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Time bar clauses in commercial contracts

In commercial contracts it is usual for the parties to limit the time in which they can bring claims against each other under the contract, these are known as “time bar clauses”.  This type of clause was recently considered by the High Court in the case of Arab Lawyers Network Company Limited v Thomson Reuters (Professional) UK Limited (25 June 2021).

Arab Lawyers Network (ALN) was a supplier of legal resources.  Under an agreement with Thomson Reuters (TR) dated 2 February 2011 it agreed to provide certain publications, mainly encyclopaedias of Gulf state legislation.  The Agreement contained a time bar clause which required any claim to be brought within one year “after the basis for the claim becomes known to the party desiring to assert it”.

The Agreement was terminated by TR on 1 February 2015.

On 13 June 2017, ALN issued claims against TR for:

  • The non-payment of royalties.
  • The continued use of its publications after the termination of the Agreement.

TR applied for summary judgment against ALN (i.e. ALN’s claim should be dismissed without the need for a trial as it had no prospects of success) on the basis that the claim was time barred as ALN had written a letter on 13 October 2015 alleging the breach i.e. over one year before issuing proceedings.  The Court therefore had to consider the meaning of “becomes known” in order to decide if the time bar clause was effective.

The Judge stated that “knowledge” should be given its ordinary, natural meaning – the question was therefore when ALN knew or became aware of the basis of the claim.  In this context, “knowledge” meant that ALN must have a sufficient measure of confidence in the belief which was justified by evidence, experience, or reasoning.  A mere suspicion, even if supported by some indeterminate evidence, was insufficient to constitute “knowledge” to start time running.

The Judge held that ALN’s claim for unpaid royalties was time-barred but its claim for TR’s continued unauthorised use of its publications was not because it was not known by ALN until after 13 June 2016 (being one year before the Claim Form was issued) that TR was still using the publications.  The Judge accepted ALN’s evidence that the statements in its letter of 13 October 2015 were no more than a suspicion based on lack of information from TR.  The question of when ALN had requisite knowledge for the purpose of the time bar clause would require an assessment of evidence, which the Court was not in a position to make on a summary basis but instead it would have to be determined at trial.

It is possible that ALN’s claim for the unauthorised use of its publications could still fail at trial once the Court has heard all of the evidence but, for now, it lives to fight another day.

If you are involved in any contractual disputes or would like advice on time bar clauses, please contact a member of our Dispute Resolution team via email or on 0113 207 0000.

 

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Luke Patel

Partner and Head of Dispute Resolution
Commercial Dispute Resolution
LPatel@LawBlacks.com
0113 227 9316
@LukeLawBlacks
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Luke Patel Blacks Solicitors LLP