The Special Court of the Superior Court of Justice (STJ) advanced to put an end to the controversy over the limitations period applicable to claims based on contractual civil liability. In a judgment last May 14, the Justices decided, by a majority vote (7x5), that the ten-year statute of limitations is what is appropriate in these cases.

The decision is the one with the greatest hierarchical relevance on the subject thus far handed down in Brazil and sets a binding precedent, which should be observed both by the panels and sections of the STJ itself and by the lower courts, per article 927, item V, of the Code of Civil Procedure (CPC).

The statute of limitations on the filing of lawsuits is an issue of unquestionable relevance, since the occurrence of a time-bar removes the possibility of obtaining in court the exercise of a right or liability for violation thereof. It is therefore desirable that such limitations periods be defined in a clear and stable manner without major changes over time.

This issue is especially important when any modifications may represent legal uncertainty should there be a sudden change of understanding shortening a limitations period. This would certainly frustrate the expectations of litigants in relation to the filing of lawsuits or arbitrations and would restrict the period that could be protected via these proceedings.

The issue gains even greater relevance in long-term contracts, in which the parties often choose to wait until the end of the agreement to initiate a dispute. After all, this choice does not affect the beginning of the limitations period, which coincides with the moment of the violation of the right (article 189 of the Civil Code), even if the contractual relationship continues in force.

Since the entry into force of the Civil Code of 2002, however, legal scholarship diverges regarding the limitations period applicable to claims based on contractual civil liability: some jurists claim it to be three years, due to the provisions of article 206, paragraph 3, item V of the Civil Code, while others argue that such a time limit would apply only to claims based on non-contractual civil liability. Accordingly, for contractual civil liability, the general ten-year period set forth in article 205 of the Civil Code is said to apply to those cases in which the law has not established a lesser limitations period.

The discussion is restricted exclusively to contractual civil liability, since it is settled that the non-contractual civil liability is covered by the provisions of the Civil Code cited above and, consequently, the respective limitations period is three years.

An attempt to settle the issue with regard to contractual civil liability was also made, through Restatement of Law No. 419 of the Fifth Workshop on Civil Law, of the Federal Justice Council and the Superior Court of Appeals, approved in November of 2011. The idea at the time was to establish that claims based on contractual civil liability as well as non-contractual civil liability should be governed uniformly by the three-year limitations period. However, the divergence persisted.

Contrary to the restatement in question, for example, the STJ itself has for the most part adhered to the general ten-year limitations period for contractual civil liability, although it has sometimes decided to apply a contradictory three-year limitations period for only certain modalities of contractual obligations.

In November of 2016, the divergence regarding the subject came about definitively within the STJ: in deciding Special Appeal (REsp) No. 1.281.594 - SP, the Third Panel of the STJ modified its understanding and decided that the limitations period in contractual civil liability is three years.

The decision generated an immediate reaction by the advocates of the general limitations period of ten years, where two nationally-known authorities on the civil law published an article supporting this position.[1]

Apparently influenced by the arguments presented in this publication, in June of 2018, the Second Section of the STJ, composed of the Third and Fourth Panels, decided, in Motion to Settle Divergence in Special Appeal No. 1.280.825/SP, that the applicable limitations period is ten years.

Since these two judgments occurred, litigants in contractual relations have come to live with intense legal uncertainty as to the possibility of exercising their rights.

Fortunately, however, the unsuccessful party in REsp. 1.281.594 - SP filed a motion to settle divergence against the decision (precisely to settle the case law with the courts of appeal). The appeal was then referred to the Special Court of the STJ, which decided in favor of the ten-year statutory limitations period.

Notwithstanding the divergence as to the binding effect of this decision also on arbitral tribunals, it is expected that it will also be observed in arbitration proceedings, as a means of ensuring equal protection to contract parties and ensuring legal certainty.

It is still necessary to await a final and unappealable decision so that the divergence may be definitively considered to have been overcome, but the expectation is that it will be upheld and the topic settled for a long period of time.

In addition, the decision favors legal certainty, since it removes the possibility that claims made in disputes initiated, or about to be initiated, three years after the beginning of the limitations period, and backed by the majority position, may be suddenly considered time-barred.

Also, in order to strengthen legal certainty, the decision stated that “the statute of limitations constitutes, in a certain manner, a rule restricting rights, and cannot entail an expansive interpretation of the guidelines laid down by the legislature" (page 33 of the appellate decision), which should serve as a parameter so that future decisions on the subject of the statute of limitations, even if in different contexts, favor restrictive interpretations.

[1] MARTINS-COSTA, Judith; ZANETTI, Cristiano de Sousa; Responsabilidade contratual: prazo prescricional de dez anos [“Contractual liability: ten-year limitations period”]. Revista dos Tribunais, São Paulo, v. 797, p. 215-241, May. 2017.