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06.09.2017 Maksim Ali, Senior Associate

Maxim Ali has provided his comments on reductions in the recovery of legal costs

Novaya Advokatskaya in an article, titled ‘Reasonableness of compensation for legal costs’, has considered the recovery of legal fees and the procedure for reducing the amount claimed. The article focused on analysis of the decision of the Arbitration Court of the Central District of 25 July 2017, in which the court confirmed the lawfulness of the judgments of the lower courts, under which a party costs were reduced by 57,000 roubles.

After reviewing the decision, Senior Associate at Maxima Legal, Maxim Ali noted that the criteria listed by the Court for the reasonableness of costs (the extent of the claims, their value, complexity, the amount of work provided, time taken, the documentation prepared, duration of the case and other factors) had already been formed through established court practice and had been mentioned in guidance from the Supreme Arbitration Court of the Russian Federation in 2004 and 2007.

“The motives for reducing the amount of compensation for court expenses are formulated by the court in a rather abstract way, which, unfortunately, is found everywhere, as is the tendency of courts to undervalue such compensation. Despite the fact that the Supreme Arbitration Court and the Supreme Court have repeatedly spoken about the inadmissibility of arbitrarily reducing court costs, in practice a detailed assessment of the reasonableness of the amounts claimed is extremely rare and is often limited to listing the criteria for the reasonableness of expenses and references to rulings of higher courts." Maxim explained.

Maxim added that such decisions invariably lead to the fact that participants in litigations cannot rely on full compensation for legal costs, and unscrupulous debtors, in turn, can safely refuse to voluntarily fulfil obligations, borrow at another’s expense and draw out any conflict until it reaches a court. Maxim concluded that as a result the courts’ caseloads increase, and this adversely impacts upon the quality of decisions in practically all cases.

For the full version of this article (in Russian) click here.

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