§ 1141.21.Costs and Fees If Judgment Upon Trial De Novo Not More Favorable Than Arbitration Award
Title 3. Of Summary Proceedings · Chapter 2.5. Judicial Arbitration · Last amended 2007 · Last verified July 29, 2026
In one sentenceSection 1141.21 penalizes a party who demands a trial de novo but fails to do better than the arbitration award, ordinarily requiring that party to pay the arbitrator's compensation, the other side's costs, and reasonable expert-witness fees, unless the court finds in writing that the penalty would cause substantial economic hardship, with reduced exposure for parties proceeding in forma pauperis.
(1)If the judgment upon the trial de novo is not more favorable in either the amount of damages awarded or the type of relief granted for the party electing the trial de novo than the arbitration award, the court shall order that party to pay the following nonrefundable costs and fees, unless the court finds in writing and upon motion that the imposition of these costs and fees would create such a substantial economic hardship as not to be in the interest of justice:
(A)To the court, the compensation actually paid to the arbitrator, less any amount paid pursuant to subparagraph (D).
(B)To the other party or parties, all costs specified in Section 1033.5, and the party electing the trial de novo shall not recover his or her costs.
(C)To the other party or parties, the reasonable costs of the services of expert witnesses, who are not regular employees of any party, actually incurred or reasonably necessary in the preparation or trial of the case.
(D)To the other party or parties, the compensation paid by the other party or parties to the arbitrator, pursuant to subdivision (b) of Section 1141.28.
(2)Those costs and fees, other than the compensation of the arbitrator, shall include only those incurred from the time of election of the trial de novo.
(b)If the party electing the trial de novo has proceeded in the action in forma pauperis and has failed to obtain a more favorable judgment, the costs and fees under subparagraphs (B) and (C) of paragraph (1) of subdivision (a) shall be imposed only as an offset against any damages awarded in favor of that party.
(c)If the party electing the trial de novo has proceeded in the action in forma pauperis and has failed to obtain a more favorable judgment, the costs under subparagraph (A) of paragraph (1) of subdivision (a) shall be imposed only to the extent that there remains a sufficient amount in the judgment after the amount offset under subdivision (b) has been deducted from the judgment.
Plain-English Summary
This is the price of gambling on a better result. If a party elects a trial de novo under § 1141.20 and the judgment that comes out of it isn't more favorable, in either damages awarded or the type of relief granted, than the arbitration award had been, subdivision (a)(1) makes the court order that party to pay a set of nonrefundable costs: the compensation paid to the arbitrator, the other party's costs under § 1033.5, the reasonable fees of expert witnesses who aren't the other party's regular employees, and any arbitrator compensation the other side itself paid under § 1141.28(b). The court can excuse all of it, but only in writing and only on a finding that imposing these costs would create such substantial economic hardship that it wouldn't serve the interest of justice.
Subdivision (a)(2) limits the reach of these fee-shifting costs, apart from arbitrator compensation, to whatever was incurred from the moment the party elected the trial de novo forward — costs from before that election aren't swept in.
Subdivisions (b) and (c) soften the blow for a party who proceeded in forma pauperis and still didn't improve their position: rather than owing these costs outright, the amounts are offset against whatever damages that party did recover, and the arbitrator-compensation cost is collected only if money remains in the judgment after that offset.
Frequently Asked Questions
What happens if I demand a trial de novo and don't do better than the arbitration award?
The court must order you to pay the arbitrator's compensation, the other party's § 1033.5 costs, and reasonable expert-witness fees, unless the court finds in writing that doing so would create substantial economic hardship not in the interest of justice.
Can a court excuse these costs entirely?
Yes, but only by a written finding that imposing them would cause substantial economic hardship inconsistent with the interest of justice.
Do these penalty costs cover the whole case, or just the trial de novo phase?
Just the trial de novo phase — costs and fees other than arbitrator compensation are limited to those incurred from the time the trial de novo was elected.
Does an indigent party who loses at trial de novo face the same costs?
Not in the same way. If that party proceeded in forma pauperis, the costs are offset against any damages awarded rather than owed outright, and arbitrator-compensation costs are collected only from whatever remains after that offset.
Is there ever a way to avoid this penalty by winning a bigger arbitration award instead?
Yes — § 1141.26 exempts a party from this penalty if the arbitration award itself exceeded the amount-in-controversy threshold and the trial de novo judgment does too.
Amendment History
Amended by Stats 2006 ch 538 (SB 1852),s 66, eff. 1/1/2007. Amended by Stats 2005 ch 706 (AB 1742),s 14, eff. 1/1/2006
Source & verification. Section text is reproduced verbatim from
the Deering's California Codes Annotated / vLex. Enacted by the California Legislature.
Last verified July 29, 2026.
· Official source
Also known as:cost penalty trial de novo californiaarbitration fee shifting californiain forma pauperis arbitration costs