Statute of Limitations

There is always a period, beyond which anything becomes too old to be relevant. The same applies for illegal activities too, unfortunately. Statute of limitations is the period set out by law, that limits the maximum amount of time in which concerned parties in a dispute must initiate legal proceedings following an alleged offense. And this period depends usually on the location of the jurisdiction where the legal proceedings are taking place and also on the type of the offence itself. So for the purpose of this article, we will look at some of the major geographies individually, and with a focus on civil offences.

The United States

Federal Antitrust Actions

The Clayton act and the Sherman act generally lays out a four year limitation period for private antitrust actions in the United States. This runs from when the "cause of action" has accrued which is determined by the court.

• Injury Rule - This runs from the date the plaintiff is injured. This is the most commonly used rule in the US antitrust actions.
• Discovery Rule - This runs from the date the plaintiff discovers, or could have reasonably discovered that they were injured.

There are some specific exception to this federal limitation in some of the states of the US. For example:

• Maine and Vermont have a six year statute of limitations
• Louisiana has a one-year statute of limitations

Securities Litigation

Section 10 of Securities Exchange Act and SEC rule 10b-5 lists out a statute of limitation of two years after the fraud has been discovered, and no more than five years after the fraud has occurred. The securities act lays out the statute of limitations for Section 11 claims as one year after violation has been discovered, and three year repose after security involved has been first offered.

United Kingdom

Competition Law

The Competition Appeal Tribunal (CAT) in the United Kingdom has specific time limits for bringing claims related to competition law. If the cause of action arose before 1st October 2015, the limitation period is two years. For claims arising after 1st October 2015, the CAT proceedings are subject to the general legislation on limitation. Similarly, in cases brought before the High Court, the limitation period is also suspended during the certification process for collective actions. This suspension allows for the efficient certification of collective claims without the pressure of an impending limitation deadline.

Securities Litigation

Under the Limitation Act 1980, the statute of limitations for securities fraud litigation in the UK varies based on the type of claim. Actions brought in contract, tort, and breach of trust are subject to a six-year limitation period. This means that such claims become time-barred after six years from the date on which the cause of action accrued. Restitutionary claims for the recovery of money (including those related to securities fraud) also fall under the six-year limitation period. These claims are governed by Section 5 of the Limitation Act 1980.

 In the United Kingdom, the statute of limitations for latent damage in securities cases depends on the circumstances. Latent damage in the context of securities cases refers to harm or loss that is not immediately apparent or visible. It’s damage that remains hidden or dormant until a later point in time. For example, in the context of securities investments, latent damage could occur due to misleading information, fraud, or other misconduct by a company or financial institution. Investors may not realize the full extent of the damage until it becomes evident over time.  The statute of limitations for bringing claims related to such latent damage varies. The limitation period is the later of:

• Six years from the date when the damage occurred.
• Three years from the date when the potential claimant knew or reasonably ought to have known the material facts necessary to bring an action alleging negligence.

Claims for negligent latent damage are barred after fifteen years from the negligent act or omission. 

European Union

Competition Law 

In the European Union (EU), the statute of limitations for antitrust damages actions varies based on the specific circumstances and the Member State involved. The EU Damages Directive establishes minimum limitation periods for antitrust damages actions across EU Member States. Article 10 of the Directive mandates that a limitation period of at least five years should be granted for actions seeking compensation for antitrust infringements. Importantly, this limitation period does not start until the claimant knows or can reasonably be expected to know the essential elements of the infringement (such as the conduct, the fact that it violated competition law, and the identity of the infringers). 

Antitrust damages actions are governed by national laws in each of the EU Member States. Given the cross-border nature of antitrust infringements, calculating limitation periods can be complex, especially when claims may be brought in multiple Member States with different rules. 

Germany

Competition Law

According to the Section 33h of the German Act Under German law, the standard limitation period for competition law-related claims is five years. This period begins once the infringement has ceased, and the claimant knows or can reasonably be expected to know of their claim. Additionally, there exists an absolute limitation period of ten years regardless of claimant’s knowledge.

Additional “Suspension Provisions” from July 2005, introduced tolling in the determination of statute of limitations in Germany. The statute of limitations with respect to private cartel damages claims is tolled if a national competition authority of an EU member state or the European Commission has initiated a proceeding with respect to the anticompetitive conduct in question. This means that the limitation period is paused while such proceedings are ongoing

Securities Litigation

Under the German Securities Trading Act (WpHG) the statute of limitations for securities cases is generally defined at three years. This period begins at the end of the year in which the claim arose and the creditor obtains knowledge of the circumstances of the claim. There also exists an absolute limitation period of ten years similar to the competition claims mentioned earlier.

While this article does not cover all the geographies when it comes to their limitation period, it gives a general idea of the duration of limitation periods that major countries apply in allowing legal actions for antitrust and securities proceedings. Do subscribe for more things Economic consulting related!

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