The proper determination of the statute of limitations of a counterclaim is one of the important factors in court proceedings. To remove obstacles in the trial process, help litigants protect their legitimate rights and interests.  On November 25, 2021, the Council of Judges of the Supreme People’s Court adopted Case Law No.44/2021/AL, published under Decision No. 594/QD-CA dated December 31, 2021, of the Chief Justice of the Supreme People’s Court.  In the following article, TNTP shares its assessment of Case Law No.44/2021/AL and provides the necessary information on determining the current date of the counterclaim.

Case law no.44 Summary

1. Summary of the dispute

Case Law No.44/2021/AL case law is a commercial business case “design consultancy contract dispute” between the plaintiff H Joint Stock Company (“Company H”) and the defendant P Design and Construction Company Limited (“Company P”).

On 29/01/2008, Company H and Company P signed a Design Consultancy Contract (“Contract”) with the following contents:

  • Company P is responsible for designing the entire project “4-star commercial center-hotel HD Hotel” on a land area of 8,971m2 in D7, Ward X, District T, Hanoi city invested by Company H;
  • The total value of the contract is 1,754,550 USD (excluding value added tax);
  • The work is allocated in three stages: phase 1 of construction design, phase 2 of landscape interior design, and phase 3 of author supervision.

Company H has transferred payment to Company P in 02 installments specified in the Contract, the total amount of payment in the above 02 installments is 396,751.75 USD, equivalent to 6,374,689,675 VND.

After that, due to the change in the scale of the project and the two parties could not agree on the adjustment of the contract value for the new design, Company H unilaterally terminated the Contract and had a dispute with Company P about the payment value.

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Company H contends that it has advanced the overpayment compared to the actual amount of work that Company P performed in the first payment. Therefore, Company H only accepts to pay Company P the amount amounting to 8% of the construction design fee for both payments. In addition, Company H only accepts a penalty equivalent to 1% of the contract value.

However, Company P did not accept the plaintiff’s request for money back because it was money Company H had paid to Company P according to the schedule agreed in Company H, not an advance.

Company P also filed a Counterclaim, requiring Company H to continue to pay Company P the 3rd payment due to Company P’s technical support to approve the project’s design documents.

2. Conclusions of the Court

On 20/06/2011, TAND of Hoan Kiem District, Hanoi city issued the first instance judgment No. 01/2011/KDTM-ST deciding to accept Company H’s petition against Company P. Forcing Company P to refund to Company H the advance amount of the Contract of 272,571.41 USD equivalent to 5,642,228,187 VND. Hoan Kiem District TAND denies Company P’s counterclaim against Company H.

On 1/07/2011, Company P appealed the entire first instance judgment. At the appellate judgment No. 27/2011/KDTM-PT dated September 21, 2011, TAND of Hanoi decided not to accept the appeal of Company P and upheld the decision of the first instance judgment No. 01/2011/KDTM-ST.

Subsequently, Company P further filed a petition for the assessee for the aforesaid appellate judgment.

On September 15, 2014, the Chief Justice of TAND issued Appeal Decision  No. 60/2014/KN-KDTM appealed the appellate commercial business judgment No. 27/2011/KDTM-PT dated September 21, 2011, of TAND of Hanoi.

Accordingly, the Chief Justice of TAND requested the TAND Economic Court to hear the chief justice in the direction of annulling the aforesaid first instance judgment and appellate judgment. At the same time, hand over the case file to TAND of Hoan Kiem district, Hanoi city for retrial by the provisions of the law.

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3. Contents of case law

At the court of cassation, representatives of the High People’s Procuracy in Hanoi requested the Committee of Judges of the High People’s Court in Hanoi to accept the appeal of the Director of the High People’s Procuracy in Hanoi. Accordingly, the court found that the counterclaim,  the judgment of the Court of  Appeal in Judgment No. 82/2020/KDTM-PT on the fact that the counterclaim is not limited to the statute of limitations is not true. According to the provisions of the  Civil Procedure Code (“CPC”) of  2004 and the CPC of 2015, a counterclaim is a request that is not part of the plaintiff’s request, which can be resolved by an independent case; The resolution of the counterclaim in the same case is for a more accurate and faster resolution result. A lawsuit request is also a lawsuit request, so it must comply with the statute of limitations for lawsuits. Therefore, in cases where there is a counterclaim and a litigant case proposes to apply the statute of limitations, the court of the first instance and the court of appeals must determine whether the counterclaim has a statute of limitations or not.

Rule commentary

Neither the CPC 2004 nor the 2015 CPC have clear statutes of limitations for counterclaims. Therefore, before case law No.44/2021/AL, there were many different views and interpretations on determining the counterclaim statute of limitations.  The first view is that: A counterclaim must also comply with the statute of limitations. The second view is that a counterclaim does not have to comply with the statute of limitations because the statute of limitations applies only to the plaintiff’s claim.

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Case Law No.44/2021/AL issued has resolved the problem, agreeing that the trial court’s view that the statute of limitations for counterclaims must also comply with the statute of limitations for lawsuits.

TNTP considers that a counterclaim must also comply with the statute of limitations  for determining a  counterclaim as a claim, specifically:

  • The procedure for requesting a counterclaim is carried out by the provisions of the CPC on the plaintiff’s lawsuit procedure. The defendant who wants to make a counterclaim must show the same content as the petition and must pay advance court fees if not exempted, accompanied by documents and evidence proving that legal rights are violated.
  • For counterclaims, the defendant has the rights and obligations of the plaintiff specified in Article 71 of the CPC 2015.
  • The defendant has the right to sue in another case if the counterclaim is not accepted by the Court to settle in the same case.

Thus, the essence of the counterclaim is the defendant’s claim against the plaintiff, which does not arise based on the claim, it is a claim independent of the claim. The counterclaim can be resolved by another case. The purpose of the counterclaim is to offset or exclude the plaintiff’s claim. The counterclaim in the same case resolves to make it faster, more accurate, and more convenient for the litigant. Since a counterclaim is treated as a lawsuit request, it must also comply with the statute of limitations.

Above is the content of case law No.44/2021/AL and TNTP’s judgment on the correct determination of the statute of limitations of the counterclaim. Hope the above article helps you.

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