FRC are set amounts that the winning party in civil litigation is entitled to recover from the losing party. They are designed to bring predictability to costs exposure/recovery and encourage parties to deal with cases at proportionate cost. In most cases, the FRC regime will apply to claims where proceedings are issued on or after 1 October 2023. For personal injury claims, FRC will apply where the cause of action accrues on or after 1 October 2023.

Although there are limited exceptions, FRC will apply to the vast majority of cases allocated to the fast track and a new “intermediate track”.
The scope of the fast track will remain as it is, and will remain appropriate for claims with a value up to £25,000 where the case can be tried in one day or less and oral expert evidence at trial is limited to two expert fields with one expert per party per field. In claims which seek both monetary and non-monetary relief, the FRC will be calculated by reference to the damages awarded and the assigned value for non-monetary relief.
The new intermediate track is a new track for claims up to £100,000 where the case can be tried in three days or less, with no more than two expert witnesses giving evidence on each side, and the claim is brought by one claimant against one or two defendants, or by two claimants against one defendant. Where the relief sought includes a claim for non-monetary relief, the claim will not usually be allocated to the intermediate track unless the court considers it to be in the interests of justice. Judges will retain discretion to allocate more complex cases valued at under £100,000 to the multi-track (which would take them outside of the FRC regime).
A further change is that the court will also assign cases to a complexity band. Both the fast track and the intermediate track will have four complexity bands (1 to 4 in ascending order of complexity). The higher the band, the greater the fixed costs. Allocation and assignment will be extremely important for parties (given the direct impact on recoverable/payable costs), and whilst the parties’ views on allocation and assignment will be important it will ultimately be a question for the court.
A series of tables in a new Practice Direction 45 set out a menu of fixed costs which apply depending on the stage reached/activity undertaken. The MoJ proposes to review the tables three years post launch.
In both the fast track and intermediate track, the court may allow any disbursement which has been reasonably incurred, as long as there is no double recovery. VAT can also be recovered, where appropriate. Also, the Court will consider a claim for costs in excess of FRC where there are “exceptional circumstances”, but at this stage there is no guidance on what those exceptional circumstances might be. Cases can also be reallocated/reassigned in appropriate circumstances, but these are also likely to be exceptional.
Predictability of costs exposure/recoverability is they key advantage of the new rules, and should help parties weigh up the merits of trial versus settlement. That said, there will inevitably be a period of uncertainty while practitioners, parties and the courts grapple with these new rules. It is also vital to bear in mind that the rules go to costs recoverability. They do not dictate what legal representatives can charge their clients. The actual costs charged may exceed the fixed costs that are recoverable, which would leave the receiving party with a shortfall payable to their lawyers.
One consequence we do expect to see flow from the new rules is parties looking to maximise their costs recovery by including a contractual right to add all their costs to the claim. Other potential approaches will be parties looking at other avenues of dispute resolution in their contracts, such as arbitration.
For more information, please feel free to contact our Dispute Resolution team.