Q Question: If I start a legal dispute in Italy and win, will I get a full legal cost refund?
A Answer: Unfortunately it is very difficult and rare to get a full legal cost refund, for several reasons. Here there are some:
- Parties are often advised to settle a dispute before it gets to Court, in order to achieve a definite and quick resolution with lower legal costs. When an out of Court settlement is achieved, it is customary for the parties to agree that each shall be responsible for the respective legal costs.
- When a dispute cannot be settled, in many cases the law requires to activate a Mediation procedure, as a mandatory step before taking the case to Court. If the Mediation procedure is successful, also in this case it is customary for each party to be responsible for the respective legal costs.
- Should the dispute be discussed in Court, the law says that the judge shall also rule about legal costs, putting them on the party who had less merit in the case. As a result, there are a number of circumstances and discretional evaluations under which the judge can rule, for example, that the winner shall be refunded only partially, or shall not be refunded at all, and each party shall be responsible for the respective legal costs. For example, the judge might penalize the winning party by not granting any legal cost refund if it is proven that such party did not act in good faith to achieve a settlement out of Court. It is impossible to know in advance how a judge will rule about legal cost refund.
- Even in a court dispute where one party has total merit and the judge rules for full legal cost refund, such ruling might not fully satisfy said party’s legal costs. In particular, legal cost refunds are subject to mandatory rate guidelines set by law. More specifically, in the Italian legal system the judge shall determine the legal cost refund amount on the basis of rates and parameters that are set by law, regardless the fees actually paid by the subject who shall be refunded. In our experience, full legal cost refund awards in international disputes represent just partial refund of actually accrued legal fees (average ratio 1/3). The higher is the dispute value, the closer the court legal cost award might be to actual accrued legal costs.
Follow us on LinkedIn for more on this topic