Luxembourg: Litigation & Dispute Resolution In Luxembourg – 2019

Last Updated: 19 March 2019
Article by Marianne Rau


1 Preliminaries

1.1 What type of legal system has your jurisdiction got? Are there any rules that govern civil procedure in your jurisdiction?

Luxembourg is a civil law country and has a codified legal system largely based on the French codes. The rules governing civil procedure are laid down in the New Code of Civil Procedure (Nouveau Code de Procédure Civile, hereafter the "NCCP").

1.2 How is the civil court system in your jurisdiction structured? What are the various levels of appeal and are there any specialist courts?

Luxembourg is divided into two judicial districts (Luxembourg and Diekirch). The District Courts (Tribunal d'Arrondissement) are the ordinary courts hearing all cases dealing with civil and commercial matters that are not attributed by law to another Court. They also hear appeals against decisions rendered by the Magistrate's Courts that exceed the sum of EUR 2,000. Special chambers of the District Courts are dedicated to the various civil law matters.

Furthermore, jurisdiction for juvenile and guardianship matters is conferred to a special section of the District Courts. The Magistrate's Courts (Justice de Paix) have jurisdiction for civil and commercial disputes that do not exceed the sum of EUR 10,000. Decisions handed down by the Magistrate's Courts that do not exceed the sum of EUR 2,000 are not subject to appeal. The NCCP also confers exclusive jurisdiction to the Magistrate's Courts without any limitation as to the financial stakes of the dispute in various specific matters, e.g. disputes with leaseholders or related to wages and pensions. Decisions rendered by the District Courts can be appealed before the Court of Appeal (Cour d'appel). The Court of Appeal has jurisdiction to make a new assessment of both the facts and the applicable legal provisions in its judgment. Appeals against judgments of the Court of Appeal may be filed before the High Court (Cour de Cassation). The High Court will only rule on matters of law (to the exclusion of facts). Alongside the Prosecutor- General's Office (Parquet Général), the Court of Appeal and the High Court form part of the Supreme Court of Justice (Cour Supérieure de Justice).

1.3 What are the main stages in civil proceedings in your jurisdiction? What is their underlying timeframe (please include a brief description of any expedited trial procedures)?

Ordinary civil proceedings are instituted by a writ of summons (assignation or citation) that has to be served on behalf of the applicant (claimant) by a bailiff upon the defending party. Except before the Magistrate's Courts, civil proceedings are normally in writing and representation by a lawyer registered as Avocat a la Cour with the Luxembourg Bar is mandatory. The claimant normally files the document instituting the proceedings with the competent court together with the supporting documents after having them duly communicated to the opposing party's lawyer. The parties' lawyers will exchange written submissions and exhibits according to the timetable set by the court. Once the parties' arguments have been sufficiently developed, the court will order the closing of the examination period and set the date of the hearing for the oral pleadings. Arguments or grounds of defence that have not been set out in the written submissions are not admissible during the oral pleadings. After the oral pleadings, the case is deliberated upon by the court who will set the date for the delivery of the judgment. The duration of first instance civil proceedings may vary depending on the number of parties involved and the complexity of the case, as well as the need for expert evidence. The usual length is between 12 and 30 months. In urgent matters, parties may also start summary proceedings, where a court order may be obtained within a few weeks. However, a court order rendered by the judge sitting in summary matters will only have an interim or provisional effect pending final judgment in the case.

1.4 What is your jurisdiction's local judiciary's approach to exclusive jurisdiction clauses?

Exclusive jurisdiction clauses are normally recognised by the Luxembourg Courts as long as they are not contrary to any mandatory provision of national or international law.

1.5 What are the costs of civil court proceedings in your jurisdiction? Who bears these costs? Are there any rules on costs budgeting?

The costs of civil court proceedings (frais et dépens) mainly includes the claimant's bailiff costs, fees of a notary or an expert possibly appointed by the court, and witness and lawyer expenses (émoluments). Normally, the unsuccessful party is ordered by the court to pay the judicial costs. These costs do not include lawyer fees, however. Normally, each party has to bear the costs of its own lawyer, except when a procedural indemnity (indemnité de procédure) is granted by the court to one of the parties (Article 240 NCCP). This procedural indemnity normally covers only a small portion of the total lawyer fees.

In addition, when damages founded on tortious liability are granted by the court, the lawyer fees of the claimant may be considered as being part of the damages he has suffered, so that the defendant will be ordered to bear them. Furthermore, when the judicial action brought against one party is considered as obviously unfounded, the claimant might also be ordered by the court to pay the lawyer fees of the defendant in full on the basis of an abuse of process.

1.6 Are there any particular rules about funding litigation in your jurisdiction? Are contingency fee/conditional fee arrangements permissible?

Apart from the lawyer's obligations to comply with its anti-money laundering duties, there are no particular rules about funding litigation in Luxembourg. Litigation funding should therefore be permissible as long as it does not put the party's lawyer benefitting from it into a situation of conflict of interest between the interests of his client and those of the funder(s). Fee arrangements based completely on the outcome of a dispute (quota litis pact) are prohibited for Luxembourg lawyers, however. Fees should normally be fixed based on account of the importance and complexity of the case, the amount of work done by the lawyer, the notoriety and the experience of the lawyer as well as the final outcome of the case.

1.7 Are there any constraints to assigning a claim or cause of action in your jurisdiction? Is it permissible for a non-party to litigation proceedings to finance those proceedings?

In Luxembourg, the principle "no pleas by prosecutor" applies. However, the assignment of claims or the subrogation of rights is normally possible, except for claims to uphold purely personal rights (droits strictement personnels), such as usufruct rights, habitation rights, authorisations or concessions granted by the public authorities, etc.). As explained in response to question 1.6, there are no constraints in principle to third-party litigation funding.

1.8 Can a party obtain security for/a guarantee over its legal costs?

A financial guarantee for costs and damages may be granted by the court upon application by the defendant when the claimant has his domicile or habitual residence outside of a Member State of the European Union, a Member State of the European Council, or a country with which Luxembourg is bound by an international convention providing for an exemption of such a guarantee (Article 257 NCCP). The amount of the guarantee is determined by the court.

2 Before Commencing Proceedings

2.1 Is there any particular formality with which you must comply before you initiate proceedings?

In Luxembourg, there are no pre-trial obligations. For instance, a claimant is not obliged to try to find an amicable solution to or to enter into negotiations with the opposing party before initiating legal proceedings. In ordinary civil proceedings, the proceedings are instituted by a writ of summons that is served on behalf of the claimant by a bailiff upon the defendant.

2.2 What limitation periods apply to different classes of claim for the bringing of proceedings before your civil courts? How are they calculated? Are time limits treated as a substantive or procedural law issue?

The ordinary limitation period (prescription) for civil claims in contract and in tort is 30 years. The right to claim extinguishes after the 30-year period has elapsed. Several provisions of the Civil Code also provide for shorter limitation periods (e.g. two years for lawyer's fees, three years for wages, five years for lease payments, five years for action for annulment of contracts, two or 10 years for warranty claims against architects and construction companies, depending on whether minor or major works are concerned, etc.). For many shorter limitation periods applicable to demands of payment (e.g. claims for payment by merchants, claimants and lawyers), there is, after expiry, only a rebuttable presumption that payment has been made. Limitation periods are normally calculated in days and treated as substantive law issues.

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