Practice areas - Product liability - Costs Orders

Outline of the Rules Concerning Costs Orders in Litigation before the English Courts

This note outlines the rules governing the allocation between litigants of costs incurred by them during legal proceedings before the English Courts.

  1. As a general rule, if a litigant is successful in making applications to the Court during the litigation or is successful in the litigation overall, the Court is likely to make an order for payment of its costs by the other side.  If a litigant is unsuccessful in any applications made to the Court or in the litigation as a whole, then an order to pay the costs of the other side may be made against the litigant. However, the Court's increasing focus on an issue based costs assessment may result in an exception to this general rule. The Court may award costs to reflect which party succeeded on each individual issue in the case. So for example, a litigant might be successful overall, but lose on an issue which had been very expensive. In that case, the overall winner might have to make a net payment to the loser. 
  2. It is rare in any assessment of costs for an unsuccessful litigant to be ordered to pay the full amount of the successful party's actual costs.  The sum awarded can be varied due to factors such as the complexity of the case, its financial value, the size and financial resources of the parties involved, success on individual issues and the conduct of the parties. In particular, the conduct of the parties will determine whether costs are to be assessed on the standard or indemnity basis; a successful litigant will be able to recover a higher proportion of its costs if assessed on the indemnity basis than the standard basis.  In addition, an award of costs made against the other party does not mean that the other party will necessarily have the resources to pay.
  3. A litigant ordered to pay costs is liable for interest on those costs from the date when the order is made, even though the amount of the costs payable may not at that stage have been either agreed or determined in any assessment of costs.
  4. Some orders for costs (relating to individual applications) will be made as the litigation proceeds. Such costs orders may be subject to payment deadlines which fall before the end of the litigation, and may be measured in days rather than weeks. As a result, a litigant may have to pay costs to the other party (or receive costs from the other party) periodically as the action progresses.
  5. In shorter hearings and applications, costs will often be summarily assessed at the conclusion of the hearing or application by the Court. A longer hearing may require a detailed costs assessment.
  6. It is also possible for costs orders to be made against Bristows if the Court believes that the Court's time (or the time of another party) has been wasted or that a course of action was (in the Court's view) unacceptable.  If as a result of following a clients' instructions, an order for costs is made against Bristows, then under our Terms of Business the client will be required to reimburse Bristows for payment of that costs order.
  7. Similar rules on costs may be operated by other tribunals and bodies which hear disputes, although smaller amounts may be awarded or recoverable costs may be capped at a predetermined amount.

If you have any questions regarding this outline or the circumstances in which you might receive, or be liable, under a costs award, please contact the Partner or Fee-Earner with whom you regularly deal.
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