What Is a Settlement? (Under Swedish Law)
A settlement (Swedish: förlikning) is an agreement between the parties to resolve a dispute – fully or partially – without a court judgment. It can be reached outside of or during court proceedings in Sweden, and it effectively ends the legal process.
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Legal Fees in Settlements – What Applies in Sweden?
Unlike a court judgment, where the losing party is typically ordered to pay the winner’s legal costs, there is no automatic cost-shifting rule in settlements under Swedish procedural law. Instead:
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In approximately 90% of all settlements in Sweden, the standard practice is that each party pays their own legal fees.
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If the settlement agreement does not explicitly regulate legal costs, this is the presumed outcome.
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However, the parties are free to agree otherwise – for example, that one side reimburses part or all of the other’s legal costs.
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Examples:
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Typical Swedish case: Two individuals settle a dispute regarding property damage. One party pays compensation, but both parties cover their own legal fees.
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Negotiated outcome: A company partially prevails in a debt claim. The parties settle, and the opposing party agrees to reimburse SEK 25,000 of the company’s legal expenses.
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Legal Expenses Insurance and Legal Aid in Sweden Cover Settlements
In Sweden, both legal expenses insurance (often included in home or business insurance) and state-funded legal aid (rättshjälp) can cover lawyer’s fees even if the case is resolved through settlement.
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You may be eligible if:
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You meet the conditions for coverage (based on income, insurance terms, etc.)
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The dispute is of a type that qualifies for assistance
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Your lawyer reports the case properly to the insurance company or legal aid authority
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This means that even if you settle, you may only need to pay a deductible, with the rest covered by insurance or the state.
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Why It’s Important to Address Legal Costs in the Settlement Agreement
If the agreement is silent on legal costs, the default rule in Sweden is that each party pays their own. To avoid misunderstandings, it’s important to include a clear clause such as:
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“Each party bears its own legal costs.”
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“The respondent shall reimburse the claimant SEK 20,000 in legal costs.”
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Do You Need a Lawyer to Negotiate a Settlement in Sweden?
It helps! A Swedish lawyer can help you:
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Assess whether the proposed terms are fair
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Negotiate on your behalf
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Draft a legally binding settlement agreement
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Ensure legal costs are properly addressed
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Summary
In Sweden, the general rule in settlement cases is that each party pays their own legal fees – this applies in roughly 90% of cases. However, the parties may agree otherwise. Importantly, legal expenses insurance and state-funded legal aid often cover lawyer’s fees even when the case is resolved through settlement.
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Need help reaching a fair settlement or ensuring your legal costs are covered in Sweden?
Contact us – we’re here to protect your rights and help you resolve disputes cost-effectively.
