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All Change for Part 36

The 78th update of the Civil Procedure Rules introduces a number of changes, most of which are due to enter into force on 6 April 2015. One significant change will be in relation to Part 36.

What is Part 36?

CPR Part 36 of the Civil Procedure Rules sets out the procedural mechanism for settling either the whole or part of a claim. It contains rules relating to the timings of offers and the financial consequences that are triggered when Part 36 offers are made.

Although it is still possible for parties to make contractual "without prejudice" offers, Part 36 offers have more serious consequences for an unsuccessful party to litigation. Part 36 is therefore an extremely useful tool which can focus the parties' minds in any litigation, increasing the prospects of settlement and assisting with the bringing of a swift conclusion to otherwise costly litigation.

What is changing?

For all of its benefits, Part 36 is rather cumbersome. The Courts have attempted to offer guidance in various cases over the years, resulting in the process of making formal offers even more confusing.

Some relief may be forthcoming. Part 36 will now be clearly expressed to be a "self-contained procedural code" where the contractual rules of "offer" and "acceptance" do not apply. Even if a party has rejected a Part 36 offer, they could still accept it at a later date, providing it has not be withdrawn in writing by the offeree. This is comparison to contract 'without prejudice' offers which may be withdrawn automatically after a period of time as a term of the offer.

Further, Part 36 offers will be valid if it is made clear that it is "made pursuant to Part 36." This contrasts with the old rules where a Part 36 offer was required to "state on the face of it that it is intended to have the consequences of section 1 Part 36." Where in the past an offer may have been invalid due to drafting errors, there is no longer such a strict need for specific wording in order for the Part 36 offer to be valid.

The new Part 36 will also allow the trial judge to be told of the existence of, but not the terms of, a Part 36 offer if there is a split trial (where e.g liability and quantum are to be dealt with separately), after judgment has been given on the preliminary matter. If the Part 36 offer relates to "concluded issues," the terms of the offer can be disclosed. This may give parties a strategic advantage by allowing them to sub-divide settlement offers and recover costs at an earlier stage, lending support to the "pay as you go" nature of litigation envisaged by the CPR.

The new Part 36 will also take an arguably more practical view of settlement offers. The court will consider whether an offer represents a "genuine attempt to settle the case." However, not all are in favour - some commentators have already questioned the element of subjectivity that this introduces and this aspect of the new rules could produce some interesting case law.

The amended Part 36 also contains clarifications about time-limited offers and counterclaims and to Part 36 offers made in the course of appeals. There is also clarification about the formalities of making offers and the procedures to be followed if a party wishes to amend or withdraw an offer that has been made.

Time will tell if these new rules will practically simplify the process of making formal offers to settle. Reducing the time and cost parties spend in litigation is to be encouraged - no doubt all of those involved in litigation will be striving to make the operation of these new rules a success.