The following article discusses session one in the IR Global Virtual Series on ' Litigation Funding: Handling commercial and
US – Erwin Shustak
(ES) Even if there is a reimbursement provision which allows the court or
other tribunal to award the prevailing party its legal fees and costs, the
plaintiff pays the cost in the first instance, subject to being reimbursed, if
determined to be the ‘prevailing’ party. Costs range from filing fees to
process servers to get a case started, and we usually tell people to budget
around USD1,000 for those costs in a court litigation and 3-5 times that for an
arbitration proceeding depending on the arbitration forum.
The filing and initiation fees, however, are just the tip of
the iceberg. It is the legal fees, court reporter, expert and outside
electronic discovery firms that really add up as the case or arbitration
proceeds. Unlike many other jurisdictions, in the US, the ‘discovery process’
includes depositions; document searching and production and the extensive
amount of legal time spent is what makes litigation or arbitration an expensive
Dan Engström (DE)
Application fees for litigation in a district court are SEK2,800 or about
USD350. For small claims (below SEK22,750) the application fees are SEK900.
Like Erwin says though; it’s not the registration fees that create the cost,
it’s the lawyer’s fees. A commercial lawyer in Stockholm, will charge between
USD350-450 per hour and the main rule is that the losing party pays the winning
party’s costs if held fair.
Cimadevilla (MCC) In France commercial disputes are tried in the first
instance by lay judges (“Tribunal de commerce”) and specialised chambers of the
Courts of Appeal in the second instance.
The initial procedural costs are very low, usually less than
EUR100 initially and approximately EUR250 before the Court of Appeal plus costs
of service by bailiffs.
There is no discovery or cross-examination except when, the
parties having agreed to it, the case is tried by the International Chamber of
the Commercial Court of Paris and the International Chamber of the Court of
Appeal of Paris, where exhibits may be exchanged in English without
translation. Pleas, expert testimonies and other statements can be made in
English, with the assistance of simultaneous interpreters. Translation costs
are paid by the parties and are considered as procedural costs.
Otherwise, should the judge require technical advice, he may
appoint a court surveyor. The party which applies to the Court for the
designation of a surveyor bears the surveyor’s costs. These vary with the type
and scope of the investigation and can be very high.
The winning party will recover theses costs if it has paid
for it. Caution is advised though, since court surveys, being time and cost
consuming. must be carefully conducted by the parties and their attorneys.
The court survey proceeds under the judge’s scrutiny, who
decides on the amount of the surveyor’s fees. Attorney’s fees are freely
determined and subject to a written agreement signed by the client, they
consist either of an hourly basis or fixed fees plus success fees. The losing
party pays the procedural costs plus an indemnity for attorney’s fees.
Before the Commercial Court and the Court of Appeal of
Paris, judges take into account the real amount of the attorney’s fees.
Daniel Jimenez (DJ)
Fees in Spain are similar to those in France. The difference is that a
litigator needs an attorney and a court agent, who files the writ to the court
and receives rulings from the court. It is often the case that the losing party
pays the legal costs from the other side, although they are not calculated on
the basis of payments to the lawyer, but on a ruling from the Bar Association.
Specific rules from each association in Spain are used to calculate legal fees.
We don’t have court application fees. We used to, but they
were ruled to be against the Spanish Constitution and so were declared null and
Arbitration is very similar, but a lot more expensive, since
you have to pay administration costs, plus the cost of the arbitrators.
Klaus Oblin (KO)
Legal costs comprise court fees and – if necessary − fees for experts,
interpreters and witnesses. According to the Austrian Court Fees Act, the
claimant (appellant) must advance the costs. The amount is determined on the
basis of the amount in dispute. The court fees in Austria are set at
approximately 1.2 per cent of the total amount in dispute. Filing for an appeal
means 1.8 per cent, which is quite costly to get things started.
You might also need to pay for interpreter and expert fees,
and there is a very strict rule on the reimbursement of costs. Prevailing
parties get paid for costs incurred.
This applies to all court costs and fees for interpretation
and expert witnesses, but is limited with regard to lawyer’s fees.
You cannot just choose any lawyer and get reimbursed; there
is a tariff, calculated under the Austrian Lawyer’s Fee Act, which is worked
out based on the amount in dispute. This means there can be gaps between what
you actually charge and get reimbursed for.
The Austrian system can be compared to that in Germany and
Switzerland since upfront costs are high and can be a turn off for many clients
who want to file a law suit. In order to claim their debts, many have to turn
to third party funding.
