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The Constitutional Court has ruled that a claimant's rights
to judicial protection and to a fair trial were infringed by an
order to pay advance costs of €792,850.
The basis for the decision was that:
a party's right to a court proceeding, although not
absolute, must be effective and could not either be limited by the
court or reduced in a way which affected the subject of the
litigation;
an order to pay €792,850 in advance costs (in addition
to the maximum court fee) was a disproportionate and arbitrary
restriction on the Claimant's right to a court proceeding,
because this was enough to pay its legal fees 30 times
over;
the District Court had failed to examine the claimant's
means to pay this amount of advance costs.
The case was referred back to the District Court for a new
ruling.
The Constitutional Court's line of reasoning is difficult to
understand, given that:
the wording of the Civil Procedure Code (section 141a) does not
require the court to consider the party's means; indeed it
clearly makes it the responsibility of the relevant party to show
that it fulfils the conditions for exemption;
the amount ordered to be paid was merely the fixed percentage
(5%) of the claim specified in the Civil Procedure Code (section
141a);
there has been no decision declaring CPC section 141a
unconstitutional;
the Constitutional Court has previously reached the opposite
decision in a similar case and offered no reasoning in this case to
explain its change of view.
Judicial orders to pay court costs in advance were introduced
into the Civil Procedure Code from 1 January 2012.
Courts can, at the defendant's request, order a claimant
(unless exempt from paying costs) to pay advance costs within 60
days where he is seeking damages in excess of 400 times the minimum
subsistence level for an adult. The court can also order costs to
be paid in advance by the defendant.
If a claimant fails to pay by the deadline (and the defendant does
pay where ordered to do so), the proceedings can be discontinued by
court order within 15 days of the deadline expiring.
This change was introduced to protect the parties in high value
claims and to eliminate speculative claims. In some cases,
defendants were being ordered to pay costs to protect against the
risk of an unsuccessful claimant being unable to pay costs (for
instance, where it had already assigned the receivable to an
off-shore company, against which it could not be enforced).
In the case, the claimant had assigned its claim to an offshore
company which joined the proceedings. This company argued that the
court was not justified in deciding that the claimant did not
satisfy the conditions for an exemption from costs.
The deficiencies in this judgment may only serve to further reduce
trust in the court system, which could further damage the business
climate already suffering from the crisis.
This article was written for Law-Now, CMS Cameron
McKenna's free online information service. To register for
Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance
only. The information and opinions expressed in all Law-Now
articles are not necessarily comprehensive and do not purport to
give professional or legal advice. All Law-Now information relates
to circumstances prevailing at the date of its original publication
and may not have been updated to reflect subsequent
developments.
The original publication date for this article was
21/09/2012.
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