Statute of limitations: A common topic in construction contract disputes

The General Principles of the Civil Law of the People’s Republic of China took effect on 1 October 2017. One of the most noteworthy revisions concerning dispute settlement, compared with the superseded version, appears in article 188, which extends the statute of limitations from two to three years. However, for each case involving a claim of statute of limitations, the focus lies on when the statute of limitations starts.

For example, determining the statute of limitations is a common challenge for cases involving contracts for construction work, because of the various deadlines for project payments. In addition to the above-mentioned general principles, the laws, regulations and judicial interpretations that prescribe statutes of limitations for disputes involving contracts for construction works include, among others, the Regulations on the Quality Management of Construction Projects and the Interpretations on Application of Laws in Hearing Disputes Arising from Contracts for Construction Works of the Supreme People’s Court.

Payment obligations that an employer has under a contract for construction work include the obligation to make project payments (including project payments specified in the contract, and any additional project payments) and the obligation to pay a performance bond. Can the two payment obligations be deemed relating to the one and same debt, paid in instalments? And how do we determine the expiration dates for performing the respective payment obligations?

Alex Hsin is a senior partner and Craig Zhou is an associate at MHP Law Firm