Choice-of-Law Provisions, Conflict-of-Law Rules, the Statute of Limitations, and the Borrowing Statute
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A—an Ontario-based corporation–commences a New York state court lawsuit against B—a New York-based corporation–in New York state court for breach of contract. The contract contains a mandatory New York choice-of-forum clause and a very broad choice-of-law provision, which, among other things, designates New York law to govern the contract and its “enforcement.” If Ontario’s two-year statute of limitations applies, then the suit is time barred, but if New York’s six-year statute of limitations applies, then the suit is timely. Is A’s suit barred by the statute-of-limitations?
In Ontario, Inc. v. Samsung C&T Corp., ___ A.D.3d ___, No. 2016 NY Slip Op 06671 (1st Dep’t Oct. 11, 2017), New York’s Appellate Division, First Department, faced with these facts, concluded that A’s suit was time-barred because plaintiff was a nonresident of New York, the claim accrued in Ontario and the action was commenced more than two years after the date of the breach.
While the outcome of the Court’s decision was right on the mark, the reasoning it used was unusual, and potentially problematic if applied with equal force to cases commenced in New York where the parties agree their contract should be enforced under the law of a state having a statute of limitations that is longer than that of New York. It is also problematic because the statute of limitations is only one of countless other New York laws that are considered “procedural” for conflict of laws purposes. The Court’s decision suggests that parties can, for example, agree that New York Court must apply the California Code of Civil Procedure, rather than the New York’s Civil Practice Law & Rules (the “CPLR”). While it seems unlikely a court would seriously entertain such an argument, the decision arguably provides legal support for it.
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