Why 'without prejudice' matters - developments in the UAE

This article was first published in the February 2025 edition of the Oath Middle East Legal magazine

A recent Dubai Court of Cassation ruling (Case No. 486/2024) suggests onshore UAE courts may start recognising the ‘without prejudice’ principle. Mehdi Seadon and Jason Francis of Kennedys examine the implications of this potential shift.

“Onshore UAE Courts do not recognise the concept of ‘without prejudice’ – so do not make that offer in writing.” This has been a standard piece of advice from UAE lawyers to their clients for years. However, a recent Judgment (Case No. 486/2024) by the Dubai Court of Cassation, the Emirate's highest court, signals a potential shift in this stance. Issued late in 2024, the Judgment may mark the beginning of the recognition of the ‘without prejudice’ (“WP”) principle in onshore UAE Courts.

This article explores what all that means now and looking ahead.

Understanding the ‘without prejudice’ concept in context

The WP principle is a widely recognised rule of evidence in common law jurisdictions, including the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM). It protects statements, offers or admissions made during settlement negotiations from being used as evidence in legal proceedings. This doctrine promotes candid settlement discussions by ensuring that parties can negotiate freely without fear that their statements will be used against them in court.

The onshore civil law-based UAE courts have historically lacked an equivalent doctrine. Consequently, onshore courts would admit evidence from settlement communications. This has discouraged parties from engaging in open settlement discussions.

Recent developments: Case No. 486/2024

The Dubai Court of Cassation recently issued a landmark Judgment that, for the first time, regarded settlement communications as inadmissible in evidence. This marks a significant departure from its traditional approach and reflects a shift towards international norms.

Despite this development, UAE onshore courts do not adhere to a system of binding judicial precedent. No court in the UAE would be bound by this decision.

However, this Judgment could be used by parties in future to persuade the UAE Courts that settlement negotiations should not be treated as admissions. If successful, and a number of similar decisions are made, parties could see WP protections recognised more consistently, or even perhaps expressly written into UAE law. Such a move would enhance the UAE’s appeal as a hub for business and dispute resolution.

Implications for legal practice and dispute resolution

It remains to be seen whether UAE onshore courts or lawmakers will adopt these WP protections going forward. The Judgment could be a one-off exception to the norm, or it could be the first step of an evolution in the Dubai (and possibly the UAE) Courts.

Such an evolution is likely to be readily embraced by clients and practitioners alike for the following reasons:

• Encouraging parties to seek settlements: WP protections would facilitate more candid settlement discussions, fostering early dispute resolution. This is particularly important in commercial disputes where swift settlements can preserve business relationships and reduce legal costs.
• Discouraging Bad Faith Negotiations: The protection of WP communications also discourages parties from exploiting settlement discussions to obtain evidence and/or gain an advantage in subsequent Court proceedings.
• Alignment with International Norms: Recognizing WP protections would make the UAE a more attractive jurisdiction for international businesses, reassuring parties in cross-border disputes that their settlement efforts will not prejudice them in UAE onshore proceedings.
• Less formal measures required for confidentiality: Parties would no longer need to rely solely on non-disclosure agreements or specific statutes to ensure confidentiality during settlement discussions.

Practical considerations for lawyers

• Caution Remains Key: Until WP protections are routinely applied, practitioners should continue advising clients to avoid making written offers or compromises without confidentiality safeguards.
• Marking Communications Clearly: Label settlement communications ‘without prejudice’. This could strengthen an argument that they should not be admissible as evidence.
• Use Alternative Dispute Resolution (ADR): ADR mechanisms, such as mediation, expert determination, and arbitration, inherently offer confidentiality and provide structured environments for settlement discussions.
• Reference the Judgment: While not binding, practitioners should consider citing the recent Dubai Court of Cassation Judgment to persuade courts to exclude settlement communications.

What lies ahead?

The recent Judgment represents a promising step towards recognising WP protections in UAE onshore courts. However, the concept is not codified in UAE law. Whether WP protections will be formalised through legislation or consistent judicial application remains to be seen.

Formal adoption of WP protections would provide greater clarity and certainty for parties engaging in settlement negotiations, fostering further confidence in the UAE’s legal system. Until then, parties must proceed with caution and seek professional legal advice to safeguard their interests during settlement discussions.

For now, the recognition of WP in Dubai courts - even in its infancy - is a positive development. It holds the potential to align the UAE’s legal framework more closely with international standards, enhancing its reputation as a premier destination for business and dispute resolution.