The court’s ruling on the reimbursement of court costs is an important part of a judicial decision. Thanks to the institute of reimbursement for the costs of proceedings, the successful litigant receives compensation for their court fee, cash expenses and even their attorney’s fee.

The costs of legal representation by an attorney may represent a large amount, especially in protracted disputes. Yet, the courts don’t decide on reimbursement according to the actual amount spent on legal assistance, but based on a flat rate according to Ministry of Justice Decree No. 177/1996 Coll., the attorney’s tariff.

Up to 30 June 2014, legislation was relatively generous in terms of the amount of compensation for the costs of legal representation, whereby the entitled party in a dispute did not have to worry about approaching an attorney to exercise their claim, knowing that if successful in their case, costs incurred for legal assistance would be reimbursed.

Effective from 1 July 2014, Ministry of Justice Decree No. 120/2014 Coll. fundamentally amends the attorney’s tariff in the case of petty debt cases. The attorney’s tariff considers petty debt cases as actions filed on similar forms, in similar cases, by the same plaintiff, where the value of the dispute does not exceed CZK 50,000.

The amendment reduces the fee for filing legal action and all preceding acts (i.e. accepting representation and the final demand for payment) in actions for the payment up to CZK 10,000 to CZK 200 per act of legal services, up to CZK 30,000 to CZK 300 and up to CZK 50,000 to CZK 500.

In the matter of enforcing judicial decisions or distraint, the fee for all petty claims is CZK 100 for accepting representation and for filing a petition for the enforcement of a judicial decision/ distraint order.

The fee for acts following the submission of legal action or a petition for the enforcement of a judicial decision/ distraint order remains unaffected and continues to be recognised in full.

The following table shows the real impact on the fee for representation for one act of legal services, giving examples for the recovery of CZK 10,000, CZK 30,000 and CZK 50,000.

Amount recovered	Discovery procedure		Enforcement procedure
	Prior to amendment	After amendment	Prior to amendment	After amendment
CZK 10,000	CZK 1,500	CZK 200	CZK 750	CZK 100
CZK 30,000	CZK 2,300	CZK 300	CZK 1,150	CZK 100
CZK 50,000	CZK 3,100	CZK 500	CZK 1,150	CZK 100

 

It is evident from the above that there is a substantial impact on the amount of reimbursed costs for the plaintiff and that, as a rule, this reimbursement will not cover costs actually incurred by the plaintiff for legal assistance.

According to the Minister of Justice, Prof. JUDr. Helena Válková CSc., the amendment is directed against the assignment of claims and their recovery not for the sake of the claim itself, but for reimbursement of the costs of proceedings. The Minister considers such conduct socially unacceptable as it not only results in the further debt of primarily socially disadvantaged individuals, but also inundates the judicial system.

The Ministry of Justice’s message to debtors is therefore clear – don’t pay your debts as it will not be worthwhile for creditors to recover these debts, and if they do, you will only pay a small amount for proceedings.

Thanks to the amendment of the attorney’s tariff, debtors need not worry about paying their debts as it will not be worthwhile for creditors to recover smaller debts and for larger debts, the debtor will only pay a negligible amount in the costs of proceedings, for which the debtor will receive a few months, and in some cases more than a year, to pay their debt.

The impact of this amendment will particularly affect small loan providers, transport companies, medical facilities, telecommunication service providers and similar entities with petty claims against a large number of debtors.

Prior to the amendment coming into effect, these entities had an effective means of defence against debtors who didn’t pay their debts, where thanks to reimbursement for the costs of proceedings, they could entrust the recovery of unpaid claims to specialised law firms and thus shift the significant administrative burden associated with the recovery of claims to a third party. Due to the amendment, however, the situation of these entities is much more complicated, as reimbursement for the costs of proceedings cannot cover the actual costs of legal assistance.

It will therefore be interesting to see if this arguable step by the Ministry of Justice leads to a true reduction in the “flood” of creditors exercising petty claims before the courts in the future, or whether these creditors will continue to defend their rights despite the obstacles put in their path by the state.