Compensation for an attorney’s fee: Should be approved within reasonable limits

Difference in views between courts and arbitrators

At present, the compensation of attorney's fees is expressly provided only in the Law on Intellectual Property 2005. According to this law, the owner whose intellectual property rights have been infringed has the right to claim compensation for attorney's fees from the infringing party. In addition, the Vietnamese legal framework practically does not provide for attorney's fees as a type of damages, except for defense costs in cases where legal representation is mandated by the provisions of the Criminal Procedure Code 2015, which is beyond the scope of this article.

For this reason, the current courts have not really considered the application of compensation for these expenses. For example, the People's Court of Hai Duong Province, in Judgment No. 19/2019/DS-PT dated September 13, 2019, on compensation disputes due to violation of consumer rights[1], stated that: “As for the cost of hiring a lawyer to participate in the lawsuit, it is 50,000,000 VND. When filing a lawsuit according to the provisions of law, the plaintiff has the right to invite a lawyer to protect his or her legitimate rights and interests. Mr. Kh exercised this right voluntarily and through a civil agreement”. As a result, the People's Court of Hai Duong Province did not accept Mr. Kh's request to file this lawsuit.

With a similar assertion, the People's Court of Hai Duong City, in Judgment No. 01/2022/LD-ST dated January 10, 2022, regarding a dispute involving claims for damages, social insurance, and public apologies related to labor discipline[2], stated that "Mr. T's hiring a lawyer to protect his rights and legitimate interests is a personal choice. Therefore, the lawyer's fee is not considered a reasonable and obligatory cost to be paid by the losing party must pay to the winning party." This argument confirms the perspective of the court in this case, asserting that attorney fees are not reasonable costs that the losing party must reimburse to the winning party, and the decision to hire a lawyer or not does not affect the outcome of the case resolution.

Commercial arbitrators seem to have a different perspective than the court when it comes to attorneys' fees.

For example, in the Arbitration Award of Case No. 101/19HCM dated December 2, 2020[3], the Arbitration Council of the Vietnam International Arbitration Center ruled as follows: "The Respondents are jointly liable to reimburse the Claimant the arbitration fees of USD 61,433.31 and the legal fees of USD 18,016.62 within 30 (thirty) days from the effective date of the Arbitration Award”.

It appears that commercial arbitrators are inclined to consider attorney fees incurred by the parties as costs related to the arbitration proceedings. Pursuant to point h Clause 1 Article 61 of the Law on Commercial Arbitration 2010, arbitration awards shall apportion the costs of arbitration and other related expenses. According to this provision, commercial arbitrators have the power to allocate other related expenses, including attorneys' fees. From an international perspective, such cost allocation is consistent with the provisions of Clause 2 Article 42 of the UNCITRAL Arbitration Rules 2021.[4]

In summary, the decision of the commercial arbitrators in the above-mentioned award to order the losing party to reimburse the winning party's attorneys' fees is based on a different approach of commercial arbitrators than that of the courts. While the court considers whether attorneys' fees constitute damages to the party seeking compensation, commercial arbitrators recognize attorneys' fees as costs associated with the arbitration.

The reasonableness of accepting a claim for damages includes the attornes’s fee

It is no coincidence that the issue of attorneys' fees is attracting the attention of litigants. This is due to the growing demand for legal services in dispute resolution. Lawyers, with their knowledge and experience, can provide significant assistance to their clients in the dispute resolution process. Of course, as the role of lawyers becomes more extensive and disputes more complex, the fees that clients have to pay to lawyers tend to increase.

In some legal relationships where there is a discrepancy in the "position" of the parties involved, such as labor relations between companies and employees, and relations between suppliers and consumers, the weaker party may not always have sufficient information or legal understanding of the established legal relationship. For this reason, Vietnamese law contains specific provisions aimed at protecting the weaker party in such relationships. For example, regulations that limit certain aspects of labor relations, such as probationary wages, minimum wages, or requirements for standardized contracts for providers of utilities, water, and housing...

In these relationships, when disputes arise, it is not easy to access records and documents and gather evidence to present to a court or arbitrator to resolve the dispute. In addition, companies or suppliers typically have legal teams and attorneys to protect their rights and interests. In contrast, employees or consumers may not even be aware that their rights and interests are being violated without legal advice and assistance in many cases.

Therefore, the author believes that it is necessary to approve requests for attorneys' fees in disputes involving labor or consumer issues.

In addition, during the settlement of disputes, especially in court, the parties involved may request the court to carry out one or more procedures during the stages of the dispute settlement process, such as the application of temporary emergency measures, investigation, on-site inspections, etc.

These are procedures that are not easy for the parties involved to identify and apply to the court. Therefore, lawyers play a very important role in these cases. In some cases, after receiving legal advice from a lawyer, the parties exercise their rights reasonably, which leads to the quick resolution of disputes and limits the damage to the parties involved.

The author believes that in such cases, if the parties can prove that without the legal advice and assistance of a lawyer, they would not be able to present reasonable claims to the court, the lawyer's fee at that time can be considered a reasonable expense to limit damages, as stipulated in Article 361 Clause 2 of the Civil Code 2015.

Should be considered to be approved at a reasonable level

As noted above, approval of a request for attorneys' fees is essential and practical. However, approval by the dispute resolution authority should also be considered at a reasonable level.

First, approval should be considered only if the disputing parties provide supporting documents, such as legal service contracts, invoices, bank transfer orders and other relevant documents. These documents facilitate the parties' ability to protect their rights or to demonstrate the lawyer's contribution to expediting the resolution of the case, thereby limiting harm to the service users.

Second, in many cases, disputing parties, especially those with strong financial resources, often abuse the use of legal fees in general and attorneys' fees in particular. Their legitimate demand for legal services cannot be denied. However, dispute resolution authorities need to evaluate and take into account the complexity of the dispute, the experience and reputation of the lawyer handling the case, and the work performed by the lawyers in practice, in order to have a basis for a fair and reasonable decision on the amount of approval (for courts) or the allocation of related costs (for commercial arbitration).

In general, the approval of requests for compensation of attorneys' fees is a very practical issue that dispute resolution institutions consider, especially when the demand for hiring attorneys to protect the legitimate rights and interests of disputing parties is increasing day by day.

Approving the compensation of these fees can, from some perspectives, encourage parties to make sound decisions to use legal services during the dispute resolution process. It is also a step forward in bringing Vietnam's legal activities closer to the world's advanced and leading legal frameworks.