Discussion threaad on Question regarding statute barred debt & EU/other 'laws' that come into play

[Newborn]

As I understand it, the first thing is to see which law decides both the applicable law and the jurisdiction (two different things) according to EU legislation (which also covers the different jurisdictions of England & wales, NI and Scotland):

 

For a debt contract signed before 02/04/1991 it is UK common law (whatever that is).

For a debt contract dated between 02/04/1991 and 17/12/2009 it is the Rome Convention.

For debt contracts after 17/12/2009 it is 'Rome I'.

 

See here: crippslink.com/index.php?option=com_content&view=article&catid=26%3Acdr-publications&id=805%3Arome-1-the-law-applicable-to-contracts&Itemid=537

 

This though does not include the 'consumer' aspect. As an example see:

 

If you are domiciled in Scotland - ec.europa.eu/civiljustice/applicable_law/applicable_law_sco_en.htm - (I think this is Rome convention).

 

If you are domiciled in England - http://ec.europa.eu/civiljustice/applicable_law/applicable_law_eng_en.htm - (I think this is Rome convention).

 

There is also one for each EU country on the same europa website.

 

If you look at many UK lenders' T&Cs these days they actually say that the applicable law is the law of the country the consumer has on their application form. But even that does not guarantee anything for the lender it seems.

 

Under EU law it appears that the consumer will always be sued in the country in which they are domiciled. But the consumer can sue the provider either where they live or where the provider has their base. (Remember this is consumer law designed to be on the consumer's side.)

 

As I read it, as a consumer in the EU you can gain the protection of the law that is most beneficial to you, but I am happy to be proven wrong. Especially where the law is mandatory in either: the country in which you signed the doc or the country you are being sued in.

 

As an example, if it is possible to contract out of consumer protection in Germany where you signed the contract and you are sued in the UK where you live where you can't contract out then UK law will protect you.

 

And remember that under s.13 of the Scottish Prescriptions Act 1973 the relevant parts of that Act are mandatory (can't be contracted out of). So a contract you signed when in Scotland saying it is governed by English law should still reach the buffers at the Scottish five year point - as long as you tell the DCA/courts. But be sure of your ground!

 

As one source I looked at said, a lot of this is undecided as yet! I just wish it was simpler, but then it has to be as complex as possible, otherwise how could DCAs fool the public and how could lawyers earn their extortionate fees?

[Newborn]

Depends whether it is a business debt or a consumer debt.

 

If it is a business debt and both parties lived in the same region when the contract was signed and the applicable law is stated on the paperwork then the lawsuit may be brought in a jurisdiction outside of Scotland.

[Newborn]

I was looking at sources like this - http://www.out-law.com/page-479

 

Near the bottom it looks into the differences between B2B and B2C dealing.

 

One of the things that I found out was that, in the absence of any other guidance, the applicable law over a contract is derived from the concept of the 'country closest to it'. And this was normally down to the party that had the 'substantial performance'. In English law it seems that party is the one that provides the service, so it would appear that in B2B cases the applicable law is where the lender is based. But in B2C cases it is the domicility of where the consumer made the contract because that is what the EU consumer protection law says.

 

When I first started digging I thought there would be a simple answer, but it seems there is not.

[Newborn]

As an extra, are you aware that when a debt is extinguished under the Scottish 1973 Act the lender cannot claim tax relief on the loss?

 

See - http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm28384.htm

 

So the more of these the DCAs hold the worse for them if they don't recover! As long as they are good little boys and girls and fill in the forms correctly.

[Newborn]

I can only go by what I read, it is just my interpretation. Please explain what you mean by twaddle. This FOTL thing seems to be quoted as an answer to anything people don't agree with but without explaining why.

[Newborn]

But EU law says that jurisdiction law would be subject to any mandatory laws of the land where the consumer took out the contract. And the Scottish Prescriptions Act 1973 is mandatory law if a consumer takes out a contract when domiciled in Scotland. This does not change just because they move to England or anywhere else even if the contract states that it is subject to English law.

 

But conversely if the consumer signs the contract when domiciled in England and moves to Scotland they are covered as they have to be sued in Scotland where it would be against Scottish public policy to allow a suit after the five years had passed.

 

As I said before it is more complex than it seems.

[Newborn]

But neither party would be domiciled 'at sea'. Each would have to be domiciled somewhere and that would decide the applicable law and the jurisdiction. then it would be down to three things:

 

The date of the contract

Whether it was business to business or business to consumer

where the parties were domiciled at the contract signing

[Newborn]

It isn't about what those individual pieces of legislation say. It is what EU legislation says and that seems quite clear. Where there is a consumer involved they are protected by the best of either the law where they signed the contract or where they are domiciled at the point where the law suit is brought against them.

[Newborn]

Not so, the cause of action under EU law only concerns non-contractual tort. The law governing a contract is determined on the date it is made. That is when the relevant mandatory laws are decided. Bear in mind that many UK credit agreements today say just that - in fact they say that the applicable law will be governed by the address on the application form (Eng&W, Scot or NI). It then does not matter where you move to or where you default.

[Newborn]

The answers at 3 and 4 above show how confusing this can be. The substantive law is decided where the contract is formed within the limits of UK and EU law - so of course several bits of legislation are going to apply. But trying to apply one single response to this is the same as when a judge asks you 'why is that agreement wrong?' and you just say 'the case of Wilson sir', and are then surprised that you lost (as some have).

 

Scottish courts can decide (have jurisdiction over) cases where foreign laws also apply.

