Basic aspects to be considered on court costs within the framework of court proceedings.

By Jordi Rivera

Introduction to negotiation (IV)

By Alejandro Casas

Basic aspects to be considered on court costs within the framework of court proceedings.

Jordi Rivera

INTRODUCTION

The order on court costs and attorney’s fees within court proceedings is a basic characteristic of court proceedings. Briefly, the general rule sets out that such party whose claims have been rejected shall be obliged to pay the court costs arisen during the court proceedings.

As a mere non-exhaustive introduction, we detail below the most remarkable aspects of this legal concept.

BASIC ASPECTS OF THE ORDER TO PAY COURT COSTS

The risk to be sentenced to pay the court costs that may arise in the court proceedings undoubtedly implies an effective method to avoid, or at least to reduce, bringing court proceedings with no expectation to success, recklessly and with the hope to try their luck when submitting their claims to a Judge for some little expenses.

This way, upon filing a suit, we must be aware of the economic risk we take, which means the obligation to pay, if our claims are withdrawn, additionally to the fees corresponding to the professionals in charge of our representation and defence, such fees corresponding to the professionals who have done so for the other party in the proceedings.

(…) no order for court costs shall be imposed if the case has raised serious legal or factual doubts.

Any judgment passed in any court proceeding usually includes among its rulings the order to pay the court costs to such party whose claims have been rejected under article 394 of the Procedural Criminal Act, which establishes an objective expiration criterion: The loser pays. Such criterion must not be understood as a fine or penalty on the loser litigant, but as a compensation for the court expenses that would be unnecessarily generated for the party obliged to sue for defending its rights.

The exception of this general rule is regulated in section one of the aforementioned article, which sets out that no order for court costs shall be imposed if the case has raised serious legal or factual doubts. This means that we would be dealing with a case which is not clear from a factual or legal point of view, that such absence of transparency shall be important and significant and that there shall be contradictory case law in similar cases, i.e., Judgments give different judgments in the same factual case.

LEGISLATIVE DEVELOPMENTS

We must remark the following developments as the most relevant ones:

Act 42/2015, of 5 October, reforming Civil Procedural Act, establishes that the rights corresponding to useless, redundant or legally unauthorised writs and actions or items in professional fees which are not broken down in detail or which may refer to fees which have not been accrued during the lawsuit, shall be excluded from the court costs assessment. Similarly, rights of court liaisons’ accrued for performing the communication, cooperation and assistance to the Court Administration, as well as any other merely facultative actions which may have been otherwise performed by court offices, shall be also excluded.

Fourth paragraph of article 243.2 of the Civil Procedural Act sets out that when determining the court costs, the Attorney’s and Court Liaison’s fees shall also include the Value Added Tax pursuant to the applicable law.

HOW TO DETERMINE THE ATTORNEY’S FEES

Pursuant to the Statute of the Spanish Law Practice Statutes, the Attorney is entitled to a monetary compensation for the services rendered, as well as to be refunded any expenses arisen. The amount of the Attorney’s fees shall be freely agreed between the attorney and its client.

Furthermore, when submitting the professional fees in court proceedings (evidently in the case of the party not obliged to pay the court costs), the guiding scales of the relevant Bar Association may be taken as a reference when determining the professional fees. The same shall be applied pursuant to the rules, practices and customs thereof. These rules, in any case, shall be of a subsidiary nature to that amount agreed by the parties in the court proceeding.

As we can see, we are dealing with two cases as regards the possibility to calculate the fees to be paid to an Attorney within the framework of court proceedings: they are determined by mutual agreement of the parties or in the absence thereof, they shall be determined according to the scales established by the Bar Associations, which shall serve as a reference to be followed in the event of a sentence ordering to pay the court cost to the other party in the proceedings.

(…) the basic rule that will allow us to know, broadly speaking, the scope and amount of any possible order to pay court costs shall mostly be the amount of the proceedings (…)

This fact is particularly significant to the extent that, in the event of an appeal by the other party on the fees assessment, their correctness and payment shall finally depend on their adequacy to the aforementioned scales. Adequacy to the scales means not only the correct application of the calculation tables contained therein, but also that the professional fees submitted are reasonable and weighted up and appropriate to, among others, the circumstances concurring the proceedings and the degree of complexity of the case.

In any case, we must remind that the basic rule that will allow us to know, broadly speaking, the scope and amount of any possible order to pay court costs shall mostly be the amount of the proceedings: the greater the proceeding amount is, the greater the payable amount by the party sentenced to pay the court costs shall be.

Regarding the court cost assessment, The Civil Procedural Act assigns the court cost assessment and the arrangement of any appeal to the Court Clerk of the court who has heard the proceedings in question. Such Court Clerk shall be responsible for initially verifying that the calculations made by the party not sentenced to pay the court costs is correct and then made the necessary modifications to adjust the fees to that legally established.

