Part 36 – Important changes to Interest

From 1 April 2021 a key change to Part 36 means that additional interest will not be payable where the Part 36 offer is accepted after the relevant period unless specified within the offer.

In accordance with CPR 36.5(4) a Part 36 offer is treated as inclusive of any interest to the expiry of the relevant period. From 1 April 2021 a new rule 36.5(5) provides as follows:-

A Part 36 offer to accept a sum of money may make provision for accrual of interest on such sum after the date specified in paragraph (4). If such an offer does not make any such provision, it shall be treated as inclusive of all interest up to the date of acceptance if it is later accepted.

This rule change is likely to affect only claimants’ offers. However, defendants should be aware of the rule and check the terms of any offers received carefully.

At this stage the meaning of the rule is somewhat ambiguous. It is not clear whether it means that an offer may provide that if accepted after the expiry of the relevant period there will be a liability to pay further interest, or whether it simply means that the offer may exclude further interest from the terms of the Part 36 offer (i.e. the offer will become an offer for part of the proceedings after it has expired). These questions, and the effect of an offer which excludes interest, are only likely to be clarified when they have been put before the Courts. As the rule applies only to offers made on and after 1 April 2021, this is unlikely to be for some time.

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