In its judgment of 9 September 2026, Case No. 21 Cdo 1228/2026, the Supreme Court considered a dispute between an employer and a trade union concerning the repayment of funds provided under several donation agreements. The employer claimed that the trade union had used the funds contrary to their agreed purpose and sought their repayment. A key issue was the limitation of the claims, particularly the possibility of suspending the running of the limitation period under the second sentence of Section 650 of the Civil Code where a creditor had been fraudulently misled by the debtor.
The Supreme Court reiterated that fraud involves intentional conduct whereby one party knowingly provides false information or conceals the true state of affairs with the intention of misleading the other party. Such conduct is fraudulent and dishonest and cannot enjoy legal protection. Where a creditor has been misled as a result of such conduct and has consequently failed to exercise their right, the creditor cannot be blamed for relying on the other party’s honesty and for not actively taking steps to uncover the deception.
The Supreme Court therefore concluded that, for the purposes of suspending the limitation period under the second sentence of Section 650 of the Civil Code, it is irrelevant whether the creditor could have discovered the debtor’s fraud by exercising greater diligence. If the reason for failing to exercise the right was that the creditor had been fraudulently misled by the debtor or a person close to the debtor, the creditor cannot be required to bear the adverse consequences of failing to uncover the other party’s dishonest conduct.
The Court of Appeal therefore erred in concluding that the employer should bear the consequences of failing to exercise its right to inspect the use of the donated funds at an earlier stage. In the subsequent proceedings, the court must examine whether the trade union had indeed fraudulently misled the employer and whether the conditions for suspending the limitation period were therefore satisfied.
HR Legal Update 09/2026 download here.