The High Court has considered time bar clauses in the recent case of Arab Lawyers Network Company Ltd v Thomson Reuters (Professional) UK Ltd [2021] EWHC 1728 (Comm) (25 June 2021).

Ironically, this case concerned a dispute between two companies who supply legal resources.  The relevant agreement included a time bar clause, which required any claim to be brought within one year "after the basis for the claim becomes known to the party desiring to assert it".

The defendant company argued that the claim was time barred, as the claimant had written a letter alleging breach over one year before issuing proceedings. The High Court was therefore required to consider the meaning of "becomes known" for the purposes of the time bar clause.

Deputy Judge MacDonald Eggers QC noted that: 

  • On the one hand, a time bar provision restricts a contracting party’s entitlement to exercise rights / enforce obligations. Therefore, if the provision is ambiguous, the Court should generally adopt a construction which is favourable to the claimant. This is because it is unlikely that the parties would lightly intend that a party would surrender valuable legal rights without the use of clear words to achieve that effect.
  • However, on the other hand there may be a genuine commercial justification for a time bar provision i.e. to ensure that the defendant is able to investigate the claim soon after it is made, rather than having the potential disadvantage of investigating years later.

The judge held that 'knowledge' should be given its ordinary, natural meaning - the question was therefore when the claimant knew or became aware of the basis for the claim.

In this context, 'knowledge' meant that the claimant must have a sufficient measure of confidence in the belief which was justified by evidence, experience or reasoning. A mere suspicion, even if supported by some indeterminate evidence, was not sufficient to constitute 'knowledge' and start time running.

The High Court consequently dismissed (in part) the defendant's application for summary judgment, on the basis that the claimant had a real prospect of defeating the time bar defence and succeeding in some of its claims for unpaid royalties.

There are obvious parallels with the time bar provisions of the FIDIC and NEC4 contracts. For example:

  • NEC4 requires the Contractor to notify compensation events "within eight weeks of becoming aware that the event has happened"
  • The FIDIC Red Book 1999 requires the Contractor to give notice "not later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstance."

However, the drafting is not identical and this judgment emphasizes that the starting point is always the wording of the specific contractual time bar clause in question.