Without Prejudice: Common Misconceptions and How to Avoid Them 

The "without prejudice" rule plays a key role in assisting disputes to be resolved through negotiation.  The rule prevents statements made in the course of genuine settlement negotiations from being used as evidence of liability in court or before arbitral tribunals. 

The "without prejudice" rule is often considered to be a straightforward concept but there are some common pitfalls that arise and we consider those in this article as well as some of the practical steps to preserve the intended protection. For clients involved in litigation, arbitration, mediation, or commercial negotiations, understanding when "without prejudice" applies, and when it does not, can make a material difference to both outcome and costs risk.

1.  Not all settlement discussions are protected

Not all communications made in the course of settlement discussions are covered by without prejudice privilege. A communication can only be "without prejudice" if it is made as part of a genuine attempt to settle a dispute. For example, in Bradford & Bingley Plc v Rashid (FC) [2006] UKHL 37, the Court held that letters from a debtor seeking a time extension for, or reduction in, debt repayments were not covered by without prejudice privilege as the debtor had acknowledged the debt was owed (i.e. the discussions did not concern a disputed liability).

2.  Costs strategy: when to use "without prejudice save as to costs"

Whilst Part 36 offers are automatically treated as "without prejudice save as to costs", offers outside of the Part 36 regime are not. When making a without prejudice offer to settle a dispute, it is important to specify that the offer is without prejudice "save as to costs". Otherwise, if the dispute proceeds to trial, the offer will not be admissible on any costs application made once judgment has been issued. Ensuring an offer is admissible for these purposes can lead to favourable outcomes for the party making the settlement offer where their counterparty refuses the offer but is unsuccessful at trial or fails to secure an amount greater than the settlement offer.

This is particularly worth remembering in the context of mediation, where a party will want to ensure that offers made during the mediation are admissible on any later application for costs if the dispute proceeds to trial. If desired, mediation agreements can specify that offers made during the mediation are without prejudice save as to costs and the offering party should consider repeating the offer in a letter marked "without prejudice save as to costs" post-mediation.

3.  Exceptions to the without prejudice rule

In certain circumstances, without prejudice communications may still be admissible as evidence. In addition to the exception for communications marked "without prejudice save as to costs" (discussed above), the key exceptions are:

• Acceptance of a without prejudice offer: Communications in negotiations leading to an agreed settlement are admissible as evidence of that settlement where its existence or terms are disputed.
• Waiver by mutual consent: Without prejudice privilege can be waived with the joint agreement of the parties to the relevant communication.
• Misrepresentation, fraud and undue influence: Without prejudice communications are admissible as evidence proving or disproving claims of misrepresentation, fraud or undue influence by a party. They are also admissible as evidence that a party pleaded patently untrue facts or made false statements.
• Impropriety: Without prejudice communications may be admissible as evidence of perjury, blackmail or other "unambiguous impropriety". This is a high bar and will only apply in the clearest cases of abuse of a privileged occasion, i.e. involving conduct which is in some way "oppressive, or dishonest, or dishonourable".¹ An example of "unambiguous impropriety" is provided by the case Morris v Williams [2025] EWHC 218 (KB), where the Court held a letter marked "without prejudice – save as to costs" to be admissible at trial – despite having been sent by the Claimant's solicitors in an attempt to settle a dispute - because it contained an admission that the Claimant had been fundamentally dishonest in making their claim.
• Evidence as to the reasonableness of a settlement: In circumstances where: (a) a party settles a dispute and attempts to recover settlement monies from a third party by way of contribution; and (b) the third party argues the settlement sum is excessive, the substance of the without prejudice discussions leading to the settlement may be admissible as evidence of the extent to which the settling party sought to mitigate its losses.
• Delay: Without prejudice negotiations may be admissible as evidence to explain a delay in progressing proceedings or apparent acquiescence, for example when defending an application to strike-out for want of prosecution.

4. It is not an abuse of the without prejudice rule to tell the truth, even where the truth is contrary to your stated case

A document or communication will not lose its "without prejudice" status simply because it contains admissions or statements that differ from a party's openly pleaded case. The without prejudice rule exists precisely so parties can speak openly, make concessions and try to settle a dispute without going to court. 

It can be frustrating if the other side appears to concede a point in without prejudice correspondence and you cannot show it to the judge. To rely on it in court, one of the limited exceptions referred to above must apply. There are, however, legitimate ways to attempt to bring the same information before the court in open form. For example, you could serve a notice to admit facts under CPR 32.18, ask targeted questions in open correspondence or make a Part 18 Request for further information.

