Recent practice shows that the legislator is attempting to find an optimal approach to regulate the issue of court costs.
The topic of court costs is also sensitive because, according to general rules, the principle of “the losing party pays all costs” applies. This means that the losing party bears their own costs and must compensate the other party’s expenses.
Often, the most significant expenses in court are related to the representative’s fees – whether it’s a lawyer or legal counsel.
As of 01.01.2015, a new version of the Code of Civil Procedure came into force, in which the legislator makes another attempt to strike a balance between the capabilities of the judicial system and the rights of the participants in the judicial process.
Despite the new version of the law, the author believes that the following issues remain unresolved:
- A party to the judicial process has the right to choose their representative. Hourly rates for representatives in the capital can range from 100 to 400 euros. According to the earlier practice of the Supreme Court in cases 3-3-1-66-12, 3-2-1-92-13, and 3-2-1-93-13, a reasonable rate for a representative in court can be 110-120 euros. Additionally, according to the law, only necessary and justified expenses are reimbursed. In such a situation, a client who chooses an expensive representative may incur significant losses because the court will base its decision on the reasonable rate of 110-120 euros, thereby reducing the reimbursable court costs.
- When determining court costs, the question arises: what constitutes necessary and justified expenses? If the court believes that the representative should have spent 5 hours drafting a claim, but instead 8 hours were spent, and the client was billed for 8 hours, then such a court decision may be unreasonable. The court considers the volume of the submitted claim but does not see the extent of the work done, the development of a strategic line during the preparation of the claim, or the representative’s work on coordinating the claim with the client, etc.
- The issue of appealing the decision regarding the determination of costs remains unresolved. Both the previous and current versions of the law maintain that a party does not have the right to reimbursement of expenses related to the appeal of the court-determined amount of court costs. Since the appeal is carried out by a representative and the client is generally unable to appeal the costs independently, this may result in additional expenses for the client, which no one will compensate according to the law.
Interesting Innovations as of 01.01.2015
The law, before 01.01.2015, provided that court costs were determined after the end of the legal dispute and after the decision came into force. A party had 30 days to submit a request to the court regarding the determination of court costs. As of 01.01.2015, the situation has changed, and the law now stipulates that the court determines court costs when rendering a decision on the merits. The parties must be prepared to present their costs at each hearing, as the request must be submitted before closing arguments. Often, the court does not inform whether a hearing will be the last and whether a list of expenses should be prepared. Expenses related to the hearing are presented separately within the timeframe set by the court. The parties have the right to present objections to the other party’s expenses. This situation complicates the work of both representatives and the court as a whole. The adopted system requires representatives to perform unnecessary procedural actions, which may affect the cost of legal services.
According to Section 174(1) of the Code of Civil Procedure, the court has the ability to determine court costs based on the list of expenses or the case materials. In the author’s opinion, this regulation is controversial. If the court evaluates the reasonableness of court costs based on the list of expenses or the case materials, it may create a dangerous practice of declaring expenses that do not actually exist. This, in turn, may lead to a violation of the principle of compensation and judicial arbitrariness. The author believes that only proven court costs should be determined by the court. A list of expenses or the case materials is not sufficient proof.
Ilya Zuev, sworn advocate,
Law Office Grandman
This article was published in the newspaper “Äripäev.”
