Settlement and ADR

Question 1

What is the central rationale behind Part 36?

Answer 1

That parties who make realistic proposals to settle actions should get some benefit if these are not accepted and it turns out at trial they should have been accepted.

Question 2

When can a Part 36 offer be made and who can it be made by?

Answer 2

At any stage of proceedings, including pre-action and can be made by either party.

Question 3

What is a Calderbank offer?

Answer 3

An offer, usually communicated in writing and headed ‘WPSATC’, such that it cannot be referred to the judge until costs are considered after trial, but at that point can be relied upon. Such an offer does not need to comply with Part 36.

Question 4

What are the key requirements of a Part 36 offer?

Answer 4

a) Be in writing;

b) Make clear it is made pursuant to Part 36;

c) Specify a period of not less than 21 days within which the offeree will be liable for the offeror’s costs if the offer is accepted (relevant period);

d) State whether it relates to the whole or part of the claim; and

e) State whether it takes into account any counterclaim.

Question 5

When is a Part 36 offer made?

Answer 5

When it is served on the offeree.

Question 6

Do the Part 36 consequences of acceptance have effect when an offer is made and accepted pre-action?

Answer 6

No!

Question 7

What is the time limit for an offeree to seek clarification of the terms of a Part 36 offer?

Answer 7

The offeree can seek clarification of the terms of the offer within 7 days of service.

Question 8

If a Part 36 offer has already been accepted, can it be withdrawn?

Answer 8

No, and its terms cannot be changed either.

Question 9

Can a Part 36 offer be withdrawn/amended within the relevant period?

Answer 9

Yes, but only with Court permission and the notice of withdrawal/change will only take effect at the end of the relevant period.

Question 10

Does a Part 36 offer remain open for acceptance unless it has been withdrawn?

Answer 10

Yes, this remains the case even after the relevant period has expired, unless the offer is expressed to be withdrawn automatically at the end of the relevant period.

Question 11

How can a party accept a Part 36 offer?

Answer 11

-Serve written notice of acceptance

-If the case is issued, the acceptance also needs to be filed at Court

Question 12

What are the consequences of accepting a Part 36 offer (stay and settlement sum)?

Answer 12

-The claim will be stayed and not continue to trial

-The D has 14 days from acceptance to pay the settlement amount agreed unless otherwise agreed in writing

Question 13

If acceptance is made within the relevant period, what are the costs consequences?

Answer 13

If accepted before the expiry of the relevant period, the C is entitled to its costs of the proceedings up to the date the notice of acceptance was served on the offeror.

Question 14

If acceptance is made after expiry of the relevant period, what are the costs consequences?

Answer 14

The Court will determine liability for costs unless the parties agree them but the Court must, unless it considers it unjust to do so, order that:

-the C be awarded costs up to the date the relevant period expired; and

-the offeree do pay the offeror’s costs for the period from the date of expiry of the relevant period to the date of acceptance.

Question 15

Who do determines the costs consequences if a Part 36 offer is accepted less than 21 days before trial?

Answer 15

In this situation, if the parties do not agree liability for costs the Court must determine liability.

Question 16

What is the trigger when a D’s Part 36 offer is not accepted?

Answer 16

The trigger is where a C fails to obtain a judgment more advantageous than a D’s Part 36 offer.

Question 17

What are the costs penalties imposed on the C when they fail to obtain a judgment more advantageous than a D’s Part 36 offer at trial?

Answer 17

Unless it considers it unjust to do so, the Court must order that:

a) The C pay the D’s costs from the date the relevant period expired; and

b) Interest on those costs.

Question 18

What is the trigger when a C’s Part 36 offer is not accepted?

Answer 18

The trigger is where judgment against the D is at least as advantageous to the C as the proposals contained in a C’s Part 36 offer.

Question 19

What are the costs penalties imposed on the D when they fail to obtain a judgment more advantageous than a C’s Part 36 offer at trial?

Answer 19

Unless it considers it unjust to do so, the Court must order:

a) Indemnity costs (from end of relevant period);

b) Interest on those costs up to 10% above base rate;

c) Interest on damages up to 10% above base rate (from end of relevant period); and

d) An additional amount based on a percentage of the awarded damages, 10% up to £500,000 and 5% above £500,000. The total amount is capped at £75,000.

