A standstill agreement is a contract between a prospective claimant and a prospective defendant under which the parties agree that time will not be taken to run against the claimant for a defined period, or that the defendant will not rely on a limitation defence in respect of that period. It allows the parties to work through the Pre-Action Protocol for Professional Negligence, obtain expert evidence and attempt settlement without the claimant being forced to issue protective proceedings.
The court cannot extend the statutory periods in an ordinary professional negligence claim, since the section 33 discretion is confined to personal injury and fatal accident claims. A standstill agreement is the parties' own mechanism for achieving something similar by consent.
Agreements are generally framed in one of two ways. The first suspends the running of time, so that the standstill period is added to whatever limitation period remains. The second is a contractual promise by the defendant not to raise a limitation defence based on the passage of the standstill period, which operates by way of estoppel or contract rather than by altering the statute.
The distinction matters when the agreement is construed. Litigation such as Russell v Stone [2017] EWHC 1555 (TCC) and Muduroglu v Stephenson Harwood [2017] EWHC 29 (Ch) has turned on precisely what the parties agreed and which claims and parties were covered. A badly drafted standstill can leave a claimant worse off than issuing protective proceedings would have done.
Entering a standstill gives up a defence that might otherwise be available, so it is a decision with direct consequences for the professional indemnity policy responding to the matter. Most wordings contain a condition requiring the insurer's consent before the insured admits liability, settles or otherwise prejudices the defence of a claim. Agreeing a standstill without reference to insurers risks breaching that condition.
The practical sequence is to notify the circumstance, tell the insurer that a standstill has been proposed, and let the appointed defence solicitors settle the wording. Firms on the solicitors PI pillar often find themselves on both sides of this question, advising a client on a standstill in one matter while being asked to sign one in another.
They are common in valuation and survey disputes, where quantum depends on expert evidence that takes time to assemble, and in claims involving expert reports, where the underlying litigation may still be running. Practices on the surveyors PI pillar and the expert witnesses PI pillar encounter them regularly.
Apex Insurance Brokers can put a firm in front of its insurer's claims team early, so that a standstill request is handled within the policy conditions rather than around them.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.