Palladian Partners LP & Ors v The Republic of Argentina & Anor

Under Civil Procedure Rules 1998, r 36.17(4)(a), enhanced interest following rejection of a Part 36 offer compensates the successful claimant for non-financial costs associated with the litigation. The defendant’s borrowing costs are generally irrelevant. The amount of the claim is relevant, since a rate suitable for a modest or middling claim need not suit a very large award. A 4% uplift was therefore reduced to 3%.

The claimants obtained judgment for approximately €1.33 billion arising from the 2013 Reference Year payment. The court had determined that the primary interest rate was 2% above Euribor and that it would not be unjust to disapply the consequences of an unaccepted Part 36 offer.

The ruling concerned the additional uplift under Civil Procedure Rules 1998, r 36.17(4)(a). The claimants sought a further 5.34%, alternatively 4%, relying on authorities awarding 4% uplifts. The issue was the appropriate additional rate in light of the award’s size and the compensatory purpose of the rule.

1. Outcome. An additional uplift of 3% above Euribor was awarded, producing total interest of 5% above Euribor when combined with the previously determined 2% rate.
2. Rule 36.17(4)(a) concerns compensation for the successful claimant’s non-financial litigation costs, including stress, time and inconvenience. The Republic’s borrowing costs were not the appropriate measure.
3. The amount of the claim was relevant. A 4% uplift awarded in cases involving materially smaller claims should not be followed slavishly for an award of approximately €1.33 billion.
4. The court exercised a broad discretion and rejected both the proposed 4% uplift and the defendant’s proposed rate of 1% or at most 2%. The appropriate additional uplift was 3%.