Oceanbulk Shipping v TMT Asia Ltd 2009 and why you should enter into without prejudice discussions.

Even if you are in settlement discussions the without prejudice discussions could well be aired and interpreted in the event that the dispute moves on to the proper interpretation of the settlement discussions.

Without prejudice discussions

The principle concerning without prejudice discussions being not generally admissible in evidence is based both upon the (express or implicit) agreement of the parties and also upon the public policy.

The courts are keen to ensure that the parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that could be said in the course of such negotiations may be used to their prejudice in the course of the proceedings.

This position was enshrined by Lord Griffiths in Rush & Tompkins v GLC, where the House of Lords established that without prejudice communications do not lose their privileged status because the parties conclude an agreed settlement.

Lord Griffiths said “as a general rule, the ‘without prejudice rule’ renders inadmissible in any subsequent litigation connected with the same subject matter proof of any admissions made in a genuine attempt to reach a settlement”.

However the rule seems far stronger when comparing discussions leading to a breakdown in communications as opposed to discussions held to settle a dispute once and for all.

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