LIMITATION PERIODS UNDER INDEMNITY CLAUSES: DATE OF REALISATION FAVOURED OVER DATE OF INCEPTION

Mayor and Commonalty and Citizens of London v Reeve and Co Ltd and others ([2000] BLR 211)

The period within which a party to an indemnity clause must seek payment under its terms is prima facie a matter of construction, to be identified from the wording of the clause itself. Where the clause purports to indemnify the payee against liability to a third party, the starting date may be either the date on which the third party liability was incurred or the date on which that liability was ‘realised’ in the sense of being quantified, established by judgment or actually paid by the present claimant.