Settlement is a desirable alternative to adversarial adjudication. Legal systems encourage parties to resolve disputes amicably, conserving judicial resources and reducing uncertainty. The without prejudice rule is a doctrinal mechanism that facilitates this objective. It allows parties to engage in settlement negotiations freely, without fear that statements or admissions made during such negotiations may later be deployed against them in court.
Despite its frequent invocation in legal correspondence, the without prejudice rule is often misunderstood as being dependent solely on the use of the phrase itself. In reality, it is a nuanced evidentiary doctrine grounded in public policy and judicial interpretation. Its application depends on the substance and context of communications rather than their form. This article explores the rule in detail, drawing exclusively from authoritative dictionary meanings, foreign and Indian case law, and statutory provisions that have been thoroughly examined and fact-checked.
The starting point for understanding the without prejudice rule lies in authoritative legal definitions.
Black’s Law Dictionary defines without prejudice as a declaration that no rights or privileges of the party concerned are to be considered as waived or lost, except to the extent expressly conceded or decided. The definition emphasises the preservation of legal rights despite the making of offers or admissions.
Wharton’s Law Lexicon similarly explains that without prejudice is a phrase used in offers to guard against waiver of rights and for the purpose of negotiating a compromise. It further clarifies that the term applies to communications exchanged between parties during negotiations, whether before or after litigation has commenced, but before trial or verdict. The essential understanding is that if negotiations fail, nothing that has passed between the parties may be taken advantage of thereafter.
These definitions underline two core elements of the doctrine: first, the protection of legal rights, and second, the facilitation of settlement through candid negotiation.
Rush & Tompkins Ltd. v. Greater London Council
The most authoritative modern exposition of the without prejudice rule is found in the decision of Rush & Tompkins Ltd. v. Greater London Council. Lord Griffiths described the rule as one governing the admissibility of evidence and founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a conclusion.
The House of Lords held that the rule applies to exclude all negotiations genuinely aimed at settlement, whether oral or written, from being given in evidence. Importantly, the application of the rule does not depend on the express use of the words without prejudice. If it is clear from the surrounding circumstances that the parties were seeking to compromise the dispute, the content of those negotiations will, as a general rule, be inadmissible.
The judgment reinforced earlier authority, emphasising that parties should be encouraged to speak fully and frankly during settlement discussions. The public policy justification rests on preventing statements or offers made during negotiations from being treated as admissions on the question of liability. The House of Lords also clarified that without prejudice protection is joint in nature and cannot be waived unilaterally by one party.
Evolution and Rationale: Oceanbulk Shipping and Trading SA v. TMT Asia Ltd.
The historical development of the without prejudice rule was revisited by the UK Supreme Court in Oceanbulk Shipping and Trading SA v. TMT Asia Ltd. The Court explained that the rule initially focused on negotiations conducted on the footing that they were without prejudice to the parties’ respective positions if negotiations failed.
The essential purpose of the original rule was that, if negotiations failed and the dispute proceeded to adjudication, neither party should be able to rely upon admissions made by the other in the course of negotiations. The Court observed that the underlying rationale of the rule is that parties are more likely to speak frankly if nothing said can subsequently be relied upon, thereby increasing the likelihood of settlement.
The UK Supreme Court reaffirmed the public policy basis of the rule and summarised principles derived from earlier authorities, including Rush & Tompkins. The decision thus consolidates the doctrinal foundation of the without prejudice principle in modern jurisprudence.
A consistent theme across common law authorities is that the mere use of the words without prejudice is not decisive. Both Rush & Tompkins and Oceanbulk recognise that merely labelling a document as without prejudice is insufficient to attract the privilege. Conversely, the absence of the label does not necessarily negate protection.
Courts must examine the factual circumstances and the intent of the parties to determine whether the communication formed part of a genuine attempt to settle a dispute. The privilege attaches based on substance rather than form. Waiver of without prejudice protection can ordinarily occur only with the consent of both parties to the communication.
Section 23 of the Indian Evidence Act, 1872
The without prejudice principle finds statutory recognition in India through Section 23 of the Indian Evidence Act, 1872. The provision states that in civil cases, no admission is relevant if it is made either upon an express condition that evidence of it shall not be given, or under circumstances from which the court can infer that the parties agreed that evidence of it should not be given.
Section 23 embodies the same principle articulated in English common law: admissions made in the context of settlement negotiations are excluded from evidence where there is an express or implied understanding that they will not be relied upon.
