Provisions on Several Issues Concerning the Application of the System of the Prescription of Actions in Trials of Civil Cases

(1) claims for the payment of the principal of, and interest on, deposits;

(2) claims for the redemption of the principal of, and payment of interest on, treasury bonds, financial bonds, and corporate bonds offered to the general public;

(3) claims for the payment of capital contributions arising from investment relationships; and

(4) other claims for debts to which, in accordance with the law, provisions on the prescription of actions do not apply.

Article 2: If, in violation of the law, parties agree to extend or shorten the period of prescription of actions or waive in advance the benefits of the prescription of actions, the people's court shall not recognise the same.

Article 3: If a party does not mount a defence on the basis of the prescription of actions, the people's court shall not provide an explanation of the issue of the prescription of actions or actively apply provisions on the prescription of actions in reaching its judgment or ruling.

Article 4: If a party fails to mount a defence on the basis of the prescription of actions at first instance but does so at second instance, the people's court shall not support the same, unless, based on new evidence, it can be established that the other party's claim has exceeded the period of prescription of actions.

If a party fails to mount a defence on the basis of the prescription of actions in accordance with the preceding paragraph and files an application for a retrial or objects to a retrial on the grounds of the expiration of the period of prescription of actions, the people's court shall not uphold the same.

Article 5: If the parties have agreed that a debt obligation is to be performed in stages, the period of prescription of actions shall be counted from the date on which the term for performance of the last stage expires.

Article 6: If a term for performance is not specified in a contract but such term can be determined in accordance with Articles 61 and 62 of the Contract Law, the period of prescription of actions shall be counted from the date on which the term for performance expires. If the term for performance cannot be determined, the period of prescription of actions shall be counted from the date on which the grace period allotted by the creditor to the debtor to perform its obligations expires. However, if the debtor expressly indicates, on the first occasion that the creditor asserts its claims against the debtor, that it will not perform its obligations, the period of prescription of actions shall be counted from the date on which the debtor expressly indicates that it will not perform its obligations.

Article 7: If a party with a right of rescission requests rescission of the contract, the provisions of Article 55 of the Contract Law on a one-year cut-off period shall apply.

If the other party mounts a defence on the basis of the prescription of actions against the claim for rescission of the contract, the people's court shall not uphold the same.

If a contract is rescinded, the period of prescription of actions for a claim for property return or damages shall count from the date on which the contract was rescinded.

Article 8: The period of prescription of actions for a claim for the return of illegitimately gotten gains shall be counted from the date on which the concerned party learnt or ought to have learnt of the facts of the illegitimately gotten gains and of the other party.

Article 9: The period of prescription of actions for a claim for the payment of a necessary management fee or damages arising from the negotiorum gestio act of a gestor shall be counted from the date on which the negotiorum gestio act concluded and the gestor learnt or ought to have learnt of the principal.

The period of prescription of actions for a claim by a principal for damages arising from an improper negotiorum gestio act shall be counted from the date on which it learnt or ought to have learnt of the gestor and the facts of the damage.

Article 10: Any of the following circumstances shall be deemed a “party demanding that obligations be performed” as specified in Article 140 of the General Principles for Civil Law and give rise to an interruption of the prescription of actions:

(1) a party directly delivers to the other party a document asserting its claims and the other party signs and/or stamps the document or, despite its not signing or stamping the document, it can otherwise be established that the document was served on the other party;

(2) a party has asserted its claims by sending a letter or electronically transmitted document, and the letter or electronically transmitted document has reached or ought to have reached the other party;

(3) if a party is a financial institution, it has deducted the principal of and interest on the amount owed from the other party's account in accordance with the law or as agreed by the parties; or

(4) if the whereabouts of a party is unknown, the other party publishes an announcement asserting its claims in media with national reach or influential provincial level media in the place where the party whose whereabouts are unknown is domiciled, unless laws or judicial interpretations specifically provide otherwise, in which case such provisions shall apply.

In the circumstance set forth in Item (1) of the preceding paragraph, if the other party is a legal person or other organisation, the person signing in receipt may be its legal representative, main person in charge, the department responsible for the receipt and sending of correspondence or an authorised entity; if the other party is a natural person, the person signing in receipt may be the natural person himself/herself, a relative with full capacity to act who resides with such person, or an authorised entity.

Article 11: If a rights holder asserts claims with respect to a portion of a claim on a debt, the effect of the interruption of the prescription of actions shall extend to the remainder of the claim on the debt unless it expressly waives the remainder of the claim on the debt.

