Offers to settle

An offer may be in the form of an open or sealed offer. A party may want the tribunal to see that it is being reasonable and looking to settle; hence an open offer, which will specify:

1. the capital amount offered
2. the interest
3. proposals for costs, and
4. the period for which the offer will remain open.

Conversely, a sealed offer (which must set out similar particulars to those required for an open offer) is not made known to the tribunal and is on a “without prejudice save as to costs” basis. It is sometimes referred to as a Calderbank offer. The tribunal will only be told of the offer after it has made its decision on merits, but before costs are determined. An unreasonable refusal to accept a settlement offer may be considered by the tribunal when deciding on the division/allocation of costs. It enables an attempt at settlement without the tribunal being made aware of the terms of the offer and being at risk of being prejudiced as a result. It also affords the offeror a protection as to the level of costs to which it could be liable. It may also result in the party to whom the offer is made considering afresh the strength of its case.

An offer presents tactical choices for both parties: if an offer by the respondent is rejected and the claimant is awarded a greater amount than that offered, the claimant was justified in its refusal, but if an offer is refused and the amount awarded is less than that offered, then the claimant will usually be liable for costs from the date when the time for acceptance of the offer closed.