8. Without prejudice to negotiations, the privilege shall apply and any resulting settlement agreement shall be used to indicate that an agreement is not yet binding. A document marked “subject matter of the contract” is generally not protected. In cases where you are in negotiation and therefore want impartial protection, but want your settlement offer to be further discussed rather than being fully binding upon acceptance, you must also replace the letter “contractual purpose”. This makes it clear to the other party that any proposed or discussed settlement is always subject to formal, written and agreed terms. But these two labels do completely different things and should not be confused. The content of this website is provided for informational purposes only and should not be construed as legal advice and should not be considered as a substitute for specific advice. PDT Solicitors LLP assumes no responsibility for the content of third party websites to which this website links. Impartiality belongs collectively to the parties to such communication. Therefore, it can only be lifted with the consent of all parties. If one party attempts to unilaterally rely on submissions from Without prejudice as evidence, the other party may generally choose to request that the offending material be removed or waive its privilege in order for the material to become admissible for the benefit (or detriment) of both parties. 9 It was not clear whether the courts would allow the use of evidence of an impartial exchange in the event of a dispute over the correct interpretation of the settlement. The Supreme Court`s decision in Oceanbulk Shipping & Trading SA v.
TMT Asia Limited and 3 others [2010] UKSC 44 has now confirmed that evidence is admissible without prejudice in such circumstances. Let us assume that A, B and C are all parties to the same dispute, with A being the plaintiff and B and C being the co-respondents. If A reaches an agreement with B but continues the action against C, can this be relied on as evidence in the ongoing dispute between A and C, without prejudice to the communications which led to the settlement between A and B? The answer lies in the House of Lords judgment in Rush & Tompkins -v- GLC17. Rush & Tompkins (a contractor business) was involved in a legal dispute with the GLC and a second defendant and eventually reached a settlement with the GLC through impartial negotiations. The House of Lords held that the content of these negotiations could not be disclosed to the second respondent. A contrary view would discourage parties to multi-party disputes from attempting a genuine settlement. Lord Griffiths said: The WP rule is to encourage settlement discussions without the parties weakening their position in the formal dispute. Basically, when this rule applies, people can speak and write openly without fear that what they say could be used against them in court or arbitration. Some disclosure of impartial communications may be required if it is clear that the court could be misled without such disclosure, but there is no general right to do so and the parties should do so with caution (Linsen International Ltd v. Humpuss Sea Transport PTE Ltd).
Evidence of negotiations may be presented to explain the delay or apparent acquiescence of a preliminary request, but it will often be sufficient – and preferable – to refer only to the existence of negotiations without prejudice, rather than to their content. The reverse is also true – simply using the label “without prejudice” does not guarantee confidentiality – again, the content and intent of the document/discussion is decisive. However, the courts treat the impartial veil with some respect, and what has been clarified in recent Court of Appeal decisions12 indicates that “manifest inadequacy” must be demonstrated in order to be lifted. This is behaviour that is somehow “oppressive, dishonest or dishonourable”.13 Courts recognize that, in practice, negotiations often involve a certain degree of posturing and accept that a party may take a position in discussions without prejudice incompatible with its open position. However, there is a line that must be drawn, and the use of the unbiased label does not give a party “carte blanche” to be dishonest. “. As a general rule, without prejudice, the rule renders inadmissible, in any subsequent dispute concerning the same subject-matter, proof of confessions made in a genuine attempt at settlement.