Article 12: If a party submits a statement of claim to a people's court or orally institutes a legal action, the prescription of actions shall be interrupted from the date of submission of the bill of complaint or oral institution of the legal action.

Article 13: With respect to the interruption of the prescription of actions, the people's court shall recognise any of the following events as having the same effect as the institution of a legal action:

(1) an application for arbitration;

(2) an application for a payment order;

(3) a bankruptcy petition or declaration of claims in bankruptcy;

(4) an application for a declaration that the obligor is missing or dead for the purpose of asserting claims;

(5) an application for pre-trial preservation of property, pre-trial temporary injunction or other such pre-trial measure;

(6) an application for enforcement;

(7) an application for the addition of a party to, or a notification to participate in, a legal action;

(8) the assertion of set-off in the course of a legal action; or

(9) another event that, in the interruption of the prescription of actions, has the same effect as the institution of a legal action.

Article 14: If a rights holder submits a petition for the protection of pertinent civil rights to a people's mediation commission or other state authority, public institution, association or other social organisation that has the authority in accordance with the law to resolve relevant civil disputes, the prescription of actions shall be interrupted from the date of submission of the petition.

Article 15: If a rights holder reports a case to, or files a charge with, the public security authority, people's procuratorate or people's court seeking protection of its civil rights, the prescription of actions shall be interrupted from the date of reporting of the case or filing of the charge.

If the aforementioned authority decides not to open the case, to withdraw the case or not to institute the action, the period of prescription of actions shall be counted anew from the date on which the rights holder learnt or ought to have learnt that the case would not be opened, was withdrawn or that the action would not be instituted. If a criminal action proceeds to the trial stage, the period of prescription of actions shall be counted anew from the date on which the criminal judgment document enters into effect.

Article 16: If the obligor gives an undertaking or acts to perform in stages, partially perform, provide security, petition to postpone performance, formulate a debt repayment plan, etc., the same shall be deemed to be a party “agreeing to perform its obligations” as specified in Article 140 of the General Principles for Civil Law.

Article 17: If a reason for the interruption of the prescription of actions arises in respect of one among joint creditors, the interruption of the prescription of actions shall be deemed to have occurred for the other joint creditors as well.

If a reason for the interruption of the prescription of actions arises in respect of one among joint debtors, the interruption of the prescription of actions shall be deemed to have occurred for the other joint debtors as well.

Article 18: If a creditor institutes a legal action with respect to the right of subrogation, interruption of the prescription of actions shall be deemed to have occurred in respect of the creditor's claim and the debtor's claim.

Article 19: If a claim is transferred, the prescription of actions shall be deemed to have been interrupted from the date on which the claim transfer notice reached the debtor.

Under a circumstance where a debt is assumed, where acknowledgment of the debt of the original debtor is constituted, the prescription of actions shall be deemed to be interrupted from the date on which the expression of the intent to assume the debt reaches the creditor.

Article 20: Any of the following circumstances shall be deemed “another impediment” as specified in Article 139 of the General Principles for Civil Law and the prescription of actions shall be suspended:

(1) the person with no or limited civil capacity whose rights have been infringed does not have a statutory agent, or his/her statutory agent has died, lost his/her power of agency or lost his/her capacity to act;

(2) no heir or executor of the estate has been determined after the commencement of a succession;

(3) the rights holder is controlled by the obligor or another party and is unable to assert its claims; or

(4) another objective circumstance under which the rights holder is unable to assert its claims arises.

Article 21: Once the period of prescription of actions with respect to a principal debt expires, the guarantor shall have the principal debtor's right of defence in respect of the prescription of actions.

If the guarantor fails to exercise the aforementioned right of defence and wishes, after performing its guarantee obligations, to exercise the right of recovery against the principal debtor, the people's court shall not uphold the same, unless the principal debtor agrees to make payment.

Article 22: If the period of prescription of actions expires, and after a party expresses to the other party the intent to agree to perform its obligations or voluntarily performs its obligations it mounts a defence on the grounds that the period of prescription of actions has expired, the people's court shall not uphold the same.

Article 23: If, at the time of the implementation of these Provisions, a case is in trial at first instance or at second instance, these Provisions shall apply. If a final judgment has been reached in a case before the implementation of these Provisions and the people's court retries the case, these Provisions shall not apply.

Article 24: In the event that these Provisions conflict with a relevant judicial interpretation rendered by this court before the implementation hereof, these Provisions shall prevail.