This article was first written by Sarah Barnes, Senior Associate, Hill Dickinson LLP for ABTA's Travel Law Today issue eight, which can be download at abta.com/travellawtoday

Litigation can be expensive and time consuming. This, coupled with the fact that court rules on costs mean you are unlikely to recover any defence costs even if you successfully defend a claim to trial, necessitates swift action on claims swiftly. You should have an appropriate insurance policy in place and should inform the insurers of any claims, but it is also useful to understand what may lie ahead if a claim is pursued. Here are ten top tips for handling claims and litigation.

1 - Preparation and preservation
You should have a document management system for collating and retaining documentation from a customer’s initial booking stage to the conclusion of the holiday and a clear procedure for investigating complaints/accidents. It is vital that all employees are aware of the procedure. Whilst it may not be clear that a customer who has made a complaint or sustained an accident will bring a claim, you should still investigate any complaints to ensure that relevant documentation is preserved. If a customer has an accident during their holiday and sustains a personal injury, this should be investigated straight away and handled on the basis that a claim could be presented in the future.

2 - First steps
When a claim is received, consider whether you need to notify your insurers. If the claim is of minimal value, you may not want to claim under your liability policy but you may need to notify your insurers in any event. Gather and evaluate all the relevant documents/evidence, including accident reports, witness statements and photographs to assist you in analysing the claim. Consider any relevant contracts to establish if they have any relevant clauses, which may strengthen your defence, as well as any contractual indemnities from third parties, which you can rely on.

3 - Privilege
Consider the difference between privileged and non-privileged documents. Privileged documents are those that do not need to be disclosed to the other party. You should therefore consider whether to involve lawyers at an early stage as this will ensure legal privilege is established.

4 - Limitation
If the claimant has waited a long time before bringing their claim, you may be able to make an application to the court to strike out the claim. This does happen! In simple terms (a) land-based negligence actions (personal injury) have a three-year limitation period from the date of the accident; (b) cruise ship negligence actions (personal injury) have a two-year limitation period from the date of disembarkation of the passenger, or two years from the date the passenger should have disembarked in the case of death during the cruise; and (c) contractual claims (eg incorrect room/issues with air conditioning etc.) have a six-year limitation period from the date of the breach. This is a complex area of law and you should always seek advice.

5 - Liability
When a claim is received, you need to determine whether (a) the complaint is genuine; and (b) if you are liable, for example, the claimant did indeed sustain a personal injury because of your, or your supplier’s negligence.

6 - Value the claim
If you consider that you are liable, assess what the claimant is seeking by way of compensation. Is the amount they are seeking appropriate and realistic? This analysis allows you to make an informed decision on whether to settle the claim to avoid incurring any further legal costs and to limit any potential damage to your reputation.

7- Disclosure and expert evidence
Seek at an early stage from the claimant relevant disclosure, such as medical records, and any expert evidence they seek to rely on so you can consider the claim further. If you are dealing with a personal injury claim, it is helpful to consider the claimant’s medical records so you can gather more information about the claimant’s alleged injury, and if they had any relevant pre-existing medical issues which could have an effect on their alleged injury. You should also consider whether to obtain early expert evidence of your own on liability and/or the value of the claim to counter the claimant’s or to assist in getting the claimant to withdraw their claim.

8 - Costs
Consider at an early stage how much court proceedings are likely to cost. This can only be an estimate as litigation can be unpredictable. Having an idea of your potential costs exposure assists in determining your strategy for the claim.

9 - Alternative dispute resolution (ADR)
If you decide to defend the claim then consider whether you should use ADR, which allows the dispute to be resolved without the costs and time of going to court. The courts encourage parties to consider whether ADR would be more suitable than litigation, and arbitration and mediation are frequently used to resolve disputes outside court. ADR is far cheaper than litigation and the arbitration courts are private. If you are a Member of ABTA you can ask your customers if they would like to use the ABTA arbitration scheme. ABTA also operates a conciliation service, which could be recommended to a customer.

10 - Part 36 offers
The earlier an offer to settle is made the more likely you are to save on costs. Therefore, as soon as you have investigated a claim, and if you consider you are at risk on liability, then you should consider making what is called a ‘Part 36 offer’. If you make a ‘Part 36 offer’ and the claimant fails to recover more than that amount at trial, then the claimant’s damages will be applied to pay your defence costs, but only up to the level of damages recovered by the claimant. The higher the ‘Part 36 offer’ the greater the costs protection you would be afforded.