27 April 2017Jurisdiction reportsMichiel Rijsdijk

The highs and lows of compensation

The guidelines are currently under review, to assess how they work in practice and how they relate to the 2016 Court of Justice of the European Union (CJEU) ruling in United Video Properties v Telenet.

District courts, appeal courts and the Supreme Court all use the so-called ‘indicatietarieven’ approach. These indicative rates are set by the Netherlands Bar Association and the judicial authorities. They consist of maximum amounts for summary proceedings, proceedings on the merits, appeal cases and Supreme Court cases, further sub-divided into simple and normal proceedings, proceedings with and without counterclaims, and oral proceedings.

For example, the maximum fee for simple proceedings on the merits without counterclaims and/or oral proceedings is €8,000 ($8,705). There is currently a proposal to increase the subdivisions to very simple, simple, normal and complex.

When a court determines how to qualify the legal proceedings as simple or normal, the following characteristics are relevant: the scope of fact finding; size of the body of facts; basis of the claim; scope of the defence; and number of exhibits. The financial interest of the parties in the outcome of the dispute is not mentioned as a relevant circumstance in the guidelines.

The indicative rates are applicable only to IP cases that are covered by the scope of article 1019h of the Dutch Code of Civil Proceedings, which implements article 14 of the enforcement directive (2004/48). Nullity proceedings are excluded from the scope. Furthermore, patent cases are not covered by the guidelines on the indicative rates.

The guidelines mention as reasons for this exclusion the wildly varying complexity of patent cases, which would not fit well into a framework, and the lack of the existence of a chilling effect, which would be reduced by introducing indicative fees. In practice the parties often agree before the oral hearing the amount considered to be fair and equitable in patent cases.

As the wording shows, the rates are only indicative. However if a party claims compensation of higher legal costs than the indicative rates, this party must substantiate that claim. It must show why deviation would be justified and why the legal costs incurred are reasonable. In practice we see that courts adhere more strictly to the guidelines on indicative fees.

As a result parties that seek compensation which surpasses the maximum amount in the guidelines must undertake considerable effort to show this. The guidelines are currently under revision but would set a higher cap.

United Video

The abovementioned maximum amount on the compensation of legal costs calls into mind the ruling of the CJEU in United Video. That case concerned Belgian legislation which set a maximum amount—an absolute reimbursement ceiling—which was also described as a flat rate.

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