Abstract
Under the English rule, the loser pays litigation costs whereas under the American rule, each party pays its own costs. Israel instead vests in its judges full discretion to assess fees and costs as the circumstances may require. Both the English and the American rules have been the subjects of scholarly criticism. Because little empirical information exists about how either rule functions in practice, an empirical study of judicial litigation cost award practices should be of general interest. This Article presents such a study in the context of Israel’s legal system. We report evidence that Israeli judges apply their discretion to implement multiple de facto litigation cost systems: a one-way shifting system that dominates in most tort cases; a loser pays system that operates when publicly owned corporations litigate; and a loser pays system with discretion to deny litigation costs in other cases. Although a loser pays norm dominates in Israel with litigation costs awarded to the prevailing party in 80 percent of cases, Israeli judges still often exercised their discretion to protect certain losing litigants, especially individuals, from having to pay their adversaries’ litigation costs. In tort cases won by individual plaintiffs against corporate defendants, for example, corporations had to pay their own litigation costs plus plaintiffs’ litigation costs 99 percent of the time. Even when the corporate defendants prevailed, they still had to pay their own litigation costs 52 percent of the time. When public corporations litigated and lost, a loser pays system dominated. Award patterns also varied by case category and judicial district. In property cases in one district, courts denied prevailing plaintiffs fees in about 75 percent of cases. Theorizing about optimal fee rules should account for the variety of fee outcomes observed in practice.
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