Lawyer fees in Croatian public procurement remedies have been a point of contention for a long time. The issue mainly arises from Article 3(3) of the State Commission Act, which stipulates that the State Commission (State Commission for Supervision of Public Procurement Procedures – Croatian PP Appeal Body DKOM) decides on the reimbursement of the costs of the appeal procedure and other claims that the parties are authorized to make in appeal proceedings, and that in such proceedings the value of the subject matter is not assessable.

This seemingly uninteresting description of the value of the subject matter of a public procurement appeal has caused the admissible lawyer fees never to reflect the scope of the work and responsibility a lawyer takes on when writing an appeal in a, e.g. public procurement procedure valued at 100 million euros. The fact that the value of the subject matter has been defined as non-assessable has caused that, in public procurement appeals, Articles 22 and 24 of the Tariff of Fees and Expenses payable for Lawyers’ Services are applicable, meaning that the reimbursable lawyer’s fee in any public procurement appeal, no matter the value, is 125 euros.

Croatian Bar Association (CBA) attempted to remedy this gross imbalance with its’ 2023 Tariff Amendments, where a new Article 25 was introduced – establishing new rules for lawyer fees in public procurement appeals;

For drafting an appeal in public procurement procedures before the competent authority, if:

the estimated value of the procurement is up to EUR 250,000, the attorney is entitled to a fee of 500 points;

the estimated value of the procurement is between EUR 250,000.01 and EUR 13,000,000, in addition to the fee of 500 points, the attorney is entitled to an additional 100 points for every commenced EUR 250,000;

if the estimated value of the procurement exceeds EUR 13,000,000, the attorney is entitled to a fee of 7,500 points.

2. By way of exception to item 1 of this tariff number, for drafting an appeal against the procurement documentation, the attorney is entitled to a fee of 500 points.

This solution elegantly mirrors the one established for the calculation of appeal fees in Article 430.a of the Public Procurement Act;

The appellant is required to pay a fee for initiating the appeal procedure in the following amounts:

EUR 1,320.00 for an estimated procurement value of up to EUR 265,440.00

0.5% of the estimated procurement value for an estimated value from EUR 265,440.01 to EUR 13,272,000.00 EUR

66,360.00 for an estimated procurement value exceeding EUR 13,272,000.00

If the estimated value of the procurement is not known at the time of filing the appeal with the State Commission, the fee for initiating the appeal procedure shall be paid in the amount of EUR 1,320.00.

Very soon after the Tariff amendments were published, the High Administrative Court of the Republic of Croatia (VUSRH) initiated a procedure to establish the legality of the new Tariff – as it is a general act and the evaluation of legality of general acts falls within its jurisdiction.

The judgement was published last week, and it is available here (in Croatian, but a machine translation will work relatively well). VUSRH repealed Article 25 of the new Tariff, erased the new system of calculating lawyer fees in public procurement appeals, and reduced the renumeration awarded by DKOM (appeal body) to 125 euro per appeal.

This judgement of course warrants a deeper analysis (I plan to write a paper), as it raises important questions on the autonomy of CBA, the sustainability of the legal profession, access to justice for economic operators, and many others. But a couple of things are either evident or incomprehensible.

The evident part is the effect of this judgement on the level of legal protection and remedy use in Croatia. I have already extensively written on the narrowing of possibility to submit public procurement appeals (e.g. here and here), and I see this judgement as a new contribution (intentional or not, it makes no difference) to the same problem. This will definitely discourage lawyers from public procurement and public procurement appeals; it will make it even more expensive for appellants to access justice, which will lead to further erosion in the level of public procurement legality.

The incomprehensible part is the fact that it is allowed for the legislator to establish (extremely expensive!) appeal fees valued relative to the estimated procurement value even though they are a part (a preprequisite) for initiating an appeal procedure (which is supposed to be non assessable, remember), but the same is not allowed to the CBA when establishing lawyer fees.

The silver lining is the dissenting opinion of judge Karlovčan-Đurović, which can in part serve as a conclusion to this post;

This will undoubtedly deter parties from filing appeals in public procurement procedures, which was likely the intention behind prescribing such high fees for initiating an appeal procedure. However, this will also result in the denial of access to justice, as it is not realistic to expect that parties can secure professional assistance and protect their rights and legal interests under such conditions.

This is because, according to the Tariff (Tariff Numbers 22 and 24), an attorney is expected to provide professional legal assistance in exercising and protecting the rights and legal interests of parties for EUR 125.00. Clearly, there is a disproportion between the value of the procurement and the compensation available for drafting an appeal under the Tariff.

Therefore, it is only logical that attorneys will, as much as possible, avoid representing clients in public procurement procedures, which are, as is widely known, among the largest potential sources of corruption.

Thus, a real and logical question arises: Who benefits from a situation where parties lack professional legal assistance in public procurement procedures?

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