Section 21 of the Bharatiya Sakshya Adhiniyam, 2023
The Bharatiya Sakshya Adhiniyam, 2023, which replaces the Indian Evidence Act, retains this position in Section 21 using materially identical language. The continuity reflects legislative acceptance of the settled doctrine governing without prejudice communications.
Early authorities
Indian courts have long recognised the equitable foundation of the without prejudice rule. In Kuar Nageshar Sahai v. Shiam Bahadur, the court observed that parties are often willing to make admissions for the purpose of effecting a compromise, and it would be unfair to hold them to such admissions if the compromise fails.
Similarly, in Shibcharan Das v. Gulabchand Chhotey Lal, the Allahabad High Court held that where negotiations are conducted with a view to settlement, they must be treated as having been conducted without prejudice. In such circumstances, it is not open to one party to give evidence of an admission made by the other during negotiations. The court emphasised that settlement necessarily involves mutual concessions and that offers made during negotiations should not later be used as admissions.
Modern elaboration: Peacock Plywood and Koninklijke Philips
The Delhi High Court provided a detailed exposition of without prejudice privilege in Koninklijke Philips N.V. v. M. Bathla & Anr., while referring to Peacock Plywood (P) Ltd. v. Oriental Insurance Co. Ltd. Drawing upon Phipson on Evidence, the Court observed that without prejudice privilege is generally a rule of admissibility rather than a substantive right. It can ordinarily be waived only with the consent of both parties, and it applies only where correspondence is written for the purpose of a genuine attempt to compromise a dispute.
The Court further clarified that the presence or absence of the words without prejudice is not conclusive. Courts must examine the surrounding circumstances to determine whether the communication forms part of bona fide settlement negotiations. Documents may be labelled without prejudice yet fall outside the rule if they are unrelated to settlement or if the expression is used in a different sense altogether.
The jurisprudence establishes that the without prejudice rule applies only where there is an existing dispute and a genuine attempt to settle it. Communications not aimed at compromise, even if labelled without prejudice, do not attract protection. Equally, the rule does not operate mechanically; courts retain the authority to assess context, intent, and purpose.
The joint nature of the privilege ensures that one party cannot unilaterally deploy settlement communications for forensic advantage, thereby preserving the integrity of the negotiation process.
While the without prejudice doctrine is classically rooted in common law and operates as a rule governing the admissibility of evidence, its underlying rationale finds clear functional expression in India’s statutory frameworks governing mediation and conciliation. Part III of the Arbitration and Conciliation Act, 1996, through Sections 75 and 81, imposes confidentiality obligations and an express bar on reliance upon or introduction of settlement-related communications in subsequent arbitral or judicial proceedings, thereby placing conciliation communications within a statutorily protected settlement regime.
A more comprehensive articulation is found in the Mediation Act, 2023, which characterises mediation as a voluntary, confidential and non-adjudicatory process, mandates confidentiality of all mediation communications, and prohibits their evidentiary use before courts and tribunals, subject only to narrowly tailored statutory exceptions grounded in public interest considerations.
Although these enactments do not employ the phrase “without prejudice”, they embody the doctrine in substance by ensuring that admissions, proposals and concessions made in the course of settlement negotiations cannot later be weaponised in adversarial proceedings. In this sense, mediation and conciliation under Indian law operate within a codified and fortified manifestation of the same public policy that underpins the without prejudice rule, namely, the promotion of candid, uninhibited settlement discussions as an integral component of effective dispute resolution.
The without prejudice rule represents a careful balance between evidentiary fairness and public policy. By excluding genuine settlement negotiations from evidentiary use, the rule promotes candour, flexibility, and compromise. At the same time, judicial scrutiny ensures that the doctrine is not misused as a shield for communications unrelated to settlement.
Through authoritative English decisions such as Rush & Tompkins Ltd. v. Greater London Council and Oceanbulk Shipping and Trading SA v. TMT Asia Ltd., statutory recognition in Indian evidence law, and consistent interpretation by Indian courts, the without prejudice rule has achieved doctrinal clarity and coherence. Its continued relevance lies in its ability to encourage negotiated outcomes while safeguarding the fairness of adjudicatory processes.
About the authors: Parmeet Singh Nagi is a Principal Associate and Gauri Rastogi is an Associate at KNM & Partners.
Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.
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