The limitation of the substantive right of action in the execution of administrative contracts

In this material, we will address a matter of general interest for companies regarding the contractual relationship with a public authority. 

The analysis concerns an administrative contract of common law, concluded (only) on the basis of the provisions of Law 554/2004. So, not a public procurement contract, concession, or other such contracts which benefit from special legal requirements, which derogate from the common ones.

The subject is the limitation of the substantive right of action in the execution of administrative contracts, before and after the entry into force of Law No 212/2018.

The importance of the preliminary procedure even after it is no longer a binding procedure for the claimant.

Law no. 212/2018 brought important amendments to Law no. 554/2004 and to the preliminary procedure for administrative contracts, by repealing the provisions of art. 7 para. (6) lit. c)-e) which regulates the time limit for carrying out the preliminary procedure in the form of conciliation, in case of disputes related to the execution, termination, or interpretation of the contract.

Thus, in the previous form of the law, the preliminary procedure was also mandatory for the execution of administrative contracts.

The beginning of the limitation period for the administrative action in the case of administrative contracts was linked, until the entry into force of Law no. 212/2018, to the conclusion of the preliminary conciliation procedure; in this regard, Article 11 of Law no. 554/2004 provided that the limitation period shall begin, in the case of administrative contracts, from the date of the conclusion record of the conciliation procedure.

This dependence between the formulation of the preliminary procedure and the expiry of the limitation period of the substantive right of action did not produce any inconvenience or different interpretation because, from a procedural point of view, the failure to carry out or the improper carrying out of the preliminary procedure entails the inadmissibility of the action in administrative proceedings.

The failure to carry out or improperly carrying out the preliminary procedure, leading to the inadmissibility of the action, prevents the analysis of the incidence of extinguishing prescription, which becomes subsequent to the analysis of the admissibility or inadmissibility of the action by reference to the preliminary procedure.

However, the situation is not the same after the entry into force of Law 212/2018.

Symmetrically with the repeal of the provision on the conduct of preliminary procedure in disputes concerning the execution of contracts, the provision establishing the initial moment of the limitation period for the substantive right of action was also repealed.

Thus, the question is if by doing so, the legislator has implicitly modified the limitation period applicable to the substantive right of action for the execution of administrative contracts.

We consider that, at present, in disputes concerning administrative contracts, in cases where the preliminary procedure is applicable (e.g. actions for annulment of an administrative contract) the limitation period for the substantive right of action runs from the date of communication of the answer to the preliminary procedure or the expiry of the time-limit for its resolution, and in cases where it is not necessary (e.g. actions for avoidance of an administrative contract) the initial moment of the limitation period shall be determined according to the rules of common law or, where applicable, special provisions, such as the provisions of Law No 101/2016 or other special provisions applicable to the nature of the contract.

As regards the duration of the limitation period applicable to administrative contracts under common law, it differs according to the subject matter of the dispute and is determined in accordance with Law 554/2004.

In the case of disputes arising from the execution of administrative contracts, the subject of our analysis, we consider that the limitation period applicable is the standard law limitation period provided for in Article 2517 of the Civil Code, 3 years.

Thus, although the Law no. 212/2018 substantially amended the Law no. 554/2004, it no longer contains express provisions of the duration of the limitation period applicable to disputes concerning the execution of administrative contracts under the common law, which it removed from the administrative contentious and gave to the jurisdiction of civil courts.

In support of the position that Law 212/2018 only amends the preliminary procedure as a condition of admissibility - or not - of the action in administrative contentious, not the limitation period, the following arguments could be made:

• the relationship between the preliminary procedure and the limitation period is not of the essence of the limitation period so the elimination of the preliminary procedure automatically leads to the elimination of the special limitation period established by Law no 554/2004;
• the provisions of Article 11 of Law No 554/2004 remain unchanged - as regards the recognition of the right claimed - except for the elimination of the obligation of preliminary procedure as regards the execution, interpretation, and interpretation of administrative contracts.

In all cases, however, no matter the type of administrative contract, in addition to the special provisions, the provisions of the common law, represented by the Civil Code, regarding the course of the extinguishing prescription (beginning, suspension, interruption of the term),  are applicable as well as the provisions regarding the application in time of the law, according to the provisions of Article 28 of Law no. 554/2004.

The resolution of the conflict of laws in time implies a distinction between the rules of procedure and those of substantive law, with the mention that prescription, which is an institution belonging to substantive law but also involves procedural aspects, benefits from its own specific transitional rules.

Thus, the legislative amendments made in the field of administrative contentious regarding the duration of the limitation period and the carrying out of the preliminary procedure with implications for the start of the limitation period will be applied in accordance with the rules contained in Art. 24, Art. 25 para. (1) of the Code of Civil Procedure, with regard to the rules of procedure, Art. 6 para. (4) of the Civil Code, as regards prescription.

With regard to the rules of civil procedure, such as those relating to the mandatory or non-mandatory nature of the preliminary procedure, the law in force at the time the court was referred is applicable.

However, given that the object of the analysis is actions concerning the execution of an administrative contract, it must be verified whether or not the preliminary procedure was carried out in accordance with the law in force at the time of the non-performance/improper performance of the contractual obligation. Still, this verification is required not from the perspective of the exception of inadmissibility, which is not applicable, but in order to determine the applicable limitation period and its calculation, given the link existing in the previous legislation between the limitation period and the preliminary procedure.

Thus, in accordance with Article 6 para. (4) of the Civil Code, the prescriptions begun and not fulfilled at the date of entry into force of the new law are entirely governed by the legal provisions that established them. Therefore, the first step in determining the applicable law with respect to the limitation period is to determine when it began.

The importance of this check is that the duration of the limitation period in the case of disputes arising from the performance of the contract is different depending on the date of the breach of the contractual obligation.

Under the rules prior to Law no. 212/2018, the time limit for filing a preliminary procedure according to the provisions of Article 7(6) lit. c of Law 554/2004: "from the date of the breach of contractual obligations, in the case of disputes related to the performance of the contract;"

The limitation period is 6 months and runs from the date on which the preliminary conciliation procedure equivalent to the preliminary procedure was carried out or, if the procedure was not carried out, from the expiry of the maximum period in which it could be carried out, 6 months, according to Article 7 para. (6) of Law no. 554/2004. 

In conclusion, the amendments made by Law no. 212/2018 apply to proceedings started after its entry into force, as regards the jurisdiction of the courts, the regularity of the referral (preliminary procedure), and the trial procedure, while the amendment in the duration of the limitation period and the time from which it starts to run (determined by reference to the preliminary procedure) applies only to the limitation periods that started to run after the entry into force of the new law.

MAXIM/ Associates

Av. Ilinca Pop

28.09.2022