Introduction:
In the UAE, the common law legal principle of without prejudice is usually not applied in onshore courts. This legal concept, which is found in many legal systems, ensures that statements made during settlement discussions cannot be used as evidence in court if the negotiations fail. Further, it allows parties to discuss settlements freely without fear of their words being used against them later. Despite this, recent court decisions stipulate the possibility of a change in the legal system of the UAE.
Meaning of "Without Prejudice"
When a letter or discussion is marked without prejudice, it means the statements made cannot be presented as evidence in a dispute. This helps parties negotiate openly to resolve conflicts without legal risk. The term without prejudice communications is commonly used in contract negotiations, employment disputes and settlement discussions in civil and commercial cases. Following this principle ensures that if a settlement may not be reached, the discussions remain confidential and cannot be used in court. However, there are some limitations to applying this principle. The protection does not apply in all situations. If a statement includes fraud, threats, or illegal activity, it can be used as evidence. Furthermore, once an agreement is reached, the final settlement is legally binding.
Background the case
According to recent court decisions, the Dubai Court of Cassation Case No. 486/2024 brought attention to this subject. The claimant initiated a case in the Dubai Court of First Instance based on an agreement to purchase cryptocurrencies. The claimant stated that the agreed-upon amount of bitcoin had not been transferred after payment and sought reimbursement, along with interest. The Dubai Court of First Instance rejected the majority of the claim and only granted a minor portion of the total amount sought. As a result, the claimant filed an appeal with the Court of Appeal, claiming that the Court of First Instance omitted the details of WhatsApp contacts between the parties during settlement discussions in which the defendant agreed to owing the claimed amount. The Court of Appeal decided that statements made during amicable settlement discussions are not evidence of responsibility since they are given "without prejudice" and are protected from being used as evidence of liability.
In this case, the Dubai Cassation Court ruled that statements made during unsuccessful settlement negotiations were inadmissible as evidence. The Dubai Cassation Court decision adheres to the common law principles of without prejudice and changes significantly from the common practice of UAE mainland courts.
While this ruling is a positive step, it is important to note that UAE courts do not follow a system of binding judicial precedent. Therefore, until the principle of without prejudice concept is fully formalized in UAE law, parties should exercise caution during settlement negotiations.
Conclusion:
The common law principles of without prejudice in UAE law support fair settlement negotiations between the parties. It permits parties to try to settle problems without fear of legal consequences. Understanding its use and limits can help individuals and businesses handle legal matters wisely.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
