Disputes over small amounts have become more costly

Czech Republic: The compensation of costs of proceedings in petty lawsuits has been lowered

An amendment to the attorneys’ fee scale which came into force in mid-2014 has led to a precipitous drop in the amounts awarded as compensation of the costs of proceedings in those cases in which the dispute concerns an amount of no more than CZK 50,000 and was initiated by a „boilerplate lawsuit”. The idea behind the amendment is to discourage litigants to take their opponent to court over trivial claims because they actually seek to gain disproportionally high payments in the form of compensation for their costs of proceedings.

According to the amended attorneys’ fee scale, the compensation per attorney’s individual pre-litigation performance (i.e., per individual step carried out before filing of the claim with the court) is now much lower if (i) a boilerplate lawsuit was filed, (ii) the amount in dispute whose payment is sought in court amounts to no more than CZK 50,000, and (iii) the claimant was awarded the costs of proceedings.

A „boilerplate lawsuit” is a motion for the initiation of proceedings which is being filed based on an established template which has repeatedly been used by the same claimant in matters that are comparable in terms of their substance and their legal aspects. In practice, electronic standard forms are often employed for such claims. The term „boilerplate lawsuit” is not recognized by the law, but is standardly used in case law and in the scholarly literature to describe a formulaic lawsuit which differs only minimally from the original template from which it derives. The Constitutional Court, for instance, has used the term for claims which „essentially differ only in the identification of the defendant and the amount sought” (ruling I.ÚS 3923/11). In the opinion of the Constitutional Court, then, we are looking at something which rather resembles an administrative task.

Provided that all conditions are met, the compensation for pre-litigation performances (and for the very act of filing the lawsuit) in small-claim cases is divided into three tiers: for claims up to CZK 10,000, the compensation per performance of a legal service is CZK 200; for claims from CZK 10,000 to CZK 30,000, it is CZK 300, and for disputes whose subject matter is the payment of higher amounts up to CZK 50,000, it is CZK 500. In addition, the lump-sum reimbursement for cash outlays is also lower in these cases: CZK 100 for disputes over amounts of 30,000 or less.

The idea behind the amendment is sound, but it may well lead to situations in which it makes no economic sense for creditors to enforce their rights and litigate over a small claim, given that the court-awarded compensation of the costs of proceedings does not cover the expenses which they purposefully made towards the recovery of the claim in court.

Source: Decree No. 177/1996 Coll., on attorneys’ fees and attorneys’ compensation for the provision of legal services (attorneys’ fee scale)

Zapisz się do newslettera

Klikając 'Zapisz się' wyrażasz zgodę na nasze warunki przetwarzania danych