Standstill Agreement Insurance Claim

Standstill Agreement Insurance Claim

Brunel is a leading independent professional insurance broker with a recognized commitment to competitive investment, differentiated offerings, sustainability and customer understanding. Status quo agreements are used by the parties to the proceedings to suspend or extend the statute of limitations. This gives the parties additional time to investigate the merits of a case, to comply with the requirements of the protocol prior to the appeal, or to attempt other forms of dispute resolution without having to initiate safeguard proceedings beforehand. Status quo agreements can reduce exposure to costs and risks for all parties to a right and are therefore widely used in appropriate circumstances. While the status quo agreement was seen as effective in this application, Justice Mostyn criticized the effectiveness of status quo agreements in general. He commented, „It is not up to the parties to give court time“ and suggested that „this is a practice that should end immediately.“ The same is true of status quo agreements that are not effective. As a result, the complainants and their lawyers were reluctant to enter into a status quo agreement, preferring to adopt safeguard procedures instead. Whistle cessation agreements can still be considered as a means of last resort and are, in certain circumstances, an appropriate option. Nevertheless, the case warns of the risks associated with these agreements and stresses the importance of a carefully considered legal form.

Specialized legal advice is therefore essential to ensure that status quo agreements are properly concluded and to ensure that these conditions are formulated effectively. The effect of a status quo agreement containing a clause stipulating that neither party would initiate proceedings during the currency of the agreement was recently discussed at Muduroglu (in which the judgment was issued on 28 July 2017). In this regard, the applicants commenced proceedings before the expiry of the status quo period, as it is a „procedural risk approach“ of leaving the case until the last minute. The applicants argued that this was a violation of the status quo agreement, which resulted in the applicants not being allowed to invoke the suspension of the time limit at all and that the claim was prescribed. With respect to the facts before him, the judge (Mark Cawson QC) interpreted the corresponding clause of the status quo agreement as an unmentioned term and not a condition. He also concluded that the breach of the clause would not amount to rejecting the status quo contract or „the root of the contract“. In other words, the applicants were successful (although several parts of the claim were removed for other reasons or subject to summary decision). In deciding whether unknown fraud claims are covered by the status quo agreement, Cooke J found that it was clear to all authorities that the court should approach the agreement with caution. Was the nature of the claim that the first defendant wished to make within the broad definition of claims? Always check to see if there is a clause defining the formalities to be followed. For example, it is customary for silences to be fixed, for discrepancies to be written. A telephone call for an extension agreement is not enough and all arguments based on estoppel face (at best) a serious challenge: Thomas/Home Office [2007] 1 WLR 230 (a case involving a so-called oral agreement to extend the application period).

As Coulson J put it in Russell/Stone, „status quo agreements have become much more common than ever“ and yet, as this case has shown, they are often far from surviving and documenting agreements. This practical note addresses some issues related to the use of status quo agreements and links to previous agreements.