February 2025

Athens Court Decision on Statute of Limitations for Loan Claim of approximately 60,000,000 Japanese Yen

The Athens Multi-Member Court of First Instance (New Ordinary Procedure) issued Decision No. 36/2025, which rejected a lawsuit filed against our clients, seeking payment of an allegedly outstanding amount from a loan agreement to a well-known debt management company. Specifically, the opposing party claimed that a loan agreement had allegedly been concluded at a branch of a well-known financial institution in London, and that this agreement gave rise to a debt approximately equal to 60,000,000 Japanese Yen, including alleged default interest.

Among the numerous arguments we presented regarding the inadmissibility and lack of legal basis of the opposing party’s claim, our clients—the defendants—raised the defense of the statute of limitations regarding the disputed loan agreement. According to English law (which applied following an explicit agreement between the parties), claims arising from simple loan agreements are subject to a six-year limitation period, unlike claims secured by a mortgage or other real security, which are subject to a twelve-year limitation period.

The Court accepted our clients' statute of limitations defense regarding the disputed loan agreement, reasoning as follows:

"Furthermore, as extensively analyzed in the preceding legal reasoning (II), the aforementioned agreements are considered simple contracts under English law and not 'Specialty' contracts. Although they were signed on behalf of the plaintiff by two duly authorized persons, their content does not make it clear that they were intended to be 'deeds' by the drafter or the contracting parties, either by designating them as 'deeds' or by stating that they would be executed or signed as 'deeds.' Consequently, the contracts in question are subject to a six-year limitation period, starting from the date on which the cause of action arose (paragraph 5 of the English Limitation Act). It should be noted that Article 20 of the English Limitation Act, which provides for a twelve-year limitation period for claims secured by a mortgage or real security, is not applicable in this case, as English law does not contain any statutory provision or case law recognizing the Greek law concept of a pre-notation of mortgage, through which the disputed claim was allegedly secured, nor any equivalent provision."

Additionally, the Court made the following observations regarding the twelve-year limitation period for the disputed claim:

"As an obiter dictum, it is noted that even if the disputed agreements were 'Specialty' contracts or if the plaintiff had a real security interest in them—meaning that in both cases the twelve-year limitation period would apply—the claims asserted in the lawsuit would still be time-barred. This is because, as stated above, more than twelve years have elapsed between ../../2001 and ../../2022. The plaintiff contends in its lawsuit that it had previously filed lawsuit No. GAK/AKD ………/………../2012 against the defendants, based on the same historical and legal grounds as the present case, which was ultimately dismissed by the Athens Court of Appeal in Decision No. ………/2020 for non-substantive reasons. The plaintiff further argues that the present lawsuit was filed within six months of the final dismissal of the previous one and that, under Article 263 of the Greek Civil Code, the limitation period of its claims was interrupted upon the filing of the first lawsuit. However, this argument must be rejected as legally unfounded, since the aforementioned provision of Article 263 of the Greek Civil Code, being a substantive law provision, cannot apply in the present case, as explained in legal reasoning (II) of this decision."

This decision is of particular interest as it examines the issue of limitation in a loan agreement governed by English law. Consequently, it raises questions regarding the adaptation of English law to Greek real security institutions, as well as the applicability (or non-applicability) of Article 263 of the Greek Civil Code regarding the interruption of the limitation period.