New HOAI 2021 - New "fee freedom"
Since 1 January 2021, the new Official Scale of Fees for Services by Architects and Engineers (Honorarordnung für Architekten und Ingenieure, HOAI) has been in force as a consequence of the European Court of Justice’s (ECJ) scolding of the previously valid HOAI under European law.
The ECJ’s judgment of 4 July 2019 (court file no. C-377/17) called upon the German legislator to adapt the HOAI to the requirements of the European Directive on Services in the Internal Market (Directive 2006/123/EC) and thus to repeal the binding nature of the minimum and maximum fees set by the HOAI 2013.
The previous fee ranges were not changed – however, they now only have the function of benchmarks (§ 2a Par. 1 HOAI). The lower value is now declared to be the base fee rate.
The new HOAI has simplified the agreement of fees, which can now be made in text form (e.g. by e-mail, fax or exchange of PDF files) (Sec. 7 Par. 1 HOAI, Sec. 126b German Civil Code). In addition, an agreement on fees can also be made before or after the contract is awarded, thus opening up more (negotiating) leeway for the parties and avoiding disputes about the timely agreement on fees.
If the parties do not reach an agreement on the amount of the fee, the basic fee rate is to apply for basic services. Special services, on the other hand, are to be remunerated at the usual rate in accordance with Sec. 632 Par. 2 of the German Civil Code. The due date and the right to demand payments on account are also derived from the German Civil Code (Sec. 15 HOAI, Sec. 632a, 650g Par. 4 German Civil Code).
In order to protect the consumer, the contractor has to inform the consumer in text form that the values of the HOAI fee scales may be exceeded or fallen short of by negotiation before submitting a binding contractual declaration (Sec. 7 Par. 2 HOAI). If the contractor does not meet these requirements or does not meet them in time, only the respective base fee rate is due, irrespective of any agreed higher fee.
The new provisions of the HOAI only apply to contractual relationships established after 31 December 2020. Disputes in the context of so-called “supplementary actions” (Aufstockungsklagen), in which an ineffectively low fee under the old HOAI is complained about, remain unaffected by the HOAI 2021. The question of whether and to what extent such pending lawsuits are to be assessed according to the ECJ ruling of 2019 and the new HOAI 2021 and whether the legal concept of the non-binding nature of the fees should also apply to these lawsuits has been referred to the ECJ by the Federal Court of Justice (order from 14 May 2020, court file no. VII ZR 174/19).
In summary, there are welcome freedoms which allow the parties to determine fees in a privately autonomous manner guided by the benchmarks of the HOAI. As a safety net, the basic fee rate is available to the contractors in the event of a non-executed or ineffective fee agreement.