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Die Steuerungswirkungen unterschiedlicher Prozesskostenregelungen: Ein Überblick zum Stand von Theorie und Empirie
[The economic effects of alternative fee shifting rules: A review of the theoretical and empirical literature]

Author

Listed:
  • Schwab, Christian
  • Tang, Hin-Yue Benny

Abstract

The so-called English Rule in § 91 ZPO has a longstanding tradition in German civil litigation. Although this “loser pays”- fee shifting can raise severe problems like sharply reducing access to the courts for parties of moderate means, the adaption of alternative cost regimes like the U.S.-style American Rule where no fee shifting occurs has never been seriously considered. What is more, the German debate seems to completely ignore the findings of the extensive law and economics literature on fee shifting. This paper addresses this task and surveys the theoretical and empirical literature on the effects of alternative fee shifting systems on a variety of decisions arising during the litigation process. In detail, we put some arguments supporting German-style fee shifting to the test: Does the German system really discourage low-probability-of-prevailing lawsuits that would be brought under the American Rule? Does it encourage the settlement of litigation? And does the German solution lead to lower costs of the legal system compared to alternative fee regimes? The findings indicate that the influence of different fee shifting rules on parties´ decision-making behavior is to a large extent ambiguous. Policy makers should be aware of these problems.

Suggested Citation

  • Schwab, Christian & Tang, Hin-Yue Benny, 2011. "Die Steuerungswirkungen unterschiedlicher Prozesskostenregelungen: Ein Überblick zum Stand von Theorie und Empirie
    [The economic effects of alternative fee shifting rules: A review of the theoretic
    ," MPRA Paper 32746, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:32746
    as

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    File URL: https://mpra.ub.uni-muenchen.de/32746/1/MPRA_paper_32746.pdf
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    References listed on IDEAS

    as
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    Keywords

    Civil Litigation; Fee Shifting; English Rule; American Rule;

    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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