 

What would you say if the claimant's barrister showed you the agreement from this case and it says quite clearly on it that the applicable law is that of NI, or more likely that of England? It's what you signed so it must be right so NI or English statute of limitations applies not the Scots one, 'the fact you are being sued in Scotland doesn't alter that' they could say. And as we know we can't rely on judges to get us out of anything, we have to understand and do it ourselves.

[Newborn]

Where you default has no bearing, a cause of action only applies to non-contractual tort. It all depends on the applicable law at the time the contract was formed - that is the bedrock of contract law after all. Enforcement of the sums owed can only be derived from the contract itself - otherwise trying to prove a debt is not enforceable because the contract was faulty due to missing terms would never work.

 

1. If you live in Edinburgh, take out a loan then default before moving to Swansea what then? As a consumer you have to be sued in the country you are domiciled in. Which statute of limitations applies and why? Bearing in mind that when forming the contract you are not allowed to opt out of the Scots prescriptions Act.
    
   
2. And what if you moved to Wales before defaulting?
   

 

In both cases above the contract was signed in the same place. So if consumers have to be sued in the place they are officially domiciled what would happen?

[Newborn]

I was only trying to discuss around this issue and point out what I've read on legal sites.

[Newborn]

Thanks dx. I just think this subject should be looked at in more detail because at some stage someone my think a debt is statute barred when it is not.

[Newborn]

These took me a long time to dig out and I was not aware that any of the following sites that I posted were mason/FOTL sites:

 

Cripps Harries Hall: http://crippslink.com/index.php?option=com_cont ent&view=article&catid=26 %3Acdr-publications&id=805%3Arom e-1-the-law-applicable-to-contracts&Itemid=537

 

Europoean Commission: http://ec.europa.eu/civiljustice/applicable_law/applicable_law_sco_en.htm

 

European Commission: http://ec.europa.eu/civiljustice/app...law_eng_en.htm

 

Pinsent Masons: http://www.out-law.com/page-479

 

HM Revenue and Customs: http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm28384.htm

[Newborn]

Hi rameses, that was sort of what I was trying to do. But what concerned me was that it seems that business to business debt is treated differently to business to consumer debt where jurisdiction and applicable law are concerned. Also there are differing laws depending on the date of the contract as well as what was actually written on the contract agreement as well as where each party was domiciled when the contract was formed. This would mean that the debtor would have to be extremely careful when just saying this is statute barred.

As to my reference to 'non contractual tort', all I was pointing out was that when looking at breach of contract what is important is what took place when the contract was formed. Where the cause of action took place seems to have no bearing on jurisdiction or applicable law for a contract only for a wrong such as injury.

[Newborn]

Hi Dodgeball, I do agree that as long as the Op in the original thread was a 'consumer' as opposed to a business customer they would probably be covered by the 1973 Scottish Act. But with the complexities as pointed out by rameses we need to be a little careful.

 

For my part I lived in Scotland then moved to England where I defaulted on a couple of consumer credit cards. I have not paid/acknowledged for 5 and a half years. But just looking for a simple answer to 'am I covered by Scots or English law' threw up more questions than answers - especially as the laughable T&Cs that the DCA and OC sent to me said that the alleged and unreadable agreement I signed when domiciled in Scotland was governed by 'English law'.

 

As a law graduate I found it hard to wade through and understand all the conflicting laws, so i was worried that others might end up being shafted because they put the wrong argument forward.

[Newborn]

It seems to me that there are several factors in the example you put:

 

Where is the loan taker domiciled?

Where is the lender domiciled?

What applicable law is stated on the contract?

Is the loan taker a consumer or a business borrower?

 

I may be wrong but as I see it a consumer would probably be protected by the Scots 1973 Act, but a business borrower could legitimately be taken to court in England (no consumer protection) and the English SOL would apply.

[Newborn]

Hi Ganymede, the only point I would make with your reply is that, an EU consumer MUST be sued in the country in which they are domiciled at the time. So in this case the consumer would have to be sued in the French courts, but using which law? And would the French or English SOL be the one to use? But the route you suggest could I think be used against a business debtor.

[Newborn]

I took this comment:

 

Further, in almost all business to consumer sales the consumer can choose which country to take an action against the business, but the consumer can only be sued in his own country of residence.

 

From here: http://www.out-law.com/page-479

 

And this one:

 

However, the seller can only sue the consumer in the consumer's country of domicile.

 

From here: http://www.kentlaw.edu/cyberlaw/docs/rfc/euview.html

[Newborn]

But Ganymede, where the debtor who signed a contract in England but defaulted and now lives in Scotland gets taken to court after five years of no acknowledgement/payment, it is against Scottish public policy if they are a consumer to say that the debt still exists. So they are protected?

 

Rameses, as I understand it business to business contracts are viewed more strictly by the courts because the parties are 'equals' whereas the consumer is always viewed as the underdog so given more protection. In fact even where a consumer contract specifies that it is under 'English law' that may not always apply. See here: http://www.govanlc.com/jurisdiction.htm

 

This applicable law versus jurisdiction has further implications - if a contract is governed by scots law but heard in an English court does the Scots more stringent proof of the CCA docs apply?

[Newborn]

I tend to disagree Dodgeball.

 

A CCA in Scotland is subject to Scottish mandatory law (those that cannot be signed away) like the prescriptions act 1973 - so it may not matter where they move afterwards. Whereas in England it would be subject to the limitations act 1980 in the same way.

 

Please do not confuse 'jurisdiction' (the right to hear a case) with applicable law (what law applies to a case). They are not the same thing.

 

And the law covering conflicts and differences in jurisdiction and applicable law between Germany and France is the same as those between England and Scotland etc.

 

As I see it there is no simple rule (something we would like to see) rather it is on a case by case basis depending on the date of the contract, the domicility of the parties as well as the question of business to business or business to consumer.