Law Stack Exchange is a question and answer site for legal professionals, students, and others with experience or interest in law. It only takes a minute to sign up.
Sign up to join this community
Although many of the jurisdictions that do employ the ‘loser pays’ system only do so up to certain limits, usually of modest amounts, nonetheless all the places I am familiar with have the expectation that some monetary compensation is due to the victor. Even for a jurisdiction such as Quebec, where such compensation is usually very modest, it’s quite rare for no money to be given.
Are there countries, other than the US, that have differing expectations?
Fee Shifting In Various Jurisdictions
Spain (at least as of 1984) has rules on fee shifting (or the lack thereof) very similar to the American rule. The other countries of the E.U. (as of 1984) had rules similar to those of Britain's loser pays rule, although there was significant variation in detail from country to country that made this less of an omnibus statement than it might seem. See Werner Pfenningstorf, "The European Experience With Fee Shifting", 47(1) Law and Contemporary Problems 37 (1984).
Most countries with civil law systems (i.e. those systems based upon the civil code tradition of Continental Europe rather than the common law tradition of England or something else entirely) outside of Europe in Africa and Asia are derived from the French Civil Code (most of West, Northwest and Central Africa, for example), or the German Civil Code (Korea and Japan, for example), and probably have followed in the footsteps on their parent legal traditions on this issue. This is also true of most formerly Communist Eastern European countries.
Most countries in Spanish speaking Latin America, however, have legal systems derived from the Spanish legal tradition (and national constitutions modeled on that of the U.S.), so other countries besides the U.S. and Spain without automatic fee shifting to a prevailing party are probably located in Latin America. Some of these Latin American countries, however. probably adopted fee shifting rules of their own, and many of these countries declared independence from Spain before Spain adopted its civil code, so the extent to which those countries follow the Spanish model may not be as complete as in countries that gained independence later on.
It is also worth noting that, however, in most civil law countries, the fees that an attorney can charge are usually significantly more highly regulated than in the United States, so the possibility of extremely high litigation fees is lower. Furthermore, civil litigation, in general, involves lower attorney fees on average in civil law countries (and in Islamic law and Chinese style Communist countries) than in the United States, in litigated cases, because the process is less attorney resource intensive due to civil procedure differences.
So far as I know, fee shifting is also not used in Islamic law countries, where the basic assumption is that the parties are often pro se (i.e. without lawyers) and the institution of a professional legal class post-dates the establishment of the relevant legal rules.
I do not know what the situation is in the People's Republic of China or similar legal systems.
The American Rule
It also bears noting that there are many exceptions to the "American rule" in U.S. law.
While the American rule does not shift attorney fees, fees for out of pocket litigation expenses such as filing fees, copying charges, and expert witness fees are shifted as a matter of course to the prevailing party.
Most professionally drafted written agreements have fee shifting provisions.
Many specific statutes (e.g. civil rights actions and many labor law and consumer rights enforcement cases) also have fee shifting provisions (sometimes one sided, sometimes two sides).
Fees can also be awarded in certain kinds of breach of fiduciary duty litigation contexts and in cases involving a dispute over a "common fund".
In divorce cases, litigation costs of both sides are often (really usually) allocated by the court in proportion to ability to pay, as "winning" and "losing" are ill defined.
The biggest areas where fees shifting would be unusual in the U.S. would be in common law tort lawsuits, such as negligence cases (e.g. automobile accidents and slip and fall cases), strict liability products liability cases, defamation cases, intentional harm cases, and fraud actions. The American rule also applies in cases of oral contracts or contracts drafted by inexpert non-lawyers. Even in those cases various kinds of litigation misconduct can result in fee shifting.
In U.S. tort cases, defendants usually have their attorney fees paid for by their insurance company, and plaintiffs often have an attorney paid on a contingent fee basis. Furthermore, awards by juries for non-economic damages and/or punitive damages often makes it possible for a prevailing plaintiff to receive full or nearly full economic loss compensation in such lawsuits, with the non-economic and/or punitive damages awards effectively providing resources to pay the attorney for the plaintiff on top of economic loss compensation for the plaintiff.
In Germany, it's not exactly "loser pays". If I sue you for €10,000 and the judge orders you to pay €6,000, you are 60% loser and I am 40% loser, and we split the cost accordingly. But you can offer to pay say €5,000 before the case starts, so suddenly I am only suing for €5,000 and the judge orders you to pay €1,000 (on top of the €5,000 obviously), so now I am 80% loser and you are 20% loser. This can be used strategically if it is obvious that you have to pay something but you don't want to pay everything I ask for.
The American habit of suing for gazillions becomes a very bad strategy. With these rules, if you sued for $100 million and I was ordered to pay $100,000, you'd have to pay 99.9% of the cost. And the cost is a percentage of the amount you sued for, so some percentage of $100 million, and you pay a huge amount of money to the court, to your lawyers, and to my lawyers, so you lose out big time.
Almost forgot: Loser doesn't pay the actual cost of the lawyer, but the court has a fixed lost what a lawyer should charge for a case that is about €1,000, €100,000 or €10,000,000, for example. So if you pay gazillions to your lawyer, that is always your problem. Usually the lawyer checks what the fees are that the court sets, and work hours accordingly.
