Important Amendments to the Maltese Civil Code Provisions Governing ‘Prescription’

Important Amendments to the Maltese Civil Code Provisions Governing ‘Prescription’

Litigation and Arbitration services

In January 2017, certain important amendments to the Civil Code provisions regulating the institute of prescription were enacted by virtue of Act 1 of 2017.

  1. Paragraph (d) of Article 2148 which previously read:

“(d) actions of persons paid by the year for the payment of their salary”,

Now reads:

“(d) actions of persons for the payment of their salary”.

It appears that the purpose of this legislative amendment was to remove any doubt whether the law applies to persons who receive their salary on a weekly or monthly basis.

  1. A new proviso to paragraph (g) of Article 2156 has been inserted. Accordingly:

“Provided that actions referred to in paragraphs (a) and (c), where such payments are due to the Government of Malta, shall be barred by prescription by the lapse of ten years.”

Paragraph (a) refers to:

“(a) actions for payment of yearly ground-rent, perpetual or life annuities, interest on annuities ad formam bullae created  before  the  14th  August,  1862  and  for  the payment of fines due upon a  sale or other alienation of emphyteutical tenements.”

Paragraph (c) refers to:

“(c) actions for payment of rent of urban or rural property”.

Essentially through this legislative amendment the prescriptive period in respect of payments due to the Government of Malta ONLY has been increased from five years to ten years.

  1. By far the most important amendment relates to Article 2160 which previously read:

the onus of proof has now been shifted from the way it previously stood when the defendant pleads that the action is time-barred

“2160(1) The prescription established in articles 2147, 2148, 2149, 2156 and 2157 shall not be effectual if the parties pleading them, upon being put on oath, do not declare that they are not debtors, or that they do not remember whether the thing has been paid.

(2) If the oath is deferred to the heirs of the person whom the plaintiff alleges to have been the debtor, or to parties claiming under such person, the said prescriptions shall not be effectual if such heirs or parties do not declare that they do not know that the thing is due.”

According to the new amendments this provision now reads:

“2160(1) The prescription established in articles 2147, 2148, 2149, 2156 and 2157 shall not be effectual if the parties pleading them, do not of their own accord declare on oath, during the cause that they are not debtors, or that they do not remember whether the thing has been paid.

(2) If the oath is deferred to the heirs of the person whom the plaintiff alleges to have been the debtor, or to parties claiming under such person, the said prescriptions shall not be effectual if such heirs or parties do not declare that they do not know that the thing is due.

(3) Where a party to the proceedings declares on oath that he or she is not a debtor, such party shall be required to give reasons why he or she considers himself or herself not to be a debtor.

(4) If the party to the proceedings declares on oath that he or she is not a debtor because of the lapse of time, such declaration shall be considered as an admission of the debt and consequently voids the plea of prescription.”

in order to raise the plea of prescription, the debtor must link the said plea with a legitimate reason for not settling pending dues

As indicated above, the words “upon being put on oath, do not declare that” have been replaced by the words “do not of their own accord declare on oath, during the cause that”. Accordingly, the onus of proof has now been shifted from the way it previously stood when the defendant pleads that the action is time-barred according to articles 2147 (prescriptive period of one year), 2148 (prescriptive period of eighteen months), 2149 (prescriptive period of two years), 2156 (prescriptive period of five years) and 2157 (actions for rendering of accounts against a curator tutor etc.). Whilst prior to the amendment the plaintiff necessarily had to place the defendant on the witness stand and the said defendant had to merely state that he is not a debtor or that he does not remember whether the thing has been paid, now it is the defendant who sets up the plea and must declare on oath that he is not a debtor or that he does not remember whether the thing has been paid.

Moreover, by virtue of this amendment, debtors may not use the passage of time by way of contestation for not paying outstanding debts.  Accordingly, in order to raise the plea of prescription, the debtor must link the said plea with a legitimate reason for not settling pending dues.

These amendments have of course created significant debate and discomfort amongst both corporate entities and individuals alike, since previously debtors felt safe in the knowledge that if none of the parties took any action for a specified period of time, towards settlement of a debt, then the claim would be unenforceable. The new article 2160 no longer allows this possibility and a genuine link between prescription and non-payment must be proved in order for such plea to be upheld by the Maltese courts.

Contact Be. Legal Advocates to find out more about how these amendments affect you and/or your business

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