Debtors cannot use the passage of time as reason to not pay outstanding dues.

Posted on: 25 Jan 2017

Category: News

Important changes to the civil law regime regulating the institute of extinctive prescription were recently introduced by an ACT to amend the Civil Code, Cap.16.

Effective from the 13.01.17, a debtor can no longer enter a plea of prescription in connection with certain short prescriptive terms whilst merely relying on the passage of time as an excuse not to effect payment of his dues.

Previously, depending on the type of debt and the amount owed after a prescribed period had passed without the debtor acknowledging the debt in any way, the debt could have been deemed as being unenforceable if the relevant plea were to have been filed by the debtor in Court.
Under the recently introduced amendments to Article 2160 of the Civil Code, now one cannot simply plead he does not owe anything merely due to the passage of time, as such an action would actually be deemed as an acknowledgement of the debt.
The new amendments imply that in certain specified cases, in order to raise the plea of prescription, the debtor must link the said plea to a legitimate contestation.
This is clearly very significant shift in the way prescription is dealt with by the Maltese Legal System as previously debtors could feel safe in the knowledge that if neither they nor creditors did anything for a specified period of time, they would have been able to plead prescription in court without having to link the said plea of prescription to any other ground, does essentially doing away with their responsibility to effect payment of an otherwise legitimate claim.
As stated the recent amendments have done away with this possibility and a plea of prescription, in certain specified cases, will not be possible without being linked to a contestation – a change that will have big implications on both corporate and individual cases.