Thursday, November 5, 2015

Without Prejudice in Oman

In common law jurisdictions, the term ‘without prejudice’ is a reservation made on a statement suggesting that it cannot be used against the publishing party in future dealings or litigation or arbitration. – DUHAIME’S LAW DICTIONARY.

The policy behind the common law rule is to encourage settlements and to promote free and frank discussion toward that end. If parties in a dispute are encouraged to resolve their differences without taking up the time of a court or an arbitral tribunal, they must be able to communicate freely without the fear that what they say or write will be used against them in evidence as admissions. If the communication is a genuine attempt to settle a dispute, it will be protected from being produced in evidence.

There are a number of key issues and exceptions to the ‘without prejudice’ rule that are worth noting:

  • The words ‘without prejudice’ should be used on a document only in attempts to settle disputes.
  • The rule will apply whether or not the parties succeed in settling their dispute.
  • The protected communications do not need to contain an ‘offer’ to settle in order to benefit from the privilege.
  • The privilege may extend to third-party communications, which one of the negotiating parties marks to facilitate settlement.
  • The principle of the privilege has been held to protect subsequent and even previous letters in the same chain of correspondence. It is, therefore, not strictly speaking necessary to mark every document ‘without prejudice’ if it is clear that it is intended to be part of the settlement negotiations, but it is safer to do so.
  • ‘Without prejudice’ correspondence remains privileged even after a settlement has been reached and is generally inadmissible in any subsequent litigation on the same subject matter whether between the same or different parties.
  • The rule does not prevent parties from agreeing to negotiate on an open basis. If the intention is for any settlement negotiations to be treated as open, then this must be expressly stated.
  • It is often better to instruct your lawyer to make any such offers so that the process can be managed overall.
The Omani courts do not, however, recognize the concept of ‘without prejudice’ communications. 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. Similarly, admissions or offers made in correspondence in Oman may be prejudicial to the party making the admissions or offers. As a result, settlement talks are often not documented by the parties.

Unfortunately, in Oman, there is no ironclad protection that can be used to prevent such correspondence from being relied upon in legal proceedings. A judge in an Omani court is free to use any documents related to an overall settlement as evidence or an admission. There are, however, several alternative steps that can be used in Oman to bolster the protection of any settlement correspondence. These include the following:
  • In any settlement negotiations, insist that all parties to the dispute sign an undertaking that any information disclosed in the communications will not be used as evidence before the courts. 
  • All documents should contain a statement or qualification that any offer does not constitute an admission of liability.
  • Any settlement agreement should have a comprehensive confidentiality provision to prevent any form of publication.
  • A settlement agreement should also contain a provision preventing the parties from being called as witnesses in any subsequent litigation or arbitration in relation to the dispute. A waiver of this condition should require consent of all parties.
  • If necessary, all communications in relation to a settlement should be kept oral and not in writing.
To the extent that any of these undertakings are violated, the party who is prejudiced would have a valid claim for damages against the other. The threat of a claim may be enough of a deterrent to prevent the parties from breaching any of the above written undertakings by disclosing key settlement documentation in court.

The common law concept of ‘without prejudice’ has gradually emerged in several of the civil law jurisdictions in the GCC. The UAE is unique in that the Dubai International Financial Centre (DIFC) operates according to a common law system with its own laws and regulations and its own independent courts. The concept of ‘without prejudice’ is recognized by the DIFC courts and relied upon by parties. By contrast, in Oman and elsewhere in the GCC (including in UAE courts), documents marked ‘without prejudice’ and utilized for settlement purposes can be submitted to the courts and later relied upon if a settlement is not agreed.