Settlement before the first hearing may allow for recovery of the entire court fee
Settlement is a popular and safe way of resolving civil disputes. By making concessions to each other, the parties autonomously frame the legal relationship between them and allocate the rights and obligations acceptable to them. The law in Poland also promotes this model, providing advantageous rules for parties to court proceedings allowing for return of the court fee on claims if a settlement is reached. The earlier a settlement is reached, the more of the fee can be recovered. In some cases, even the entire fee may be refunded.
Many legal disputes, including complex ones, can be resolved by settlement, thus avoiding years of waiting for a judgment and the attendant risk and costs. This is particularly the case when the outcome of the litigation is uncertain and depends on expert opinions, or there are conflicting lines of relevant case law.
Parties discouraged by the difficulties linked to protracted litigation are more likely to make concessions. While amicable resolution is possible at the pre-litigation stage, filing suit often serves as an impetus for negotiations and inclines the defendant to show more flexibility in considering a settlement.
Thus, filing of a statement of claim does not necessarily mean that negotiations have failed. On the contrary, initiating a court case can open a new front in attempts to settle a dispute amicably and increase the chances of reaching a settlement.
In negotiations taking place during the court action, the key moment is the first hearing of the case, because under Polish law, if a settlement is reached before the start of the first hearing, a higher portion of the court fee is refundable. Thus, if the case can be settled, there is a financial incentive to settle it at this stage.
The procedural reality is that litigants often wait up to a year after filing a statement of claim for the first hearing. So there is usually a lot of time for negotiations, and during this period it is especially worthwhile to make settlement efforts. The maximum fee for a statement of claim is PLN 200,000, and therefore the game is worth the candle. Also, the rules for reimbursement of the court fees when entering into a settlement can play into the parties’ negotiations and calculations. So it is worth knowing them and taking them into account in negotiations.
Settlement before the first hearing
At its own initiative, the court shall return the entire fee paid on the pleading initiating the proceeding in the first instance (statement of claim or application in non-trial cases) or objections to an order for payment, if the action ended in a settlement before commencement of the hearing before the court of first instance (Art. 79(1)(1)(h) of the Act on Court Costs in Civil Cases). Therefore, an amicable resolution of the case before the hearing means that the litigants will recover the court fee in full.
In this case, the court acts at its own initiative, i.e. no request from the parties is necessary and the refund itself is automatic—it is not subject to judicial discretion, and the court is obliged to order such refund when the statutory conditions are met. The entire court fee will be refunded regardless of whether the settlement was entered into before a mediator, before the court (in which case it is best for the court to schedule a non-contentious session for the purpose of concluding a settlement), or without the participation of the court or a mediator (in which case the parties enter into settlement outside the session of the court and submit it to the court with a request to discontinue the proceedings).
Settlement after the first hearing
If the settlement is entered into after commencement of the hearing in the first instance, the mode of settlement affects how much of the fee is recovered. If the settlement was reached before a mediator after commencement of the trial in the first instance, the court shall at its own initiative refund three-fourths of the fee on the pleading initiating the proceeding in the first instance (statement of claim or application in a non-trial cases) or objections to an order for payment (Art. 79(1)(2)(a)). This rule will apply if either court mediation (from a court referral) or out-of-court mediation was conducted during the court proceeding (mediation was conducted during the trial, but not from a court referral).
If the proceeding in the first instance ended in a court settlement after commencement of the hearing, but without the participation of a mediator, the court shall at its own initiative refund half of the fee paid on the pleading initiating the action in the first instance (statement of claim or application in non-trial cases) or objections against an order for payment (Art. 79(1)(3)(c)).
A similar rule applies to the pleading initiating the proceeding in the second instance (usually an appeal), where the case ended in in a court settlement (Art. 79(1)(3)(d)). In such case, half of the fee for the appeal (or other pleading initiating the proceeding in the second instance) is reimbursed. This means that entering into a settlement at the appellate stage can also lead to recovery of part of the court costs already paid.
In all cases under discussion, the reimbursed fee is subject to reduction by the minimum fee, i.e. PLN 30 (Art. 79(3) of the Act on Court Costs in Civil Cases).
Agata Jóźwiak, attorney-at-law, Dispute Resolution & Arbitration practice, Wardyński & Partners
