Generally about the Statue of Limitations
Generally speaking, the statute of limitations in civil law is an institute that serves to reduce uncertainty. In other words, after a certain period (limitation period), the creditor can no longer successfully demand that the debtor fulfill his/her obligation in court.
The creditor’s claim is not extinguished in theory, but if the debtor points out the statute of limitations before the court, the court will reject the creditor’s request. This provides legal certainty for debtors, who do not have to worry forever about whether the creditor will sue them or not.
On the non-expiration of objections to nullity
However, for some mandatory law claims the statute of limitations is excluded. Thus, for example, the Civil Obligations Act (OG 35/05, 41/08, 125/11, 78/15, 29/18, 126/21; hereinafter: Civil Obligations Act) prescribes that the right to emphasize the nullity of the contract does not become statute barred (Art. 328).
Such a legal solution is logical. When a court finds that a contract is void, it is assumed that such a contract never even existed or produced any effects. Therefore, it would not make sense to prescribe the statute of limitations for the right to raise objections to the nullity of a contract which, from a legal point of view, never occurred.
Thus, the right to point out the nullity of a contract before a court never becomes statute barred.
Expiration of a restitution claim
If the court finds that a contract is null and void, each contracting party is obliged to return to the other all that it received on the basis of such a contract (Art. 323 of the Civil Obligations Act). A claim for the return of what was received under a void contract is called a restitution claim. The claim for a declaration of invalidity and the application for restitution are related, but different and separate claims.
They can be filed together in a single lawsuit, and they can also be filed separately. But the restitution claim always depends on whether the nullity has been previously established. In other words, the return of what was received on the basis of a void contract cannot be claimed unless the contract is found to be void.
Unlike the emphasis on nullity, the restitution claim can become statute barred. The statute of limitations for a restitution claim is 5 years, but the statute of limitations begins to run only from the moment the court judgment establishing the nullity of the contract becomes final.
For example, if you entered a contract in 2001 that you suspect could be null and void, you can file an action seeking a declaration of invalidity in 2021 without fear of the statute of limitations. From the moment the judgment establishing that the contract is null and void (say it happens in 2023) becomes final, you can file a restitution claim within 5 years to return everything received under the null and void contract (i.e., until 2028).
A restitution claim may be filed immediately with the action for a declaration of nullity, or it may be filed subsequently, after the nullity has been established, as a separate action.
Attitude of case law on the statute of limitations for a restitution claim
The described legal position was confirmed by the Supreme Court of the Republic of Croatia with a legal understanding from the session of the Civil Division of the Supreme Court of the Republic of Croatia on January 30, 2020:
“In the case of a restitution claim according to which the contracting parties are obliged to return to each other everything they received on the basis of a void contract, or in the case of a request referred to in Article 323, paragraph 1 of the COA/05 (Article 4 paragraph 1 of the COA/91), as a consequence of the determination of the nullity of the contract, the statute of limitations shall begin to run from the day of the finality of the court decision by which the nullity of the contract was determined or otherwise established. “
The County Court in Varaždin, in Judgment No. Gž-503/2020 of May 19, 2020, cites the aforementioned position of the Supreme Court and then concludes:
“According to the presented understanding, the plaintiff’s claim could not become statute barred, since the statute of limitations would begin to run only with the finality of this decision which declared the relevant provisions of the Loan Agreement null and void.”
The County Court in Varaždin, in Judgment No. Gž-1226/2020 of March 3, 2021, interprets the legal understanding of the Supreme Court in a similar way:
“According to the presented understanding, the course of the statute of limitations of the defendant’s claim could not even begin to run before the challenged judgment becoming final and establishing the nullity of the disputed provisions of the Loan Agreement.”
By its judgment of April 28, 2021, in case no. Pž-6691/2019, the High Commercial Court of the Republic of Croatia applied the Supreme Court’s understanding in an identical way:
“Therefore, contrary to the position of the first instance court, the statute of limitations begins to run from the day the court decision establishing the nullity of the contract becomes final or otherwise established (legal understanding at the first session of the Civil Division of the Supreme Court of the Republic of Croatia (1/20) held on January 30, 2020). Since the nullity of the disputed contractual provision was established only by this second-instance decision, it was only at that time that the limitation period under Article 225 of the COA began to run.“
The County Court in Velika Gorica, in its judgment of 11 May 2021 in case no. Gž-448/21, perhaps the clearest of all courts, explained the issue of the beginning of the statute of limitations in the case of unfair, i.e., null and void contractual provisions:
“As in this legal matter on November 24, 2020, the provision of Art. 2 of the Loan Agreement in which the variable interest rate is agreed, was made null and void by a final decision, in accordance with the above legal understanding of the Supreme Court of the Republic of Croatia, the statute of limitations begins on November 24, 2020, as the day the court decision establishing the nullity of Art. 2. of the Loan Agreement became final, because of which the objection of limitation is unfounded.”
From all the above judgments, it follows that the statute of limitations for claims from null and void contracts begins to run on the day when the nullity is legally established.
Some examples from real-life, where there are a large number of contracts for which the rules described here come to the fore, are primarily the well-known “Swiss Francs – švicarci” (for consumers, but also for legal entities!), contracts from the “Leasing” affair and other credit agreements (in EUR and even HRK) which contain unfair provisions on unilateral changes in interest rates.
In all these cases, financial institutions are wrongly trying to invoke the statute of limitations, but the position of case law is clear and there is no statute of limitations for initiating proceedings.
The right to raise an objection to the nullity of a contract or some of its provisions does not become statute barred either.
Furthermore, the requirement for each contracting party to return what it has acquired on the basis of a null and void contract (restitution claim) becomes statute barred within 5 years from the day the court decision establishing the nullity of the contract or some of its provisions becomes final.
For this reason, debtors who have borrowed in Swiss francs continue to have the opportunity to file claims to determine the nullity of the disputed provisions of the loan agreement whereby:
• the borrowing currency in Swiss francs and
• the creditor’s right to unilaterally change the contractual interest were contracted,
regardless of the date of concluding such a contract, as the right to object to the nullity of contractual provisions does not become statute barred, while the five-year limitation period for restitution acquired on the basis of a null and void legal transaction begins to run from the day the contract or some of its provisions become null and void.