Indemnity costs orders
Indemnity costs orders

The following Dispute Resolution guidance note provides comprehensive and up to date legal information covering:

  • Indemnity costs orders
  • What is an indemnity costs order?
  • What is the benefit of an indemnity costs order?
  • When is an indemnity costs order made?
  • Requirement for the case to be ‘out of the norm’
  • Indemnity costs and additional parties
  • Indemnity costs and costs budgeting
  • Indemnity cost and settlement offers
  • Indemnity costs and discontinuance
  • Impact of a contractual indemnity as to costs

This Practice Note considers orders for costs determined on an indemnity basis (indemnity costs orders). A court may order that costs are assessed on an indemnity basis so that any doubt as to the costs claimed are resolved in favour of the receiving party. Compare to a standard basis where any doubt is resolved in favour of the paying party, where costs are determined with any doubt as to whether the costs have been reasonably incurred or were reasonable in amount being resolved in favour of the receiving party (CPR 44.3(3)). It explains what this is and sets out the CPR guidance together with the approach the courts will take when exercising its wide discretion to indemnity costs and determining whether there are matters which take the case out of the norm (the critical requirement set out in Excelsior Commercial and Industrial Holdings v Salisbury) eg wide, disproportionate, premature or speculative claims, failure to engage with or be reasonable in settlement negotiations and the conduct of the claimant in pursuing weak cases with a low chance of success. Examples of when the court has and has not awarded indemnity costs are given.

For guidance on costs on a reasonable, rather than an indemnity basis, see Practice Note: Costs assessment—general principles.

The Court of Appeal in Excelsior Commercial and Industrial Holdings made it clear