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Debt Collection in China: Who Pays For Attorneys Fees?-CTD 101 Series

Thu, 19 May 2022
Contributors: Meng Yu 余萌
Editor: C. J. Observer

Can I ask a Chinese court to order the other party to pay for my attorney’s fees?

This post was first published in CJO GLOBAL, which is committed to providing consulting services in China-related cross-border trade risk management and debt collection.We will explain how debt collection works in China below.

The answer is: In most cases, Chinese courts are less likely to support such a request.

Similar questions, such as whether the losing party shall bear the attorney’s fees of the prevailing party, have been raised by the public to the Supreme People’s Court of China (SPC), and the SPC responded informally that:

Chinese courts mainly hold the idea that he who engages a lawyer shall pay therefor, namely, each party pays his own costs, irrespective of who won or lost.

That is to say, most Chinese judges do not agree with the view that the losing party shall bear the attorney’s fees of the prevailing party, and believe that it is not in line with the view of fairness in Chinese society. Letting both parties pay for their own legal fees is fair play.

Specifically, Chinese judges hold against the idea of losing party paying all the attorneys’ fees from both parties for the reasons below:

  • Chinese laws only stipulate that court costs shall be borne by the losing party, but do not provide that who shall pay for the legal fees. Therefore, the court can not rule on that.
  • If the losing party must bear all the legal fees, it will encourage people to bring frivolous cases to court to some extent.
  • There are no mandatory stipulations in Chinese laws requiring litigants to hire lawyers, so they may choose to take legal actions before a court on their own and represent themselves. Therefore, the attorney’s fees are not necessary litigation expenses.

Nevertheless, these judges also believe that if some cases entail specific professional knowledge and the parties have to seek help from lawyers to protect their legitimate rights, it is fair to let the losing party pay for the attorneys’ fees from both sides.

Although in most cases, “he who engages a lawyer shall pay therefor” is the universally applicable principle. However, there exist the following typical situations where the losing party shall cover legal fees:

  • If both parties have agreed in the contract that the breaching party should compensate the opposing party by covering his attorney’s fees in litigation or arbitration, and they have clearly stated the calculation standard and confines of attorney’s fees, the court is likely to support the payment request of the winning party. However, at this point, the court will require the prevailing parties to prove they have actually paid the fees.
  • In arbitration cases, China’s major arbitral institutions usually stipulate in their arbitration rules that the losing party shall compensate the prevailing party for reasonable expenses (such as the attorney’s fees) during the arbitration. However, the arbitrator is entitled to determine whether the fees are reasonable.
  • In a copyright, trademark, or patent dispute, the court may order the infringer to compensate the right holder by covering his attorney’s fees.

 

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Photo by Jason Song on Unsplash

Contributors: Meng Yu 余萌

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