New Carrots and Sticks: Proposals for Reform of CPR Part 36

Part 36 of the Civil Procedure Rules is an important component of English civil procedure's costs apportioning mechanism and its primary means of encouraging early settlement. Two changes to make Part 36 more attractive to defendants have been proposed. Firstly, public and insured defendants would be exempted from the requirement of payment into court. Secondly, the costs protection given to a claimant that betters its Part 36 offer at trial – indemnity costs assessment and enhanced interest – would apply to defendants' offers. It is argued that the payment into court requirement should be abolished. Claimants do not reject settlement offers over doubts as to the defendant's solvency as this risk remains throughout the litigation. The requirement only deters defendants from using Part 36. Awarding indemnity costs under Part 36 creates perverse incentives. Where bettering a Part 36 offer weakens costs scrutiny there is an additional incentive to expend disproportionate resources in achieving a better result.