Who bears the final costs of legal activities especially of a lawsuit in Germany?
Unlike the American rule of costs it is a fundamental German legal rule that the loser pays all costs and fees in litigation. The costs of a lawsuit in Germany include:
- the court fees and
- the necessary extra-judicial costs such as the attorneys fees, necessary translations, expert costs ...
which both have to be reimbursed by the party finally losing the case. In case of a partial losing or winning the final costs are devided according to the ratio determined by the court. Those fees are mainly calculated:
- pursuant to the value in dispute and
- according to the status of the activities.
Whereas it is possible to agree on higher fees or hourly rates, German law prohibits contingency fees. Hourly fees are possible and have to be agreed in written.
When does the losing party have to pay the winning party's costs?
Furthermore, the party who wins the case will only be reimbursed up to the amount of the statutory attorneys’ fees or, if the parties have been only partially successful, both parties must pay their share of the costs on the basis of the relative extent to which they have won and lost.
In most cases the party that loses a trial will have to reimburse the overall legal costs of the winning party (attorney's fees and court costs), limited to the amount of the RVG-fees. In case the court's decision is only partially successful for the plaintiff, the costs will be shared on a pro-rata basis.
The legal costs of the parties will then be fixed in a special cost-taxing proceeding before the court. Any enforcement costs (court costs and attorney's fees) are to be borne by the debtor.