It is a truth universally acknowledged…that communications made ‘without prejudice’, cannot generally be admitted in evidence. Though this cardinal rule of evidence is well-established in common law, the jurisprudence on “without prejudice” communications in India is less than clear. In this article, I will attempt to chart out the common law principles governing “without prejudice” communications, the recognized exceptions to this rule and global as well as Indian jurisprudence on its application.
The “Without Prejudice” Rule or WP Rule operates to exclude (subject to waiver) communication (whether made orally or in writing) between negotiating parties from being adduced as evidence against the interest of the party that made it. If the communications are in writing, the protection is afforded to the whole chain of correspondence. This is so even if certain letters do not contain an offer of compromise, although the chain can be broken by “open” communications.
The settlement privilege created by the WP Rule is based on the understanding that parties will be more likely to settle if they have confidence from the outset that their negotiations will not be disclosed1 .
The practice of excluding settlement communications from being considered in trial, finds its roots in the ancient Roman custom, where lawyers footnoted letters with the Latin phrase Salvis Iuribus meaning “without prejudice to rights” and seems to have originally been adopted on the basis that the evidence relating to these types of discussions or correspondence hold minimal evidentiary value.
WP privilege belongs collectively to the parties to the WP communications and therefore, can only be waived with the consent of all parties. This waiver may be express or implied, particularly where parties inadvertently rely on part of the WP correspondence.
The following elements characterise the application of the WP Rule (though not all of them need to be present for the WP privilege to be attracted):
Although the rule initially applied only to admissions, over time, the scope of the rule was greatly enlarged, as was evidenced by the House of Lords’ refusal to restrict its application to identifiable admissions and reinforcing the protection of all communications under the rule3 . As a consequence of the judicial expansion of its scope, once privilege is established, the boundaries between what is protected and what is not, is rather hazy
There are numerous occasions4 on which, despite the existence of WP negotiations, the WP Rule does not prevent the admission of WP communications into evidence, illustratively, when WP communications:
The courts have interpreted the aforesaid exceptions to hold communications containing facts that are relevant independently of their truth or falsity, and no reliance is placed on the content of the WP negotiations to prove any admissions8 , as being admissible in evidence.
Though the WP Rule is a creature of common law, the privilege sought to be afforded by it finds place in various jurisdictions, such as United States, Canada, Australia as well as India and is often referred to as “settlement privilege”. Though these countries share a common public policy of encouraging the compromise and settlement of legal disputes, they diverge, however, in their approach to promoting that policy.
It is interesting to note that, while courts in Canada have determined that settlement privilege should be a “class” or “blanket” privilege, courts in the United States, Australia and India have treated it as a quasi-privilege, with its application to be determined on a caseto-case basis.
Canada has followed its colonial predecessor and the approach of Canadian courts while applying the WP rule is similar to that of UK courts. On the other hand, while United States, Australia and India have afforded statutory recognition to the common law rule, the approach of each of these countries in applying the WP Rule is distinctive from its common law origins. Australia has proceeded to codify most of the common law exceptions to WP privilege and introduced some others. Illustratively, Australian courts permit production of WP communications into evidence in a case where the admitted evidence before the court is likely to be misleading unless evidence of the communication or document is allowed to qualify or contradict such evidence9 . The Federal Rules of Evidence adopted by the Supreme Court of the United States, on the other hand, only preclude the use of settlement communications for certain purposes at trial10. The settlement privilege in the United States is also subject to limitations derived from the principle of good faith11.
The common law privilege afforded to WP communications is codified under Section 23 of the Indian Evidence Act, 1872. This Section corresponds to Article 20 under the head “Admissions Made Without Prejudice” in Sir James Fitzjames Stephen’s “A Digest of the Law of Evidence”12, which includes an additional ground of duress. Section 23, therefore, embodies the without prejudice rule in India and its basic contours greatly draw from English law. The Section is reproduced hereunder for ease of reference.
“23. In civil cases no admission is relevant, if it is made either upon an express condition that evidence of it is not to be given, or under circumstances from which the Court can infer that the parties agreed together that evidence of it should not be given.”
A perusal of the aforesaid Section seems to indicate that the exclusionary rule in India is confined to ‘admissions’ alone, and that a mere statement made, even in the course of a ‘without prejudice’ negotiation would, not be barred from consideration. However, Section 23 ought to be read in the context of Section 17 of the Indian Evidence Act, 1872, which defines admissions as:
“17. An admission is a statement, oral or documentary or contained in electronic form, which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the persons and under the circumstances, hereinafter mentioned.”
From the aforesaid, it is evident that the definition of admissions itself is so broad that potentially, all statements made in the course of compromise negotiations can be brought within the “without prejudice” protection.
The framers of the Indian Evidence Act, 1872 have afforded different treatment to the WP privilege than other privileges, all of which arise out of the specific nature of the relationship shared between the litigating parties. The provisions setting out these privileges have not only been placed separately in the statute, they have also been afforded different treatment in terms of framing and clarity. For instance, while the contours of the attorney-client privilege are clearly set out and the exceptions thereto expressly provided, the application of Section 23 has been left ambiguous. A reading of the opening words to Section 23, “In civil cases no admission is relevant…” indicates that the legislature envisaged no exceptions to this rule. This hypothesis is further confirmed by the recommendations of the Law Commission of India in its 185th Report13, suggesting the addition of a proviso with respect to admissibility of WP communications as proof of factum of settlement or delay. The recommendations of the Law Commission clearly establish that the Section does not admit any exceptions in its current form.14
However, the courts in India have adopted a more open-minded approach in dealing with the aforesaid provision. The Supreme Court, while considering the meaning and import of the term “without prejudice”, opined that the implication of such a label would mean that a matter has not been decided on merits15. The Apex court has also stated that WP communications will have to be interpreted differently in different situations16, thereby adopting a different approach than that taken by its English and Canadian counterparts, which have elevated WP privilege to a class privilege. Indian courts have further held that the WP privilege will not be attracted to a document merely marked “without prejudice” if parties are otherwise in agreement to the offer/ terms contained therein, however, if the material indicates that the negotiations are still in progress and there is no finality on what is contained in the document marked “without prejudice”, then the document marked “without prejudice” cannot be considered without the consent of both the parties17.
While this article has detailed the inadmissibility of ‘without prejudice’ correspondences in trial, it is also pertinent to note that the words “without prejudice” are frequently used in other contexts having nothing to do with the law of evidence. For instance, it is common practice to accept lesser payment than the amount claimed “without prejudice” to the receiver’s right to sue for recovery of the balance amount. The lack of jurisprudence in India around the settlement or WP privilege, very often, leads to lawyers deploying the ‘’without prejudice” label on communications not exchanged in the context of settlement negotiations, merely intending to reserve any rights or remedies to avoid prejudicing their client’s position. Such improper use may sometimes cause an important communication from being excluded from consideration in the proceedings. It is prudent, therefore, for lawyers to give more thought to the labels that they attach to their correspondence before dispatch.
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