In commercial litigation and pre-suit negotiations, parties frequently engage in settlement discussions to avoid protracted court battles. In an effort to protect such negotiations from later use in evidence, legal practitioners often label correspondence and offers with the phrase “without prejudice”. Despite its widespread use in legal practice, the legal effect of without prejudice communications is often misunderstood; it is not an automatic shield that renders all marked material inadmissible but rather operates within defined statutory and judicial parameters under Nigerian law.

The without prejudice rule refers to the principle that statements made in a genuine attempt to settle a dispute are inadmissible in evidence in subsequent legal proceedings between the parties. Where an offer or admission is made “without prejudice” or a motion is denied or a suit is dismissed without prejudice, it is meant as a declaration that no rights or privileges of the parties concerned are to be considered as thereby waived or lost except in so far as may be expressly conceded or decided……….

The protection applies whether the communication is oral or written.

For the rule to apply, two essential conditions must be satisfied:

1. There must be an existing dispute between the parties; and
2. The communication must have been made in a genuine attempt to settle that dispute.

It is settled law that merely marking a document “without prejudice” is not conclusive. Where a communication is not connected to settlement negotiations, the court may admit it notwithstanding the label. Conversely, where the substance of the communication shows a genuine attempt at settlement, the protection may apply even if the words “without prejudice” were not expressly used.

The without prejudice rule is a common law doctrine rooted in public policy. The rule serves two interrelated purposes:

1. To encourage parties to settle disputes amicably; and
2. To ensure fairness by preventing admissions made for settlement purposes from being used prejudicially.

Nigerian courts, through the reception of English common law, recognize and apply the without prejudice rule as part of the law of evidence. The rule complements statutory provisions on relevance and admissibility by excluding evidence on policy grounds, even where such evidence may otherwise be relevant.

It is therefore important to note that the without prejudice rule is applied to protect the joint interests of the parties engaged in settlement discussions. As a result, the protection is generally regarded as joint, not unilateral.

In light of this, one party cannot unilaterally waive the rule, because the rule protects both parties. Allowing unilateral waiver would undermine the confidence necessary for candid negotiation. Where both parties agree, the protection may be waived. This may occur expressly, through written agreement, or implicitly, where both parties rely on the communications in proceedings without objection.

The main statute governing the principle of ‘without prejudice’ in Nigeria is Section 196 of the Evidence Act which states:

“A statement in any document marked without prejudice made in the course of negotiation for a settlement of a dispute out of court, shall not be given in evidence in any civil proceedings in proof of the matters stated in it.”

This puts the common law principle of ‘without prejudice’ into writing in Nigerian statutes.

Additionally, Section 26 also support this legislation; the statutory foundation of the without prejudice rule may be traced to Section 26 of the Evidence Act 2011, which renders inadmissible any admission made upon an express or implied condition that such admission shall not be given in evidence. The provision reflects the common law policy that parties should be encouraged to engage in frank negotiations without fear that concessions made in the course of settlement discussions will later be used against them. Although section 26 does not expressly employ the phrase “without prejudice,” its effect substantially mirrors the doctrine, as communications made during genuine attempts at compromise are excluded from evidence where the circumstances indicate an intention that they should remain confidential. Accordingly, Nigerian courts have treated section 26 as reinforcing the common law position that the admissibility of such communications depends not on the label affixed to them, but on their substance and the context in which they were made.

In Nigeria, the courts have upheld that communications made in the course of genuine settlement negotiations are excluded from evidence even if they are not expressly labelled “without prejudice”. In Ashakacem Plc v. Asharatul Mubashurun Investment Ltd, the Supreme Court held that a letter written during mediation between disputing parties is inadmissible in subsequent proceedings whether or not it was expressly marked “without prejudice”, on the basis that settlement negotiations should be protected so that parties can speak freely and attempt resolution without fear that concessions will later be used against them.

Similarly, in Obande Obeya v. First Bank of Nigeria Plc, the Court of Appeal confirmed that an offer made “without prejudice” in the course of negotiation cannot be relied upon as evidence in a later suit, reinforcing the public policy underpinning the rule.

For commercial actors and legal practitioners, the without prejudice rule carries important practical implications:

a. Careless wording in correspondence may result in unintended admissions.

b. Parties should avoid mixing open communications with settlement discussions.

c. The misuse of the “without prejudice” label may lead to false expectations of protection.

d. Lawyers must clearly distinguish between negotiation correspondence and formal demands.

In commercial negotiations involving debt recovery, contract termination, or breach of agreement, proper use of the without prejudice rule can significantly affect litigation strategy.

In conclusion, the without prejudice rule plays a vital role in commercial dispute resolution by fostering open and frank settlement discussions. While the rule generally renders settlement communications inadmissible, its application depends on substance rather than form, and it is subject to carefully defined exceptions. Legal practitioners and commercial parties must therefore exercise caution and precision in their use of without prejudice communications to ensure that the intended protection is effectively achieved.

Eghonghon Akhimien Esq.

Junior Associate.