Breaking New Ground: The Dubai Court’s Recognition of "Without Prejudice" Communications
English Law Focus
Khushboo Shahdadpuri Partner,Dispute Resolution
Rana SharafTrainee Solicitor,Corporate Commercial
It is commonplace that "without prejudice" correspondence and documents are those which cannot be adduced in evidence. Traditionally derived from common law jurisdictions, the underlying principle of correspondence and discussions designated as "without prejudice" is aimed at encouraging the settlement of disputes outside legal proceedings, reducing prolonged court proceedings, thereby reducing the time of the judiciary and saving taxpayers’ monies.
The concept of “without prejudice” offers has roots in the English case Calderbank v Calderbank [1975] 3 All ER 333, where it was established that a party may make an offer on a "without prejudice save as to costs" basis. This effectively allows the parties to refer to the “without prejudice” offer only when deciding the apportionment and allocation of costs at the end of the proceeding.
For any communication or correspondence to qualify as “without prejudice”, it must entail a genuine dispute as well as a genuine attempt to resolve the dispute. Such communication and correspondence not only preserve the confidentiality of any settlement discussions, but also introduce a cost-based incentive to allow parties to engage meaningfully in pre-dispute negotiations in order to resolve disputes outside of courts or arbitration.
This serves a dual function: it reduces unnecessary litigation by prompting parties to assess settlement offers pragmatically, thereby lowering costs for the parties, and, in turn, also conserves judicial resources by preventing protracted disputes from proceeding unnecessarily through the courts.
This judgment marks an important step in bringing the onshore UAE courts further in line with international dispute resolution standards and reflects the UAE’s ongoing efforts to modernise its legal landscape.
The “without prejudice” principle is firmly entrenched in common law systems through its codification in procedural rules across various common law jurisdictions globally. For example, in England and Wales, a settlement offer made pursuant to Part 36 of the Civil Procedure Rules 1997 is expressly treated as “without prejudice except as to costs”. Similarly, in Singapore, section 23(1) of the Evidence Act (Cap.97) provides that admissions made under an express agreement of confidentiality or in circumstances implying a mutual understanding of confidentiality are inadmissible in civil proceedings.
In the common law jurisdictions in the UAE, namely the Dubai International Financial Centre (“DIFC”) and Abu Dhabi Global Market (“ADGM”), "without prejudice" communications have long been recognised. These jurisdictions provide parties with the assurance that statements made in settlement negotiations cannot be introduced as evidence in litigation or arbitration.
In contrast, “without prejudice” correspondence are not formally recognised in civil law jurisdictions in the region. Its application within the UAE’s onshore courts has historically been inconsistent. The UAE’s onshore courts have traditionally not embraced the concept of “without prejudice” in the same way. Indeed, there have been cases where parties attempting to rely on “without prejudice” protections found that their settlement discussions were not protected from disclosure in court proceedings.
Further, Federal Law No. 5 of 1985 on the Civil Transactions Law, Federal Decree-Law No. 42 of 2022 Promulgating the Civil Procedure Code and Federal Decree-Law No. 35 of 2022 Promulgating the Law of Evidence in Civil and Commercial Transactions do not provide any form of statutory protection for communications made in the process of dispute resolution. Ultimately, this means that, in the absence of any statutory safeguards or established judicial precedent protecting without prejudice communications, parties involved in settlement discussions risk having their statements used as evidence of liability. This uncertainty has, at times, discouraged parties from pursuing early-stage settlements.
This paradigm, however, has begun to shift following a recent Dubai Court of Cassation judgment issued on 22 October 2024 in Case No. 486/2024, representing a significant development in the evolving jurisprudence of the UAE’s onshore courts.
In Case No. 486/2024, the Dubai Court of Cassation affirmed the decision of the Dubai Court of Appeal in Case No. 31/2024, holding that statements made during unsuccessful settlement discussions could not be admitted as evidence of liability in court.
By way of background, the dispute in this case arose from a cryptocurrency transaction where the claimant alleged that the defendant failed to transfer the agreed amount. To support its case, the claimant relied on WhatsApp messages exchanged during settlement negotiations in the course of litigation proceedings and argued that these communications included admissions by the defendant acknowledging a higher amount of the outstanding debt than the amount subsequently determined by the court-appointed experts.
In a landmark decision, the Dubai Court of Appeal ruled that any such statements were inadmissible as they were made "without prejudice", marking the first time an onshore UAE court had recognised that settlement communications are protected from admissibility in subsequent litigation. On appeal, this ruling was upheld by the Dubai Court of Cassation. Ultimately, the Dubai Court of Cassation concluded that there was no legitimate basis to overturn the appeal judgment excluding the settlement statements.
This judgment marks an important step in bringing the onshore UAE courts further in line with international dispute resolution standards and reflects the UAE’s ongoing efforts to modernise its legal landscape and strengthen its position as a global financial and commercial hub. While civil law jurisdictions do not operate under a binding precedent doctrine, it is expected that this decision will likely serve as persuasive authority in future commercial disputes and serve to encourage amicable settlement discussions.
By recognising the “without prejudice” principle, the UAE courts will effectively promote early-stage dispute resolution before formal legal proceedings are even initiated, which is expected to have several long-term impacts, including improving investor confidence and, ultimately, attracting greater foreign investment.
Additionally, the judgment will likely lead to an overall improvement in dispute resolution efficiency. With greater protection for settlement discussions, parties will be more inclined to negotiate early, consequently reducing the number of cases that escalate to full litigation or arbitration. This will alleviate pressure on both the courts and arbitral institutions, which will allow them to handle complex disputes more effectively and efficiently.
As mentioned, the onshore UAE courts do not adhere to a system of binding precedent. This means that decisions of individual courts do not automatically bind other courts; so, while the judgment marks an important step, it remains to be seen whether this approach will be consistently followed in future cases. Nevertheless, and importantly, the judgment has a significant persuasive value, given that it was affirmed by the Dubai Court of Cassation. It, therefore, may pave the way for a more consistent application of the “without prejudice” principle in the onshore UAE courts.
A useful analogy can be drawn from Article 5 of the UAE's Federal Decree-Law No. 40 of 2023 on Mediation and Conciliation in Civil and Commercial Disputes. This provision expressly provides that mediation and conciliation procedures, as well as any documents, information or agreements exchanged therein, are confidential and may not be invoked before any court or entity. While this provision is specific to mediation, it serves to provide a useful analogy and may reflect a broader legislative intent to protect settlement discussions and confidential communications.
Until further developments, legislative or otherwise, clarify the position on without prejudice communications, it remains advisable to explicitly mark communications as “without prejudice” to maximise the confidentiality and protection of such communications. It may also prove prudent for businesses to enter into confidentiality agreements with counterparties prior to any settlement negotiations to further protect any communications.
For further information,please contact Khushboo Shahdadpuri and Rana Sharaf.
Published in May 2025
