse recovery — even where the existence of the debt itself is not in dispute.
Our recommendation
Managing contractual discipline effectively and tracking the deadlines for going to court is a basic condition of financial stability for any business.
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Legal basis
- •Civil Code of the Republic of Kazakhstan (General Part)
- •Articles 177-180 of the Civil Code (limitation periods)
- •Article 183 of the Civil Code (interruption of the period)
- •Normative Resolution No. 2 of the Supreme Court