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As a business owner, you may, at some stage, disagree with another party when carrying out business. Where this occurs, you could find yourself in a commercial dispute. Whilst it is encouraged that you make a genuine attempt to resolve a business dispute with settlement discussions rather than going to court, sometimes litigation becomes the only option. If so, it is crucial that you understand the prejudice rule for written communication, which includes terms such as ‘without prejudice’ and ‘without prejudice save as to costs’. This article will explain what ‘without prejudice save as to costs’ means for your commercial dispute.
What is Without Prejudice?
When you are party to a commercial dispute, you will usually try to avoid litigation. Instead, you and the other party may look to resolve the dispute out of court via alternative dispute resolution (ADR), which includes methods such as:
- mediation;
- arbitration; or
- negotiation.
Naturally, you and the party will engage in written correspondence with each other during the resolution process. However, if your efforts to resolve the dispute fail, the parties may end up in court proceedings. Where this occurs, any correspondence you have labelled as ‘without prejudice’ cannot legally be disclosed in commercial litigation and cannot be used as evidence. This is both in terms of:
- the dispute; and
- when deciding who is liable for costs.
On the other hand, your lawyer may mark some correspondence as ‘open’, which can be disclosed in court proceedings. This will usually include documents where liability is being discussed.
Correspondence marked ‘without prejudice’ also means that it cannot be:
- used to make legal rules (precedent);
- referred to outside of court; and
- seen as the last word on the issues.
You may choose to use the term ‘without prejudice’ to allow yourself to speak freely about the disagreement. This can ensure transparency and may help you resolve the dispute more efficiently. It also means you do not need to admit liability when negotiating with the other party.
What is Without Prejudice Save as to Costs?
Parties to a commercial dispute may attempt to resolve the dispute before any potential court litigation and mark their correspondence instead as ‘without prejudice save as to costs’. This means that usually, the correspondence cannot legally be mentioned during following court proceedings but can be once a judgment has been made. In particular, the court can use the information to decide who will bear the litigation costs.
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Why Should I Use ‘Without Prejudice Save as to Costs?’
You will likely use the term ‘without prejudice save as to costs’ when negotiating a settlement. You may also use it if you are considering a Part 36 Offer. For example, when the court decides who is liable for the case’s costs, they can see the marked correspondence. If it showed that the claimant was offered the same amount the court awarded them before litigation and refused, despite winning the case, they would likely be liable for costs. They effectively wasted time and money by refusing the initial award and letting the case come to court.
This guide outlines how to resolve commercial disputes.
Key Takeaways
You may attempt to resolve a commercial dispute through alternative dispute resolution (ADR). If this fails, you may need to begin court proceedings. However, it is essential that before you get to this point, you have thought about the terms ‘without prejudice’ and ‘without prejudice save as to costs’. These terms are significant when marking correspondence discussing your attempts to resolve the dispute. Importantly, they dictate what the court can and cannot see if you litigate your dispute.
If you need help understanding the term ‘Without Prejudice Save as to Costs in the UK, LegalVision’s experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
‘Without prejudice’ means that the correspondence concerned cannot be disclosed in court or anywhere else.
‘Without prejudice save as to costs’ means that although the correspondence cannot be disclosed in court, it can be disclosed once the judgement has been made and the costs and liabilities are being decided.
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