When clients finish their discussion with the lawyer about a lawsuit, sometimes they will ask: “By the way, the losing party will pay for the attorney fee, right?”

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Usually, after a bit of silence，the lawyer would explain: “Well, the losing party will pay for the court fee, but usually the client has to pay the attorney’s fee themselves.”

Surprised? That’s the reality, it’s very common in China for the client to pay the attorney fee, even he wins the case.

However, the good news is, in recent years, China is exploring the possibility of an attorney-fee shift system. Let’s see under what situations the losing party will pay the attorney fee:

1. Where there are specific regulations:

Creditor executes it’s right of rescission.

If the debtor gives up or (transfers without reasonable consideration) his interest to any third party, the creditor could file to claim what the debtor did is invalid and ask the debtor to pay the attorney fee;

IPR related cases.

Attorney fee could be compensated by the losing party based on the necessity of the fee and the proportion of the compensation claimed by the plaintiff to compensation granted by the court.

Patent infringement case.

The compensation for infringement of patent rights shall include reasonable expenses paid by the right holder to stop the infringement.

Copyright infringement case.

The compensation for infringement of copyright shall include reasonable expenses paid by the right holder to stop the infringement. The related judicial interpretation further specified that the so-called reasonable expenses include investigation expenses…and attorney fee which is paid in line with related regulations.

Trademark infringement case.

The compensation for infringement of trademark shall include reasonable expenses paid by the right holder to stop the infringement. The related judicial interpretation further specified that the so-called reasonable expenses include investigation expenses…and attorney fee which is paid in line with related regulations.

2. Where there are regulations but not specific:

Only in limited situations, the losing party will pay attorney fee in China
In some other situations, it’s up to the judge or arbitrator to decide how the losing party will bear the attorney fee，such as guarantee disputes, unfair competition disputes, personal injury cases, reputation infringement cases, traffic accident cases and arbitration cases.

3. Where there is specification in the contract

If there is a specification in the contract that the losing party will pay for the attorney fee, then the judge may rule in favour of the winning party. But, they will review it very strictly. So it’s better to do it carefully:

1. make sure to specify the losing party will “pay attorney fee” instead of “pay reasonable related expenses”；

2. Provide retaining agreement with the law firm and fapiao to prove this is an actual expense.

So, don’t forget to include such a clause in your contract!

Source: Sophie Mao from ChinaLawHelp.com

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