The Cost of Lost Court Cases for the Government Rise

The costs of court litigation in which the state is a defendant is going up, but government agencies are doing little to prevent lawsuits.

When sued, Bosnia and Herzegovina (BiH) state agencies often lose. Between 2008 and 2013, court cases, mostly over labor issues and debts, cost the state 14.6 million KM, according to a performance audit by the Audit Office of the Institutions of BiH.

The auditors note that mediation and work on improving their own policies could reverse the trend. Litigations that get resolved before the court do not carry the additional expenses that come with trials, but government agencies don’t pay enough attention to the risky complaints that most often end up being litigated.

The audit found that the state agencies could figure out from certain indicators that litigation was a high possibility in at least 10 to 15 analyzed cases. But in just five cases did they take action to resolve the disputes.

Between 2008 and 2013, BiH government agencies as defendants lost 313 cases. The number of lost cases is on rise as well as the cost of them. These tripled from 1.2 million KM in 2008 to 3.6 million KM in 2013.

Most of the lost cases — 219 — were related to labor. Other causes of litigation are indemnities (48) and debts (35). The BiH Border Police, Indirect Taxation Authority, BiH Ministry of Defense and BiH Ministry of Foreign Affairs are the agencies most open to lawsuits.

“The court cases point to errors, bad policies and weaknesses of the executive branch. Late corrective measures lead to repeated court cases and additional expenses. An increase of costs for court litigation affect the budgetary balance and negatively affect the financing of BiH institutions,” the auditors’ report said.

In most cases the auditors looked at, the agencies were late paying fines and that led to additional costs of 700,000 KM and late payment fees of 230,000 KM.

“Just one judgment out of 15 analyzed court cases has been executed on time, within the court-ordered deadline,” the auditors found.