5. Cross-border negotiations: check local rules on without prejudice

Care should be taken when dealing with cross-border matters or where parties are not subject to  English law. In common law jurisdictions, the "without prejudice" principle is widely recognised but in many civil law jurisdictions, the principle is not explicitly recognised (for example, this has traditionally been the position in the UAE²) and confidentiality of settlement discussions is addressed through other means. It is important, in those circumstances, to seek specific local law advice.

6. Labels help but they are not decisive

A communication (whether written or oral) is not "without prejudice" simply because it is labelled as such. Equally, the absence of a "without prejudice" label will not prevent a piece of correspondence from being without prejudice. What matters is the context and purpose of the communication: were you seeking to resolve a live dispute? If yes, the communication is likely to be without prejudice. If not, the label will not convert the communication into something it is not. Nevertheless, clear and consistent use of the "without prejudice" label is helpful. It signals your intention to the other side and the court and reduces the scope for later argument about how the communication should be treated. 

7. Protection extends to the whole course of communication

Without prejudice protection attaches to the course of genuine settlement negotiations, not just the initial email, letter, or conversation containing a without prejudice settlement offer. Once negotiations begin on a without prejudice basis, subsequent exchanges forming part of that same settlement dialogue are usually protected, even if later messages are not re-labelled "without prejudice" each time. To change the basis of the communication, you must say so clearly. The courts expect any shift from without prejudice to open to be spelt out: “it is incumbent on the party who changes the basis of such negotiations to spell out the change with clarity” ³. 

As may be expected, where a party makes an open offer of settlement, they cannot change that offer into a without prejudice offer by labelling later correspondence "without prejudice". What matters is the objective intention of the party at the time the offer was made.

8. Multi-party disputes require special care

Where some parties in a multi-party dispute settle, their negotiations will ordinarily remain protected from disclosure to non-settling parties. The settlement negotiations will also be without prejudice for the purposes of any related litigation and any "subsequent litigation connected with the same subject matter" ⁴. 

However, caution needs to be exercised as correspondence will only be without prejudice if there is a dispute between the communicating parties. Discussions between parties who have a common opponent, but no dispute with each other, will not be without prejudice. This reflects the finding of the court in Stax Claimants v Bank of Nova Scotia Channel Islands Ltd [2007] EWHC 1153 (Ch), where it held that the claimants' discussions with their independent financial advisors (against whom the defendant bank had brought Part 20 proceedings) were not protected by without prejudice privilege. In such cases, consider whether litigation privilege or another protection might apply, and plan your communications accordingly.

9. External reports can be protected – but only with a shared understanding

Reports from third party experts that are commissioned and used to advance settlement discussions can be without prejudice if they form part of the parties’ settlement process. Recent cases emphasise that what counts is a shared understanding between the parties that the report is being obtained for settlement purposes and is to be treated on a without prejudice basis, whether by express agreement or clearly implied from the circumstances ⁵. To avoid uncertainty, agree at the outset if and how any external reports will be commissioned, their purpose, and whether they will be treated as without prejudice.

10. The without prejudice rule is not a confidentiality regime: when sharing is acceptable

Without prejudice communications are not automatically confidential. Accordingly, a party may generally reveal the content of any without prejudice settlement negotiations to a third party where it has a legitimate reason for doing so. In EMW Law LLP v Halborg [2017] EWHC 1014 (Ch) the court considered, by way of example, that it would be "absurd" for a litigant who needed to share without prejudice material with an expert to have to wait for the consent of the other party to the proceedings before disclosing the material. However, where parties have agreed – formally or otherwise - that without prejudice communications are to be treated confidentially, such agreement should be observed in order to prevent breach of confidence issues arising. In such circumstances, the party wanting to disclose the correspondence should obtain the consent of the other party (or parties) before disclosing the correspondence.

Conclusion

Without prejudice protection is a valuable tool, but not a blanket shield. It applies only to genuine settlement negotiations, is influenced by context rather than labels alone, and is subject to recognised exceptions. Careful use of headings, clear agreement on the basis of discussions, and early thought about Part 36/Calderbank options will help safeguard your position. If cross border issues arise, seek local advice. Used well, the "without prejudice" rule can facilitate frank negotiations while protecting your interests if a settlement is not reached. 

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QuickGuides - Without Prejudice