16 April, 2007
People who are used to negotiations of the more adversarial sort will be familiar with receiving correspondence marked 'without prejudice'. This is shorthand for denying the recipient the right to use the contents of the correspondence as evidence in court. The use of 'without prejudice' is a commonplace way to help negotiate settlements without giving away one's position in law. When this is done, the correspondence is said to be 'privileged'.
Case law is well established which allows correspondence which has not been marked 'without prejudice' or 'WP' to be treated as 'without prejudice' correspondence where it is clear that it is part of the process of negotiation aimed at achieving a settlement.
However, a recent case shows the wisdom of taking a more 'belt and braces' approach by making sure that all correspondence intended to be 'without prejudice' is marked as such. The case involved the settlement of reinsurance claims between insurers, including the reinsurance arm of European insurance giant Axa. Axa sent two letters which were not marked 'WP', because it needed to record its position for an interested third party which was not directly party to the negotiations. The court considered that these were 'open letters' which were not privileged.
The moral of the story is that if you create correspondence which you wish to ensure cannot be used as evidence, make sure it is appropriately marked.
Robin Stephens, Commercial Litigation Department,
We can assist in the negotiation of all commercial agreements. For further information please contact Robin Stephens on Tel: 01254 222399 or email Robin Stephens.