Yes, a Part 36 offer can be made before proceedings are issued. Under the Civil Procedure Rules, parties are expressly permitted to make Part 36 offers at any stage, including before a claim has formally begun.

In practice, pre-action Part 36 offers are a powerful strategic tool. They can encourage early settlement, shape the conduct of the dispute, and have significant implications for legal costs if the matter proceeds to litigation.

Understanding how and when to deploy a Part 36 offer before proceedings is therefore essential for both claimants and defendants.

 

What Is a Part 36 Offer?

Part 36 offers are formal settlement offers governed by the Civil Procedure Rules. They are designed to encourage parties to resolve disputes without the need for a trial by attaching clear costs consequences to acceptance or rejection.

A valid Part 36 offer must:

• Be in writing
• State that it is made pursuant to Part 36
• Specify a relevant period of at least 21 days within which the other party can accept
• Clarify whether it relates to the whole or part of the claim

These requirements apply equally whether the offer is made before or after proceedings are issued.

 

Can a Part 36 Offer Be Made Before Proceedings?

Yes, there is no requirement for proceedings to have commenced before making a Part 36 offer.

A claimant’s Part 36 offer or a defendant’s offer can be made at the pre-action stage, often alongside or shortly after the letter of claim. This allows parties to engage in early settlement discussions while still preserving the cost protection that Part 36 offers.

Making Part 36 offers early can be particularly effective where:

• The issues in dispute are relatively clear
• The value of the claim can be reasonably assessed
• Both parties are motivated to avoid litigation

 

Why Make a Part 36 Offer Before Proceedings?

Encouraging Early Resolution – A well-judged pre-action offer can prompt meaningful engagement and potentially avoid proceedings altogether. Where a party accepts the offer within the relevant period, the dispute may be resolved quickly and efficiently.

Costs Protection – Even before proceedings, a properly made Part 36 offer can influence future costs orders. If a party goes on to obtain a judgment that is more advantageous than its offer, the court may impose significant cost consequences on the other side.

Tactical Advantage – Making the first move can shift the dynamic of a dispute. A carefully calibrated offer may place pressure on the opposing party and frame expectations around settlement.

 

Costs Consequences of Pre-Action Part 36 Offers

The costs consequences of Part 36 offers made before proceedings mirror those made during litigation.

Where a Claimant’s Part 36 Offer Is Not Beaten

If a claimant makes a Part 36 offer and subsequently goes on to obtain a judgment that is at least as advantageous as that offer, the court may order the defendant to pay:

• Damages awarded
• Interest on those damages at a rate above the base rate
• Legal costs on the indemnity basis from the expiry of the relevant period
• Interest on those costs
• An additional amount, which may include up to £75,000, calculated by applying the prescribed percentage

These consequences can be significant and are designed to penalise a defendant who fails to accept a reasonable offer.

 

Where a Defendant’s Part 36 Offer Is Not Beaten

If a defendant makes a Part 36 offer which the claimant fails to beat at trial, the court will usually order:

• The claimant to pay the defendant’s costs from the date of expiry of the relevant period
• Those costs may be assessed on the standard basis

This can result in a substantial costs order against the claimant, even where the claimant succeeds in part.

 

Acceptance of a Pre-Action Part 36 Offer

Where a Part 36 offer is accepted before proceedings are issued, the usual costs rules still apply.

If a party accepts the offer within the relevant period, the receiving party will generally be entitled to legal costs on the standard basis up to the date of acceptance.

In most cases, payment must be made within 14 days of acceptance, unless otherwise agreed.

Late Acceptance

If a party accepts the offer after the expiry of the relevant period, different costs consequences may apply.

Typically:

• The receiving party will be entitled to costs up to the expiry of the relevant period
• The paying party may be entitled to costs from the date of expiry to acceptance

The court retains discretion, but delay in accepting a reasonable offer can lead to adverse cost consequences.

 

Key Considerations Before Making a Pre-Action Offer

1. Information Available to the Parties

At the pre-action stage, the information available to the parties may be limited. This can make it more difficult to accurately value the claim.

