Time-Bar Clauses and the Meaning of "Becomes Known"

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31 August, 2021

The importance of complying with time-bar provisions cannot be overstated and the recent decision made in Arab Lawyers Network Company Ltd v Thomson Reuters (Professional) UK Ltd [2021] EWHC 1728 (Comm) makes clear. The decision within this case, highlights the importance of considering the effect of time-bar clauses carefully in order to avoid being prevented by bringing claims in the future, will be of interest to all commercial parties.

Time-Bar Clauses and the Meaning of "Becomes Known"

The importance of complying with time-bar provisions cannot be overstated and the recent decision made in Arab Lawyers Network Company Ltd v Thomson Reuters (Professional) UK Ltd [2021] EWHC 1728 (Comm) makes clear. The decision within this case, highlights the importance of considering the effect of time-bar clauses carefully in order to avoid being prevented by bringing claims in the future, will be of interest to all commercial parties.

What is a time-bar clause?

A time bar clause provides that if the contractor fails to service the requisite notice within the specified period it will, in theory, become time barred from claiming any extension of time or additional payment. Time-bar clauses are designed to improve the administration and management of contracts.

S14A of the Limitation Act 1980 applies where, at the time the claimant's cause of action accrues, the claimant does not have knowledge of all material facts. In the absence of any contractual indication as to what constitutes knowledge, the basis of a claim becomes known when the claimant has a sufficient measure of condolence in the claim, having justification in evidence, experience or reasoning.

Background

In 2011, Arab Lawyers and Thomson Reuters entered into an agreement relating to the publication of legal resources for which the defendant undertook to pay the claimant an agreed royalty. The agreement contained a time-bar clause that read:

"14.2 Limitation of Claims. No claim, regardless of form, which in any way arises out of this Agreement or the parties' performance of this Agreement may be made, nor action based upon such a claim brought, by either party more than one year after the basis for the claim becomes known to the party desiring to assert it."

Following the termination of the agreement on 01 February 2015, a dispute arose between the parties and eventually, in 2017, Arab Lawyers brought proceedings against Thomson Reuters for:

  • nonpayment of the agreed royalty; and
  • the defendant's continued use of their publications after termination.

Thomson Reuters however sought summary judgment on the basis that the claims had been brought too late and were therefore time-barred. It argued that Arab Lawyers had known before June 2016 about its entitlement to claim the agreed royalty and that it had not continued to use Arab Lawyers' publications or receive payment from customers relating to the publications after the agreement was terminated.

Decision

The court ordered summary judgment in favour of Thomson Reuters in relation to royalties due before 13 June 2016 on the grounds that this part of the claim was time-barred, but allowed the claim to continue in relation to royalties payable after 13 June 2016. It was held that "basis of the claim" was equivalent to facts and circumstances which would constitute a right or cause of action at law. As the contract provided that royalties would accrue at the end of quarterly periods and were to be paid by Thomson Reuters within 60 days after the end of subject period, it was the judge's view that Arab Lawyers contractual entitlement to claim the agreed royalty arose no later than 60 days after the end of the relevant quarter. As a result the judge held that much of the agreed royalty claim was time-barred, although any claim for royalties which became payable after 13 June 2016 was not.

The reason why this case is interesting is the key issue of the inclusion and meaning of the words "becomes known" in the time-bar clause. As nothing in the agreement indicated that "knowledge" was to be defined in accordance with the statutory meaning, it was therefore given its natural and ordinary meaning, so while Arab Lawyers did not need to have an unwavering conviction in their belief in the truth of the basis for the claim, they did need a sufficient measure of confidence in the belief which was justified by evidence, experience or reasoning. Mere suspicion was not sufficient to constitute "knowledge" for this purpose. This part of Thomson Reuter's application was therefore dismissed as the judge advised that Arab Lawyers had a real prospect of succeeding in their claim.

Key Take Away

This case provides useful guidance on the interpretation of contractual time-bar clauses and demonstrates the importance of adopting a cautious approach to limitation. For businesses dealing with bespoke time-bar provisions meanwhile, this case emphasises the importance of careful drafting. For advice and assistance with the effective preparation of your time bar and limitation of liability provisions, contact John Pickervance in our Commercial Department John Pickervance">via email or phone on 0333 207 1134.

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