It is very important as lawyers that we cooperate with
reliable people in that field, which is a challenge. Third party funding does
not have a long track record in Switzerland or Austria and they usually offer a
30 per cent deal, fuelling litigation and arbitration, meaning they take one
third of the recouped money if you win.
They might also cover cost obligations towards the
prevailing party if you lose, but you need to be very diligent, since UK
funders are reluctant to do that, but Austrian, German and Swiss funders do
offer such deals.
As far as arbitration goes, the cost regimes can be easily
accessed online. It is easy to see what it costs up front, while it is more
difficult to give a preview of litigation costs.
Florian Wettner (FW)
The German Court Fees Act (Gerichtskostengesetz) governs the fees and expenses
charged by a German court. They are calculated on the basis of the value in
dispute; this is determined by evaluating the financial interest which the
claimant is pursuing through the action. There are special statutory rules and
extensive case law on how the financial interest is calculated. For the purpose
of calculating the court fees, the value of a matter is capped at EUR30
The court fees will be calculated on the basis of one fee
unit which is determined by a fee schedule annexed to the Court Fees Act. For
example, a German court will charge fees of EUR4,090.70 for a value in dispute
of EUR10,000, fees of EUR16,008 for a value in dispute of EUR1 million and fees
of EUR329,208 for a value in dispute of EUR30 million or more, each for regular
proceedings in the first instance.
There are statutory attorney fees which are governed by the
Attorney Remuneration Act (Rechtsanwaltsvergütungsgesetz) and are also
calculated on the basis of the value in dispute. They are similar to the court
fees. Again, for the purpose of calculating the attorney fees the value in
dispute is capped at EUR30 million, added up to a cap of EUR100 million in case
of multiple clients.
It is common practice in commercial litigation matters,
however, for attorneys to work on the basis of negotiated fee arrangements and
hourly rates. These negotiated fees may exceed, but not undercut, the
applicable statutory fees which the attorney has to charge as a minimum.
In German litigation a (modified) loser-pays-rule applies.
The unsuccessful party must pay the court costs and reimburse its opponent’s
statutory attorney fees, but not any negotiated fees that exceed the statutory
Hong Kong – Nick Gall
(NG) The most fundamental rule in Hong Kong is that costs are in the
absolute discretion of the Court.
The Court has full power to decide who pays legal costs in
civil litigation and the amount of those costs. Usually the courts order that
costs ‘follow the event’, except when it appears that some other order should
be made. This means that the unsuccessful litigant will usually be ordered to
pay the legal costs of the successful party, in addition to paying his own legal
Although costs follow the event, the successful litigant
seldom recovers his whole outlay. Unless agreed, the costs have to be assessed
(or ‘taxed’) by the court. For cases commenced in the High Court of Hong Kong,
there are five bases for determining costs: party and party, common fund,
indemnity, trustee and solicitor and own client.
Costs calculated on the party and party basis allows all
costs that were necessary or proper for the attainment of justice, or for
enforcing or defending the rights of the party whose costs are being taxed. As
a rule of thumb, the unsuccessful party will generally pay 50-75 per cent of
the other side’s actual expenditure.
Costs determined on the common fund basis are more generous,
allowing a reasonable amount in respect of all costs reasonably incurred. Legal
aid costs are assessed on the common fund basis between the legally aided
person and the Director of Legal Aid.
Costs assessed on the indemnity basis will be allowed except
in so far as they are of an unreasonable amount or have been unreasonably
incurred. In arbitration-related court proceedings in Hong Kong, the courts
have developed a practice of ordering costs on indemnity basis against a party
that fails in an arbitration-related application.
On a taxation of a solicitor’s bill to his own client, all
costs must be allowed except in so far as they are of an unreasonable amount or
have been unreasonably incurred. For costs assessed on the trustee basis, no
costs will be disallowed on a trustee basis, except those that should not have
Klaus Oblin (KO) Oblin Melichar – Austria www.irglobal.com/advisor/dr-klaus-oblin
Marie-Christine Cimadevilla (MCC) Cimadevilla Avocats –
Daniel Jimenez (DJ) SLJ Abogados – Spain www.irglobal.com/advisor/daniel-jimenez
Erwin Shustak (ES) Shustak Reynolds & Partners – US –
Nick Gall (NG) Gall Solicitors – Hong Kong www.irglobal.com/advisor/nick-gall
Dan Engström (DE) Advokatfirman Nova AB – Sweden www.irglobal.com/advisor/dan-engstrom
Florian Wettner (FW) METIS Rechtsanwälte – Germany www.irglobal.com/advisor/florian-wettner