An offer made too early may not reflect the true merits of the case.

2. Valuation of the Claim

Careful consideration must be given to the likely value of the claim. A claimant’s Part 36 offer that is too low may be accepted quickly but result in under-settlement. Conversely, an overly ambitious offer may fail to achieve its intended effect.

3. Strength of Evidence

Before proceedings, key evidence may still be outstanding. This includes expert reports, witness statements, or financial documentation.

The absence of this material may impact the reliability of any offer made.

4. Conduct of the Opposing Party

The willingness of the other party to engage in settlement discussions is also relevant. Some disputes are more suited to early offers than others.

 

Strategic Use of Part 36 Offers Pre-Issue

Setting the Tone Early

Making a Part 36 offer before proceedings can signal a serious intention to resolve the dispute. It demonstrates reasonableness and may influence how the court views the parties’ conduct later on.

Applying Pressure

A defendant faced with a credible claimant’s Part 36 offer must carefully assess the risks of proceeding. The possibility of indemnity costs and enhanced interest can create strong incentives to settle.

Building Costs Protection

From a defendant’s perspective, making an early offer can help limit exposure to legal costs. If the claimant fails to beat the offer, the defendant may recover costs from the date of expiry of the relevant period.

 

Interaction with Pre-Action Protocols

Parties are expected to comply with relevant pre-action protocols before issuing proceedings. These protocols encourage early exchange of information and settlement discussions.

A Part 36 offer can form part of this process, demonstrating compliance and a genuine attempt to resolve the dispute.

Failure to engage constructively at this stage may influence any later costs order made by the court.

 

Risks of Making a Part 36 Offer Before Proceedings

While there are clear advantages, there are also risks to consider.

Incomplete Information

As noted, the information available to the parties may be limited. This increases the risk of making an offer that does not accurately reflect the merits of the case.

Tactical Missteps

An ill-timed or poorly calculated offer may weaken a party’s negotiating position rather than strengthen it.

Early Commitment

Once made, a Part 36 offer carries formal consequences. Parties must be prepared for the possibility that the offer will be accepted.

 

Practical Tips for Pre-Action Part 36 Offers

• Ensure the offer complies fully with the Civil Procedure Rules
• Carefully assess the value of the claim before making an offer
• Consider the likely reaction of the opposing party
• Review the offer as more information becomes available
• Seek specialist advice where appropriate

 

How Can Greener Costs Assist?

A Part 36 offer can absolutely be made before proceedings, and in many cases, it should be.

Used effectively, pre-action Part 36 offers can:

• Encourage early settlement
• Provide significant costs protection
• Shape the direction of a dispute

However, they must be approached with care. The timing, valuation, and strategic context of the offer are all critical factors.

For both claimants and defendants, understanding how Part 36 operates before proceedings is key to managing risk and achieving the best possible outcome.

If you require expert guidance on making or responding to a Part 36 offer before proceedings, Greener Costs can provide tailored advice to help you manage risk and maximise costs protection. Contact us today via our enquiry form below or email a brief summary of your case to info@greenercosts.co.uk to discuss your situation.

 

FAQ: Can You Make a Part 36 Offer Before Proceedings?

Can a Part 36 offer be made before issuing a claim?

Yes, Part 36 offers can be made at any time, including before proceedings are issued.

What happens if a Part 36 offer is accepted before proceedings?

If a party accepts the offer within the relevant period, the receiving party is usually entitled to costs on the standard basis up to the date of acceptance.

What if the offer is accepted late?

If a party accepts the offer after the expiry of the relevant period, the court may adjust the costs order, including awarding costs from the date of expiry.

Do Part 36 costs consequences apply before proceedings?

Yes, the same principles apply. If a party goes on to obtain a judgment that is more advantageous than its offer, the court may impose enhanced costs consequences.

How quickly must a Part 36 offer be paid?

In most cases, payment must be made within 14 days of acceptance.