Indemnity Principle

A term used to describe the rule that ensures that a prevailing party in litigation is compensated for all reasonable costs in securing the vindication of that party’s position, i.e., indemnified for all legal costs. Under the indemnity principle the winner in a case should receive enough to put it in the position it would have been in, had the case not taken place or not been necessary, i.e., if the defendant had paid the plaintiff’s claim without the necessity of bringing suit, or if the plaintiff had not brought an invalid claim against the defendant. The indemnity principle is applied in most common law countries other than the United States, where it is known as the English Rule. It is usually subject to numerous exceptions. The indemnity principle is also sometimes stated as the rule that “costs follow the event.” See Costs, Attorneys’ Fees.

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