CONCLUSIONS

The possibility of being sentenced to pay court costs must be a fact to be clearly taken into account when deciding to file a lawsuit.

Such possible sentence must be a factor that not only must be considered as an additional penalty or fine for the party whose claims have been withdrawn, but it must be also considered, in my opinion, as an complementary element to assess on a realistic manner the risk we take for filing a lawsuit or the chances of success we actually have.

Introduction to negotiation (IV)

Alejandro Casas

LEGITIMACY CRITERIA

The use of objective or legitimacy criteria in the negotiation process constitutes another fundamental element in the Negotiation Theory developed by the Harvard Negotiation Project.

Objectiveness may be defined as the ability skill to be impartial in the sense of considering a problem independent from personal interests.

Furthermore, legitimacy criteria may be defined as the objective knowledge that may be used in the development of a negotiation to propose options based on standards independent from the parties’ will.

In many negotiations, the parties mostly position themselves in subjective arguments – personal- which difficult the achievement of a negotiated agreement, fundamentally for exclusively analyzing their own interests and thus obviating the other party’s interests. This situation may bring the negotiation process to a standstill, since options proposed only satisfy the interests of one of the parties. In these cases, the use of objective criteria is one of the most recommendable solutions.

(Objective) criteria of legitimacy constitute one of the most effective persuasion tools for the negotiator to propose solutions to unblock the negotiation. Similarly, they may generate an additional value, since they may create new options and the agreement may even become more beneficial for the parties.

Legitimacy criteria, due to their objective nature, are the most effective mechanism for persuasion and simultaneously prevent the other party from ripping us off.

One of the keys for the achievement of a negotiated agreement is based on each of the parties feeling that it is being treated with justice and equity. Therefore, agreements relying on these legitimacy criteria will have more possibilities to be complied by the parties, since each party may have a more positive perception of the agreement reached for considering that it has been treated fairly and without the other party having ripped it off.

Similarly, these criteria help the parties to better protect themselves before negotiators who may use manipulative or coactive tactics, since on the one hand they may detect them more easily and on the other hand such criteria will help them to refute more easily the arguments proposed which may exclusively satisfy the interests of one sole party.

The most common legitimacy criteria used in a negotiation process are the market price, expert opinions, third parties or neutral experts, laws and regulations, the customary practices within the economic sector, etc. All these elements have a common threat: their resulting value is independent from the parties’ will.

In turn, there may be several objective criteria applicable to a specific case, but leading to opposite results. In these cases, we must bear in mind that the existence of a legitimacy criterion does not exclude the other criteria. Consequently, the parties should agree which is the most appropriate or fair objective criterion for the specific case.

It is worth mentioning that objective or legitimacy criteria are not immutable, but they may be modulated by common agreement of the parties in a negotiation. It is therefore recommendable for both parties to cooperate in weighing-up the application of these objective criteria to reach a fair agreement.

For this purpose, the parties taking part in a negotiation process should be aware of the importance of insisting on the objective criteria supporting their arguments, as well as of being receptive before the objective criteria used by the other party.

As an example, let’s suppose that two people are negotiating the acquisition price of a plot of land. The seller says that the price of the plot of land is 100. In turn, a potential purchaser offers 80.

In most of the negotiations, each party adopts an initial position to subsequently make concessions to reach a commitment.

So in this abstract example, the seller may argue that the price must be 100 because it wants to invest such amount in another larger plot of land. The purchaser, in turn, offers 80 because it is the money that banks may lend him or for example because he must invest 20 in refurbishment works for the use to which he has designed the plot of land.

Agreements based on legitimacy criteria set a greater expectation of compliance, since the parties are considered as fairly treated.

This type of negotiation may lead to an agreement if both parties give in their initial positions by bargaining, but there is also the risk that they leave the negotiation because they feel tied to accept an unfounded price, without an objective criterion, since in both cases the arguments used are of a subjective nature and should not have any impact on the negotiation process.

However, an agreement may be reached if the reasons leading them to determine a sale price are fair considering objective criteria. In this particular case, elements relating to the property may be taken into account, such as:

• The price of the land in the same area and of a similar surface area.

• The price of the hectare in the area.

• The expert report, if any.

• The condition of the land, accesses or any existing water and power supplies.

This way, the parties may agree the price based on the objective elements that better adjust to the particular case.

In such cases, objective or legitimacy criteria may be used as a sword and as a shield.

As a shield, in the sense that they are usually the best arms for persuasion, which is fundamental in the negotiation process. This will facilitate more effective arguments to convince the other party that a certain particular option is the fairest one.

And as a shield, i.e., as a defence in unfair situations or arguments, as a protective shield that helps to avoid the other party to rip us off by giving in before unfounded requirements.