Question 20

Where a claim is subject to FRC, what is a C awarded instead of indemnity costs?

Answer 20

The additional costs awarded are an amount equivalent to 35% of the difference between fixed costs for the stage applicable when the relevant period expires and the stage applicable at the date of judgment.

Question 21

If a Part 36 offer is made within 21 days of trial, will it have costs consequences?

Answer 21

An offer made within 21 days of trial will have no Part 36 consequences unless the Court abridges the relevant period.

Question 22

What is a consent order?

Answer 22

An order signed by both parties that has the effect of a normal Court order but indicates that the parties agree the terms it sets out, so that there is no need for the Court to hear arguments from both sides.

Question 23

What is a Tomlin Order?

Answer 23

A type of consent order. It is made up of 2 parts; the first part is the public part and the second is the confidential part which contains the detail of the agreement reached between the parties.

Question 24

When is a Tomlin Order used?

Answer 24

-The parties wish for the key settlement terms to be confidential; and/or

-When the agreed settlement terms go beyond those that the Court could generally order

Question 25

Once the parties have agreed the content of a consent/Tomlin Order, what must they do?

Answer 25

They will need to apply to the Court to have the order made.

If the Court approves the order, then the order takes effect like any other Court order.

Question 26

What is alternative dispute resolution (ADR)?

Answer 26

Alternative dispute resolution (ADR) is a way to settle a complaint without going to Court, with the help of an impartial third party. ADR can be faster, easier, and less expensive than going to court.

Question 27

What is negotiation?

Answer 27

This is a communication process between parties that is intended to reach a compromise or agreement to the satisfaction of both parties.

Question 28

What is mediation?

Answer 28

This is a confidential process intended to facilitate the resolution of disputes through the medium of an impartial third party-the mediator.

Question 29

What is arbitration?

Answer 29

This is a process by which a dispute is resolved by an impartial adjudicator whose decision the parties to the dispute have agreed will be final and binding.

By agreeing to arbitrate, the parties are agreeing to oust the jurisdiction of the court and give jurisdiction to the adjudicator instead.

Question 30

What is med-arb?

Answer 30

This is a process whereby the parties agree that initially they will try to resolve any dispute by mediation.

In the event this is unsuccessful, the matter will move onto arbitration which will be binding.

Question 31

What is early neutral evaluation/expert evaluation?

Answer 31

This refers to a process whereby an independent party is appointed to provide a non-binding assessment of the matters referred to it.

The parties will have to pay for the time and costs and the assessment provides an impartial opinion which can influence future settlement discussions.

Question 32

What is expert determination?

Answer 32

This is where an independent expert on the subject matter is appointed by the parties to determine the dispute.

This form of ADR is particularly suitable for disputes requiring technical knowledge. The expert gives a binding decision.

Question 33

What is conciliation?

Answer 33

This involves an independent neutral third party helping parties to resolve their dispute. It is usually facilitative and often forms part of a statutory scheme which states who the conciliator should be and the process involved.

Question 34

Is mediation a binding form of ADR?

Answer 34

No!

Question 35

Is arbitration a binding form of ADR?

Answer 35

Yes!

Question 36

Is early neutral evaluation/expert appraisal a binding form of ADR?

Answer 36

No!

Question 37

Is expert determination a binding form of ADR?

Answer 37

Yes!

Question 38

What are the advantages of ADR?

Answer 38

-Preserves relationships

-Less expensive

-Saves time

-Greater privacy

-Greater control/involvement

Question 39

Can the Court compel a party to engage in ADR?

Answer 39

No, the Court cannot generally compel a party to engage in ADR.

Question 40

What are the consequences if a party unreasonably refuses to engage in ADR?

Answer 40

Silence in the face of an offer to engage in ADR is likely to be considered unreasonable and to be sanctioned in costs.

Question 41

What is a discontinuance and when does it take effect?

Answer 41

It is a document confirming that the C discontinues their claim-it brings the claim to an end.

Discontinuance takes effect from the date of service of the notice of discontinuance.

Question 42

What are the costs consequences of the C discontinuing their claim?

Answer 42

Upon discontinuance, a costs order is deemed to have been made in the D’s favour on the standard basis.

Question 43

When is the Court’s permission required to discontinue?

Answer 43

Where the C has already received some sort of remedy such as an interim injunction/payment.