New legislation on the limitation period for consumer credit claims in Slovakia
In February 2018 the Constitutional Court of Slovak Republic ("CCSP") ruled that s.5b of the Consumer Protection Act is unconstitutional. Under s.5b the court is obliged to unilaterally take into account any weakening of a seller's claim against a consumer including, for example the limitation period, regardless of whether such weakness is raised by the consumer. The CCSP deemed such a provision is contrary to the principle of impartiality enshrined in Art. 46 (2) 1 of the Constitution.
The Slovak legislator has responded to the CCSP's ruling by introducing an amendment to the Slovak Civil Code in the form of a new Article 54a. Article 54a was adopted on November 27, 2018[1]. Under Article 54a, any right which arises from a consumer contract cannot be enforced or secured if the limitation period of such right has lapsed.
The primary objective of this new provision is to ensure debt payments arising from consumer contracts can only be enforced against a consumer within a reasonable time. Therefore, a debtor can no longer be forced, through court proceedings or otherwise, to pay a debt in respect of which a significant period of time has passed. In this way the new provision helps to prevent a situation where the consumer's position in defending a creditor's claim may have significantly weakened as a result of factors which arise through the passage of time – for example the loss or disposal of evidence. As a further protective measure, only the consumer (debtor) can agree to the renewal of a creditor's rights under the consumer contract after the limitation period has expired.
The second dimension of this provision is the intention of the legislator to ensure that creditors (in the consumer contract context) seek to enforce their claims in the shortest possible timeframe and, in any event, within the limitation period. Previously, it was often the case that creditors waited until the end of the three-year limitation period to bring a claim in order to increase their claim for default interest. The new provision is intended to encourage creditors to have a higher activity in administering their claims and to proactively and promptly take action against the consumer, which will help to protect the consumer from incurring excessive interest on late payments in the case of cash debts.
There are several indications that, in practice, this new regulation effectively replicates the unconstitutional nature of s5b Consumer Protection Act by firmly tilting the scales in favour of the consumer. However, it is hard to consider the full impact of Article 54a at the date of preparation of this short article - ultimately consumers and creditors will have to wait and see how the courts navigate this before they can be certain.
[1] The Act No. 343/2018 Coll. available in binding Slovak wording on https://www.slov-lex.sk/pravne-predpisy/SK/ZZ/2018/343/20181205
