Court Rules change to encourage early settlement of litigation through a Pursuer's Offer

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By Alan McKee, Director of Dispute Resolution, Macdonald Henderson

18 May 2017

Changes to court process mean that it may be easier to achieve an early settlement when pursuing a litigation action. Alan McKee considers the implication of the new Scottish Court rules.

Scottish Court Rules have been amended to provide pursuers in a litigation action with an extra tool if they wish to achieve settlement.

As of 3 April 2017, a party suing another party for payment of money in the Court of Session or under the Sheriff Court Ordinary Procedure will be able to make a “Pursuer’s Offer”.

Currently, a pursuer is free to tell a defender that they would accept £X in settlement of their claim. However, such an offer would be purely an “out of Court” offer. It would not form part of the Court process. If it is not accepted then there will not necessarily be any consequence in relation to the Court action.

The introduction of Pursuers’ Offers will mean that a pursuer can offer to accept a certain sum (inclusive of interest) with payment of expenses in settlement of their claim. This offer can be made as part of the Court process. If the offer is not accepted, or is accepted later than it reasonably could have been, then there are potential penalties to the defender – in terms of payment of additional interest and expenses.

If the offer is accepted, but not within a reasonable period of time, then the pursuer will be entitled to interest from the date of the offer.

The pursuer will also be entitled to an uplift of 50% in relation to the recoverable expenses of the pursuer after the date of the offer.

If the offer is not accepted, the case proceeds and an award is made in favour of the pursuer which is no less favourable to the pursuer than the terms previously offered, then again, the pursuer will be entitled to recover an additional 50% of expenses in relation to the period after the date of the offer.

Even in relation to the strongest of cases, there are almost always commercial or economic reasons to consider a degree of compromise and settlement.

Defenders already have a means of making offers via the Court rules, with implications for pursuers if they delay or refuse acceptance of same.

If you are a pursuer then you also now have a means of making an offer and putting extra pressure on the defender to settle.

Topics

  • Business issues
  • Insolvency
  • Legislation

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