Running a business can be problematic at times. For example, you could encounter a business disagreement with another person or company when you carry out your business activity. If not quickly resolved, this could develop into a full-blown commercial dispute. Whilst parties to commercial disputes are encouraged to resolve these without court proceedings, there are instances where commercial litigation appears to be the ideal option. If so, knowing the rules for court proceedings is essential, including the importance of an indemnity costs award or an indemnity costs order. This article will explain the legal rights and obligations for indemnity costs. <\/p>\n\n\n\n
Indemnity costs are the costs a party incurs when carrying out litigation<\/a>. However, these costs do not include anything which is either:<\/p>\n\n\n\n There are various costs associated with commercial proceedings which will be included in indemnity costs, such as:<\/p>\n\n\n\n If you are the unsuccessful party and receive an indemnity costs order, you must compensate the other party for their litigation costs. Legally, the Civil Procedure Rules<\/a> (CPR) detail the indemnity costs principle. A court has two bases on which to calculate indemnity costs, which is either a:<\/p>\n\n\n\n If neither is specified, a standard basis will be applied. This is the most common basis for calculating indemnity costs. The court considers receiving an indemnity order a form of punishment. As a result, it is usually ordered against the party who lost the commercial proceedings. <\/p>\n\n\n\n The court has the discretion to award indemnity costs to a party in commercial litigation. A judge has to consider them on a case-by-case basis, taking into account:<\/p>\n\n\n\n However, generally speaking, indemnity costs will be awarded where, during the court proceedings, there has been a failure in a party\u2019s conduct within the legal system. Therefore, the party considered at fault will receive the order to pay the costs. However, it is possible to award indemnity costs based on other factors, such as where the court litigation cannot be carried out in a proportionate manner. Because these circumstances add complexity to indemnity costs orders, seeking advice from a dispute solicitor can help you determine whether any relevant reasons apply to your case.<\/p>\n\n\n\n Examples of where a party’s conduct may give rise to an indemnity costs order include:<\/p>\n\n\n\n However, there are two instances where the CPR say that indemnity costs must be awarded. This is where an assessment of costs needs to be made either:<\/p>\n\n\n\n\n
\n
\n
Will a Court Always Award Indemnity Costs? <\/h2>\n\n\n\n
\n
\n
\n