2020/5780
Recovering Court Costs in Beit Din: A Quiet Component of the Success of the Rabbinical Council of America’s Prenuptial Agreement
The Basic Rule – No Recovery
It is quite clear that the Halacha does not call for the loser of a Beit Din case to reimburse his adversary for his court costs. Tosafot (Sanhedrin 31b s.v. V’Yozti) and the Rosh (Sanhedrin 3:40) infer this point directly from the Gemara, Sanhedrin 31b. Rav Elazar (Sanhedrin 31b) opposes forcing a plaintiff to travel to another city along with the defendant to adjudicate their case in a more prominent Beit Din, arguing “one who is owed the sum of a Maneh should be forced to expend a Maneh to recover his Maneh”[1]?
Tosafot and the Rosh draw the obvious conclusion that the victor is not able to recover his expenses from the losing party. Had the prevailing party been entitled by Halacha to such recompense Rav Elazar would not have made the comment of having to spend a Maneh to recover a Maneh. Had he been able to recover the expenses, it would have cost the plaintiff nothing to adjudicate the case outside his home city.
This inference is so obvious that it is codified without a trace of dissent by the Shulchan Aruch (Choshen Mishpat 14:5).
Recovery in Case of Frivolous Lawsuit
If Halacha does not allow for recovery of court costs then why does the Beth Din of America include in its Rules and Procedures (28a)[2] that “The Beth Din, in its award, may assess arbitration fees and expenses in favor of any party”. The answer is that the Halacha does allow for the recovery of legal costs in case of a frivolous lawsuit.
The Rama (op. cit.) codifies, without dissent, a ruling for the Maharam of Rothenburg regarding an upsetting situation. A plaintiff induced a defendant to attend an out of town Beit Din with the promise that he would arrive in the town shortly after the defendant arrives. The plaintiff acted nastily and never arrived. The Maharam of Rothenburg ordered the plaintiff to reimburse the defendant for the money he spent to travel to the other city. We may extend the Rama/Maharam of Rothenburg ruling to any situation of wrongdoing on the part of a litigant. In such situations, the victimized party is owed compensation. Thus, the Beth Din of America’s Rules and Procedures number 28a is most certainly in conformity with Halacha.
An Agreement Where Loser Pays
The civil courts in most countries (including Great Britain) outside the United States have a rule that the loser pays the court costs of the winning party. What if parties stipulate in a contract that they agree to adjudicate their case in Beit Din but agree that the losing party pays the winning party’s expenses? Does the Halacha recognize the validity of such an agreement?
Offhand, it would seem that such an agreement is valid. After all, the Halacha follows the opinion of Rabi Yehuda (Bava Metzia 94a) that Kol Tnai SheBeMammon Kayam, any agreement as far as money is concerned is valid, even if does not confirm with Halacha (Shulchan Aruch Choshen Mishpat 291:17 and 305:4). [3]
Our question came to the London Beth Din in 1967 for adjudication. In this case, the defendant agreed to submit to Beth Din adjudication only if the loser would pay the court fees as done in British civil courts. The plaintiff agreed to the demand. The Av Beit Din (chief justice) of the London Beth Din at the time, Rav Aryeh Grossnass submitted this question to two of the greatest Halachic authorities of the time, Rav Moshe Feinstein (Teshuvot Igrot Moshe Choshen Mispat 2:26) and Dayan Yitzchak Weisz (Teshuvot Minchat Yitzchak 5:118).
It is most interesting and instructive that Dayan Grossnass did not simply decide the matter himself. After all, he simply could have issued his own opinion, as he was a very highly respected Poseik. However, Dayan Grossnass had the humility and wisdom to also consult with the two[4] highest authorities regarding this matter, since a new and groundbreaking decision was to be made.
One of the possible concerns is that of Shochad [5](bribery). The Halacha (see Shulchan Aruch Choshen Mishpat chapter nine) demands that the Beit Din treat the litigants in an absolutely equal manner. As part of this mandate, the Halacha calls for the litigants to pay the Dayanim for their time in equal amounts and in the presence of both parties. In this manner concern for creating a bias on behalf of one side is reduced.
However, both Rav Moshe and Dayan Weisz permit such an arrangement arguing that it does not create a situation of Shochad. Since the Beit Din does not know in advance who will be the loser, there is no bias as either side may prevail. Moreover, Rav Moshe and Dayan Weisz agree that there is no concern for Shochad if the litigants pay the Beit Din which in turns pays the Dayanim. In this manner the Dayanim are not swayed by the party that will foot the bill, since the Beit Din compensates the Dayanim, not the litigants directly.
