The risks of litigation – uncertainty, costs, and unforeseeable duration often serve as an incentive to the parties to reach a settlement before the actual lawsuit is filed. However, once the proceedings are initiated, the costs start to pile up – the court fees being a significant part of them, especially if the amount requested by the lawsuit is high because the obligation to pay fees stems automatically from the act of filing a lawsuit or a response to the lawsuit.

This means that once the lawsuit is filed, the incentive to reach a peaceful settlement drops. Paying the court fees becomes inevitable, and each party wants to win making the other party to pay the court fees.

However, the most recent amendments to the Serbian Court Fees Act significantly changed the rules regarding the court fees.

New Benefits for Court Settlement

The amended Court Fees Act stipulates that the obligation to pay court fees arises only after the first hearing is finished. Thus, if the lawsuit is withdrawn between its filing and the end of the first hearing (which in Serbia can be a period of several months) there is no obligation to pay the court fees.

If the proceeding is finished until the end of the first hearing, because of the court settlement, acceptance of the lawsuit by the defendant or renouncing it by the plaintiff, the court fees are not levied at all.

Furthermore, the deadline is set at the end of the first hearing. In litigations with a higher value, there is a mandatory preliminary hearing prior to the first hearing, so this gives even more time for settlement.

The amendments to the Court Fees Act came into force on January 1, 2019. Still, it is not clear whether the provisions will be applied to the litigations in which the lawsuit was filed before January 1, 2019, but the first hearing was not held prior to this date. Since the idea for enacting this legislation was to induce the parties to settle, it is very probable that this provision will be also applied to the aforementioned lawsuits.

What can these changes bring?

These changes are very important because only after both the lawsuit and the response to claim are filed and the preliminary hearing is finished, the chances for the outcome of the litigation can be assessed. The amendments create a window in time in which both sides can consult with their lawyers and reach conclusions about their chances and decide on the possible settlement more rationally prior to incurring the court fees.

Most probably the parties will request the postponement of preliminary or the first hearing (for few days or weeks) if they expect to jointly reach the settlement. The court will also have the reason to grant this suspension because reaching a settlement means much less work for the court – especially in drafting the judgments, which is much simpler in case of a settlement, acceptance of the lawsuit by the defendant or renouncing it by the plaintiff.

It is expected that this measure will increase the number of court settlements in simpler cases leaving the court additional time for the more complicated cases. That said, we are looking forward to seeing whether those amendments will make an impact in speeding up of the litigation proceedings before Serbian courts.