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Success for Mishcon clients, Diag Human SE and Mr Josef Stava, as the High Court rules that CFA fees cannot be collected under an unenforceable retainer

Posted on 16 August 2022

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Mishcon de Reya has successfully defended its clients, Liechtenstein blood plasma company Diag Human SE (Diag) and its owner, Mr Josef Stava, in an appeal brought by their former solicitors, Volterra Fietta, against a decision by the Senior Courts Cost Office. 

The appeal concerned a 2020 decision from the Senior Courts Cost Office, which found that Volterra Fietta's Conditional Fee Arrangement (CFA) with its former clients (under which the firm’s fees would be discounted by 30% with further fees payable in the event of an positive award or settlement in the underlying arbitration) was unenforceable. The High Court agreed with the original decision and dismissed Volterra Fietta's appeal.

The CFA entered into with Diag and Mr Stava was deemed by the Court to be "wholly different" in nature to the retainer signed previously with Diag alone. Last month, a ruling by Mrs Justice Foster DBE upheld the decision of the Senior Courts Cost Office, confirming that Diag and Mr Stava had no liability for costs under the unenforceable retainer. The ruling found that the clients' former lawyers, Volterra Fietta, were not entitled to the nearly US$3 million under its CFA.  

From 2017-2019, Volterra Fietta represented Diag and Mr Stava in a London-seated arbitration against the Czech Republic, which was filed pursuant to a Bilateral Investment Treaty between Switzerland and the Czech and Slovak Republics and administered by the Permanent Court of Arbitration in the Hague. Volterra Fietta was subsequently replaced by Mishcon de Reya in the underlying arbitration. In May 2022, the arbitral tribunal issued its Award, finding that the Czech Republic had breached the Treaty and was liable for frustrating Diag and Mr Stava's investment, as well as ordering compensation in the sum of US $650m.

Last month, the Czech Republic issued a challenge to the award in the English Commercial Court, in which Mishcon is also representing Diag and Mr Stava.

The Mishcon team in the Costs proceedings consists of Louis Flannery QC, Heidrun Walsh, and Emily Novelli.

The Mishcon team in the Challenge proceedings in the underlying arbitration consists of Louis Flannery QC, Heidrun Walsh, Paul Stokes, Jack Burstyn and Reem Kabour.

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