Without prejudice: what does it mean?
HUGH MURRAY and JOANNE EMERSON TAQI* continue to highlight the importance of understanding and correctly applying legal terms, and explain the meaning and application of the words “without prejudice”.
01 July 2012
FOLLOWING last month’s (June) article on legal terminology, which addressed the understanding and use of two common legal phrases “best endeavours” and “reasonable endeavours”, this article explores the meaning and application of the words “without prejudice”.
In certain jurisdictions, these words can prevent certain communications – exchanged during a dispute – from being disclosed in formal proceedings and so be immensely valuable to a relying party. However, the use of the term, “without prejudice”, is commonly misunderstood and subject to variations between jurisdictions. Here we examine its proper meaning and use under the laws of England, Bahrain and the UAE.
English law
Under English law, the “without prejudice” rule will generally prevent statements made in a genuine attempt to settle an existing dispute – whether made in writing or orally – from being put before the court as evidence of admissions against the interest of the party that made them. The “genuine attempt to settle” is fundamental and communications that are simply marked “without prejudice” may not satisfy this test.
There are a number of important issues and exceptions to the “without prejudice” rule to take into account when using it:
• Not every piece of correspondence which forms part of the ongoing “without prejudice” exchange need contain an offer to settle in order to benefit from “without prejudice” privilege.
• The “without prejudice” rule will apply whether or not the parties succeed in settling.
• The rule does not prevent parties from agreeing to negotiate on an open basis. However, choosing to proceed in this way is relatively unusual, particularly on the part of the party resisting a claim. Accordingly, if the intention is for settlement negotiations to be treated as open, then this must be expressly stated.
• It is common for parties to correspond simultaneously on both a “without prejudice” and an open basis.
• Sometimes a party might agree that some communications are without prejudice but allege that, during the negotiation, correspondence shifted to an open basis. In that event, the burden of proof would be on the party alleging that the basis of the communications had changed.
• The scope of “without prejudice” privilege may extend to cover a third-party communication, which one of the negotiating parties commissions to facilitate settlement.
• When dealing with a challenge to a claim that a document is covered by “without prejudice” privilege, the presence or absence of the “without prejudice” label on the document will not be determinative. However, it is not a good idea to omit the label from a document intended to be without prejudice because, in the absence of the label, the party claiming the privilege may well have to explain to a court why it should be treated as “without prejudice”.
Bahraini law
The concept of “without prejudice” is not recognised under Bahraini law in the same as it is under English law. That said, whilst no such concept exists, it remains advisable to mark any communications, which would satisfy the “without prejudice” rule under English law as “without prejudice” to persuade a court that such communications should not be admissible in proceedings as the parties intended (and agreed) their privileged status.
In order to secure tighter protection from correspondence being used/referred to in legal proceedings, in addition to being marked “without prejudice” (and satisfying the “without prejudice” rule), all correspondence should be qualified with detailed statements to the effect that any offer or communication does not constitute an admission of liability, or an undertaking should be obtained that the information will not be used as evidence.
UAE law
Similarly, in the UAE, the concept of “without prejudice” correspondence is not recognised. Any correspondence marked “without prejudice” and brought into existence expressly for the purpose of furthering genuine settlement negotiations can be filed in court and relied on. Any admissions or offers made in this correspondence may be prejudicial to the party making the admissions or offers. As a result, settlement negotiations are often not documented.
In a Middle Eastern context, it is good practice to assume that anything written down in correspondence may come before a judge/arbitral tribunal in due course. Therefore, it is advisable (should you wish to mitigate the risk of your communications coming before a court/tribunal) to keep any admissions or concessions with regard to liability or settlement oral. Whilst a party might seek to rely upon oral communications and introduce them into evidence, they are likely to face more hurdles in doing so and persuading a court/tribunal as to the strength of that evidence than if the communications are recorded in writing.
The “without prejudice” rule is an important legal concept with practical application. It offers potentially invaluable protection to a party that has sought a genuine settlement during contentious negotiations. It should be remembered that whilst English law has developed a relatively clear rule, the rule does not translate to local law in Bahrain and the UAE. However, certain principles can be usefully adapted in a Middle Eastern context to put an informed party in a stronger position.
* Hugh Murray is an associate and Joanne Emerson Taqi is partner at Norton Rose (Middle East) LLP Bahrain office. Norton Rose Group is a leading international legal practice with offices in Europe, Asia Pacific, Canada, Africa and the Middle East, and Latin America and Central Asia.
With a combined team located in the Abu Dhabi, Bahrain and Dubai offices, Norton Rose (Middle East) LLP is able to provide both contentious and non-contentious support to financiers, developers, contractors and specialist contractors in the region. Legal queries related to the construction sector can be addressed to Norton Rose (Middle East) LLP through Gulf Construction magazine at editor@gulfconstructionworldwide.com.
