New legislation on recovery of attorneys' fees enters into force

After years of legal uncertainty as to the recovery of attorneys' fees in Belgium, a new act and a royal decree clarifying the issue have entered into force.

Before the implementation of the new legislation, the courts had discretion to award attorneys' fees and private experts' fees where it was established that they were 'necessary'. This rule, which stemmed from the Supreme Court's jurisprudence, was applied in a very conservative and non-uniform way. It often led to the granting of rather symbolic amounts.

The new act and royal decree provide a more elaborate framework in the form of a grid indicating a minimum, standard and maximum amount to be awarded depending on the circumstances. The grid distinguishes situations where:

• the amount of the claim is not monetarily quantifiable (eg, a claim for injunctive relief in cases of trademark infringement); and
  
  
• the amount of the claim is monetarily quantifiable (eg, a claim for compensatory damages in cases of trademark infringement).

Where the amount of the claim is quantifiable, the grid is segmented based on the amount initially claimed, irrespective of the amount that is eventually granted by the court.

As a general rule, the prevailing party will be granted the standard amount. However, upon motivated request of the parties, the courts may grant a smaller or a larger amount within the limits established by the grid in each segment.

Under the act, the court must base its decision on the following factors:

• the financial situation of the losing party;
  
  
• the complexity of the case;
  
  
• any possible contractual compensation in favour of the prevailing party; and
  
  
• the unreasonableness of a situation.

By way of example, a party claiming €125,000 in damages will obtain €5,000 in attorney's fees if it prevails. However, upon request of the parties, the court may increase this amount up to €10,000 or reduce it to €1,000.

The new rules apply to pending cases.

Even though the maximum amounts will often cover only part of the attorneys' fees of the parties, the new framework represents a welcome development. The prevailing party may now obtain more substantial - rather than symbolic - compensation. Moreover, the losing party may have to pay up to €10,000 (if injunctive relief is claimed) or up to €30,000 (if damages are claimed) in addition to its own legal fees and costs.

However, both plaintiffs and defendants should be aware of certain boomerang effects. If a plaintiff claims the maximum amount of compensation, the court may use the plaintiff's arguments against it and grant the maximum amount of damages to the defendant if the latter eventually prevails. This is probably the reason why, since the entry into force of the new legislation on January 1 2008, most plaintiffs and defendants have limited their claims to the standard amounts, especially in cases where the outcome was uncertain.

Therefore, both plaintiffs and defendants should take the new legislation into account in developing their strategies. How the courts will apply the new rules remains to be seen.

Nicolas Clarembeaux, Altius, Brussels