If an insurance company has been unjustly enriched by the fact that its client has paid insurance sums on the basis of an invalid contract, the beginning of the subjective limitation period for the right to recover unjust enrichment cannot be automatically identified with the conclusion of the insurance contract and the individual premium payments.
This was stated by the Constitutional Court in its current ruling. According to the Court, this would de facto negate the essence of the subjective limitation period, which presupposes the knowledge of the entitled subject of a certain fact.
Limitation is a traditional legal institution whereby a subjective right is weakened by the lapse of time. It is intended to motivate the beneficiary (creditor) to take appropriate legal action (e.g. recovery of a sum of money) within a certain time limit. The limitation period consists of two components, namely a subjective period and an objective period. The start of the subjective limitation period depends on subjective circumstances, i.e. linked to a particular subject of the legal relationship who, for example, discovers a certain fact. In contrast, the start of the objective limitation period is independent of the subject of the legal relationship. The start of both periods may be identical, but may also differ by days, months or years (for example, someone causes damage to my property – my cottage – but I do not find out about it until 11 months later, when I go to the cottage. The objective period for compensation will therefore start to run 11 months earlier). The effects of the limitation period begin when one of the above periods expires, whichever is earlier.
Tip: We have discussed the definition of subjective and objective limitation periods in more detail in our article on the limitation of claims.
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In the case under review, a situation arose where the insurance company’s client paid the insurance claim under an invalid insurance policy. According to his submissions, he only became aware of the invalidity of the contract in question (concluded in 2011) in February 2017 and began to recover the unjust enrichment in May of that year. However, according to the opinions of the courts of general jurisdiction, the subjective time-limit for individual claims always began to run on the date of the actual payment of the premium, i.e. on the date on which the unjust enrichment on the part of the insurance company actually occurred. In their view, what was relevant was when the beneficiary discovered the circumstances from which it could be inferred that the contract under which the payment was made was invalid, which could objectively have occurred at the time of its conclusion. It is irrelevant whether the creditor had such legal knowledge as to be able to assess the invalidity of the contract. Since the complainant had made all the premium payments more than two years before it started to recover them, the courts of general jurisdiction considered that the right was time-barred.
The complainant argued that the contractual documents were too complex and that, without professional assistance, he could not have been subjectively aware of the nullity of the contract, so that at the time of the payment under the void contract he had no idea that he was paying under a void contract or that someone was being unjustly enriched at his expense.
In the opinion of the Constitutional Court, it is clear from the individual circumstances of the case that the complainant was highly unlikely to have been aware of the nullity of the contract and thus of the existence of unjust enrichment on the part of the insurance company. According to the Constitutional Court, it does not make sense why he would have made the payments at that point in time. Rather, the regular payments indicate that the complainant had, at least for a certain period of time, assumed that the contract was in order and therefore valid.
It is therefore indeed necessary to distinguish subjective knowledge of something from objective fact (however difficult it may be to prove such a thing). The starting point of the subjective limitation period for the right to recover unjust enrichment cannot be determined without more simply by reference to the time when the contract was concluded and the premiums paid. Those are objective circumstances in themselves which do not indicate the subjective knowledge of the beneficiary of the unjust enrichment. If it is clear from the circumstances of the case that the creditor was very likely unaware of the existence of the unjust enrichment due to the nullity of the contract at the time of the premium payments, the courts should take steps to establish the beneficiary’s subjective knowledge of the unjust enrichment (i.e. the nullity of the contract).
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