The reimbursement of legal costs SK 37/14
“The exemption of a losing party by a court from the obligation to reimburse the legal costs of a winning party in particularly justified instances, without burdening the State Treasury with the said costs, does not infringe the right to a fair trial, as regards a properly devised court procedure that complies with the principles of justice,” stated the Constitutional Tribunal.
On 17 May 2016 at 9.30 a.m., the Constitutional Tribunal publicly delivered a judgment, issued at a sitting in camera, on the constitutional complaint submitted by W.O. with regard to legal costs.
In the judgment of 17 May 2016, the Constitutional Tribunal adjudicated that Article 102 of the Act of 17 November 1964 – the Civil Procedure Code, insofar as it does not impose on the State Treasury the obligation to reimburse the legal costs of a winning party which were not adjudged to be paid by a losing party, is consistent with Article 45(1) of the Constitution.
Moreover, as to the remainder, the Constitutional Tribunal decided to discontinue proceedings on the grounds that the issuing of a judgment was inadmissible.
The Constitutional Tribunal stated that Article 102 of the Civil Procedure Code constitutes a purposeful departure, justified by the principles of equity, from the principle of liability for the outcome of a trial. According to the Constitutional Tribunal, it is necessary to have a certain safety valve, i.e., in particularly justified instances, the possibility that a court may lift the obligation of a losing party to reimburse the legal costs of a winning party. Courts apply Article 102 of the Civil Procedure Code only by way of an exception, and the catalogue of recurring instances regarded as particularly justified is directly linked with the facts of a given case, and not merely with the financial situation of a losing party (as in the case in the context of which the constitutional complaint was submitted, where an allegation had been put forward effectively about the expiry of the claims of the petitioner, i.e. the losing party).
The Constitutional Tribunal found it necessary to point out that, within the meaning of the jurisprudence of the Supreme Court, Article 102 of the Civil Procedure Code is applicable to: 1) cases concerning a legal relationship that may be determined only by a court judgment, even though the parties might concur with each other; 2) unfair or manifestly inappropriate conduct of a winning party, which generates costs; 3) dismissal of a legal action on the basis of Article 5 of the Civil Code or due to the lapse of a set time-limit; 4) a precedent-setting case; 5) resolution of a dispute solely on the basis of circumstances considered by a court ex officio; as well as 6) due to the financial situation of a losing party that was sure of the validity of its claim, when bringing a legal action.
Thus, challenged Article 102 of the Civil Procedure Code is not – on the basis of a literal interpretation, the doctrine of law, and, more importantly, the jurisprudence of courts which complements the semantic scope of “particularly justified instances” – construed as a manifestation of the so-called ‘poor law’. Courts exempt a losing party from the obligation to reimburse the legal costs of a winning party, where particularly justified circumstances of a given case weigh in favour of this, and where a different determination of the issue of costs would be unfounded or even unjust.
In the opinion of the Constitutional Tribunal, challenged Article 102 of the Civil Procedure Code constitutes a justified exception to the principle of liability for the outcome of a trial, and it does not infringe a component of the constitutional right to a fair trial, namely the right to a proper court procedure that complies with the principles of justice. Challenged Article 102 of the Civil Procedure Code is thus a proper example of a departure – justified by particular circumstances of a case – from the principle of liability for the outcome of a trial.
The Tribunal deemed that it was necessary to underline that the constitutional standard of the right to a fair trial – as provided for in Article 45(1) of the Constitution – does not require free-of-charge court proceedings where the State Treasury covers the whole financial burden of the pursuit of claims by parties before courts. Therefore, the legislator may – by respecting the principle of liability for the outcome of a trial, which is regarded in the jurisprudence of the Constitutional Tribunal as basic with regard to legal costs – determine rules for covering legal costs by parties to proceedings, taking account of certain axiological and functional considerations.
The Tribunal held that, in the light of the constitutional right to a fair trial, there is no direct correlation between the court’s exemption of a losing party from the obligation to reimburse legal costs and the obligation of the State Treasury to reimburse legal costs. Such a solution could be justified only, and exclusively, in a situation where the assumption about free-of-charge proceedings is adopted together with the principle of liability for the outcome of a trial, namely where a winning party would always have to be reimbursed for its legal costs, either by a losing party, or by the State Treasury, even if this breached the principle of equity.
The Constitutional Tribunal pointed out that, in the consistent jurisprudence of the Tribunal, the right to a fair trial has been linked with the principle of payment for the administration of justice.
According to the Tribunal, this does not entail that the Tribunal departs from the view presented in its jurisprudence that, as a rule, legal costs should be adjudged to a losing party. Obviously, the principle of liability for the outcome of a trial is not, and should not, be absolute in character. There is no doubt that the legislator ought to provide for exceptions to that rule, such as challenged Article 102 of the Civil Procedure Code, which complies with the principle of equity. For this reason, it ought to be deemed that challenged Article 102 of the Civil Procedure Code not only causes no violation of a proper court procedure, which constitutes a component of the constitutional right to a fair trial, but it actually manifests the conformity of the said procedure to the principle of justice.
The Tribunal found it necessary to emphasise that, from the point of view of a proper court procedure that is consistent with the principle of justice, it is vital that the principle of equity arising from Article 102 of the Civil Procedure Code would be applied by way of an except and would not become a measure within the scope of the so-called ‘poor law’. If this was the direction in which the jurisprudence of courts was headed, as regards complementing the content of the term ‘particular justified instances’, lacking sufficient specificity, as used in Article 102 of the Civil Procedure Code, then the allegation raised in this constitutional complaint should be evaluated differently. Indeed, what we would deal with would not be the principle of equity – which permits a court to determine the issue of legal costs in a different way than in accordance with the principle of basic liability for the outcome of a trial – but actually the legal institution of ‘poor law’.
The presiding judge of the adjudicating bench was the Vice-President of the Constitutional Tribunal, Judge Stanisław Biernat, and the judge rapporteur was Judge Andrzej Wróbel.