The limitation period for rent: a new practice of recovering debts?

The Supreme Court considered a case on the recovery of arrears of rent for a land plot over a period of more than three years. The case may be the start of a new practice on limitation periods in disputes of this kind.

What happened. The Moscow City Property Department demanded that Tretiy Variant, a limited liability company, pay a rent debt for the period from 2014 to 2021. The lower courts refused the claimant in part, holding that the limitation period for the claims for 2014-2019 had expired.

The Supreme Court's position. The Court did not agree with that conclusion. It noted that the signing of a lease in 2019 which expressly records the debt from 2014 is an acknowledgement of the debt, and that this interrupts the limitation period. The limitation period therefore begins to run again from the moment the contract is signed.

The Supreme Court thus indicated that, if a debtor evades payment while knowing of the obligation, an acknowledgement of the debt in documents, or in other acts, can be a ground for interrupting limitation.

For many years the Moscow authorities were met with refusals when the courts were asked to recover rent arrears for a period of more than three years. The Supreme Court's new position, however, has made it possible to recover rent debts even after that period has expired, provided it is proved that the debtor acknowledged the debt or evaded the obligation. As a rule, in cases involving state bodies, everything begins with strict conditions laid down by the Supreme Court. Over time the lower courts may loosen those conditions, relying on "judicial discretion". This often leads to judges in effect beginning to support the state bodies in most disputes, while the Supreme Court later steps back from any further action to correct the practice. In my view, therefore, and from experience of disputes with the Moscow Government, this may mean the end of limitation as an effective defence in cases of this kind. Sergei Pivovarchik, managing partner of Consul Group, comments.

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