Insurers may need to check the adequacy of any Part 36 offer they have made in claims where the claimant seeks damages in a foreign currency and may also need to reconsider whether to accept any Part 36 offer made by a claimant in such a case. This is particularly so where the Part 36 offer was made in sterling.
The need to review such offers arises because of the fall in the value of sterling as against many foreign currencies following Britain's decision to leave the European Union. Because of this, a sterling Part 36 offer which insurers made previously, believing it provided them with costs protection, may no longer do so; whereas a claimant's sterling Part 36 offer which appeared to overvalue the claim may now in fact undervalue it.
Novus Aviation Limited v Alubaf Arab International Bank is a recent example of a case where a claimant only bettered its Part 36 offer because of changes in the sterling to US dollar exchange rate between the date of the offer and Judgment. The Court decided that the date at which to make the comparison required by what is now CPR 36.17 (as to whether a claimant has obtained a Judgment which is at least as advantageous to him as his Part 36 offer) was the date on which Judgment was entered and not the date on which the Part 36 offer was made. While the amount awarded to the claimant under the Judgment was less than the US dollar equivalent of the claimant's Part 36 offer at the time that offer was made, it was more than the US dollar equivalent of the offer at the time Judgment was handed down. In fact, the Judgment would have been for less than the claimant's Part 36 offer at most times between the date of the offer and Judgment. This proved to be the silver liming for the defendant, as the Court decided that this made it unjust to visit on the defendant the consequences which normally apply where a claimant beats his Part 36. However, future defendants may not be so lucky; it seems the Court was particularly influenced by the fact that Judgment was handed down just over a month after Britain's decision to leave the EU.