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Settlement offers: revised Part 36 comes into force

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CPR Part 36 contains a set of rules governing the making of settlement offers and provides certain costs advantages for claimants that act as an incentive to settle disputes early. A failure to comply with the strict requirements of Part 36 can, however, mean that an offer does not attract these costs advantages.

As of 6 April 2015, Part 36 has been revised. It is, therefore, important that those making Part 36 offers familiarise themselves with the revisions. 

Particularly worth noting is the fact that a time limited offer was not previously capable of being a valid Part 36 offer. This has now been amended so that a Part 36 offer may be automatically withdrawn after expiry of the relevant period in accordance with its terms. 

The new CPR 36 also states expressly that a Part 36 offer may be made in respect of a counterclaim or other additional claims. This clears up the confusion under the previous version of Part 36 as to how and when a Part 36 could be made in respect of a counterclaim. 

There has also been an amendment to deal with the situation where a claimant makes a very high Part 36 offer for almost the whole of its claim amount. The position now is that the court, in deciding whether it would be unjust to order the usual Part 36 costs consequences, can consider as an additional factor whether the offer was a genuine attempt to settle the proceedings. 

Note that Part 36 applies only to settlement offers made in the context of court, rather than arbitration, proceedings. However, London arbitrators may in their discretion be guided by Part 36 when considering settlement offers made in arbitration that are analogous to a Part 36 offer. 

Fionna Gavin

Fionna Gavin Partner

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