Interestingly, although both Rav Moshe and Dayan Weisz rule that an agreement for the loser to reimburse the winning party for its court cost is valid, nevertheless they believe that this is not the proper course to take. In fact, Dayan Weisz explicitly states that this should be made clear to the litigants in advance of the hearing that the proper course of action is for the parties to each pay their own court costs. Thus, such agreements are not at all de rigueur for Shtarei Beirurin, Beit Din binding arbitration agreements.
Batei Din in Eretz Yisrael
There is a glaring policy difference between Israeli Batei Din and civil courts regarding our topic. Israeli civil courts (not surprisingly) follow the British model that the losing party pays. Israeli Batei Din, though, follow the traditional Halachic model of each side paying its own court costs regardless who wins.
Some (most prominently, the respected Orthodox Law Professor Eliav Schochetman) have argued that this disparity leads many otherwise observant and committed Jews to prefer adjudication in civil court rather than in a Beit Din. It is difficult to choose going to Beit Din if the civil court option will cost dramatically less to achieve justice than Beit Din.
In fact, the prominent Dayan and Sephardic chief rabbi Rav Mordechai Eliyahu in 1974 suggested the institution of a formal Takanna (rabbinic enactment) calling for the losing party in Beit Din to pay the legal fees of the winning side. If Rav Moshe and Dayan Weisz approve of a binding arbitration agreement calling for the losing side to pay court costs, then why not institute this in every case, especially if it will encourage more Jews to adjudicate their disputes in Beit Din rather than in a secular forum.
However, this suggestion has not been adopted. In Israel’s rabbinic courts each side pays its legal fees except in certain exceptional circumstances. It is one thing for Batei Din permit an occasional agreement for the losing party to reimburse the winning side for its legal costs. However, rabbinic courts will not embrace a wholesale rejection of the Halachic tradition for each side to pay their own legal fees. [6]
[1] Rav Elazar’s statement captures a central dilemma in the resolution of monetary disputes: At times, it is simply not worth the expense involved in recovering money that is legitimately owed. Sadly, in such situations injustice prevails. There are attempts to mitigate this problem such as the policy at the Beth Din of America where disputes on matters less than ten thousand dollars are resolved by one Dayan instead of the standard three Dayanim. This reduces the fees owed to the Beit Din. Moreover, one should consider carefully whether it is worth spending money to hire an attorney to represent him at Beit Din, especially regarding disputes over relatively small amounts of money.
[2] The Beth Din of America’s rules and procedures are posted on its website www.bethdin.org.
[3] A modern day example of this is the Rabbinical Council of America prenuptial agreement. It offers the option for a couple to agree to adjudicate monetary disputes in case of divorce based on civil equitable distribution laws. For further discussion of this matter, see my Gray Matter 2 pages 170-171.
[4] Rav Grossnass should not be seen as having been “forum shopping” by his consulting both Rav Moshe and Dayan Weisz. Rather, he was seeking wide support for a deviation from a time honored practice that dates back to the Talmudic era.
[5] Another concern is that of Asmachta. This is a complex Halachic topic but put simply it refers to a situation where parties incorporate a penalty clause, such as if a borrower says to a lender I will pay three hundred dollars if I do not pay the hundred dollars I owe you in a timely manner. The Halacha regards such an agreement as invalid since one lacks the Gemirat Da’at (intention and resolve) to pay in case of loss, as the only reason he agreed to pay extra is that he anticipated being able to pay on time. In regards to a loser pay agreement there is concern that one agrees to loser pay only because he is thoroughly convinced he will win. However, according to Teshuvot Chatam Sofer (Choshen Mishpat 66, cited in Pitchei Teshuva Choshen Mishpat 201:2) any commercially recognized form of Kinyan (formal act of acquisition) such as a legally binding contract, overcomes concern for Asmachta. Thus, according to the Chatam Sofer, a legally binding arbitration agreement or business contract containing a prevailing party clause would be a Halachically valid document.
[6] There are recently reported cases of the Israeli rabbinic courts ordering the losing party to pay the winning party’s litigation costs in situations where the losing party was discovered to be engaging in deception and fraud as reported at https://mishpatnet.wordpress.com/2017/02/13/.