Choice of Law Provision Did Not Govern Statute of Limitations

On June 7, 2022, the First Department issued a decision in Baker v. Greentech Capital Advisors, L.P., 2022 NY Slip Op. 03679, holding that a choice of law provision did not govern the statute of limitations, explaining:

Defendants argue that plaintiffs’ claims for breach of their respective agreements with defendants are barred by Delaware’s three-year statute of limitations. We find, however, that the choice-of law provisions in the parties’ partnership agreement do not require the application of Delaware’s statute of limitations to plaintiffs’ claims.

The choice-of-law provision in the parties’ partnership agreement specifically provided that it is to be construed in accordance with Delaware law. Thus, the preliminary question of whether the choice-of-law clause should be “construed” to cover the applicable statute of limitations period must be decided under the law the parties chose in the contract, that is, Delaware substantive law, and not the law of the forum state.

Under Delaware law, choice-of-law provisions apply to issues of substantive law, while procedural issues (such as the appropriate limitations period) are governed by the forum state. In other words, under Delaware law, a contract’s choice-of-law provision does not apply to the statute of limitations unless it says so explicitly. As the choice-of-law provision in the partnership agreement does not expressly mention the application of the Delaware statute of limitations, the law of the forum state (New York) governs the limitations period.

(Internal citations omitted).

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