Court of Appeal takes a restricted view of Litigation privilege in the context of settlement discussions

Following from its decision in SFO v Eurasian Natural Resources Corporation [2018] EWCA Civ 2006 that litigation privilege applied to documents concerned with the settlement or avoidance of litigation the Court of Appeal considered the extent of that application in WH Holding Limited & Anor v E 20 Stadium LLP [2018] EWCA Civ 2652. It held that the privilege did not extend to documents that were created ‘…with the dominant purpose of discussing a commercial settlement of the dispute when litigation…was in contemplation’ because such documents did not fall within the principle that to be protected the communication must be for the sole or dominant purpose of ‘obtaining information or advice’ in connection with the existing or contemplated litigation.

There are reasons for doubting the correctness or, indeed, the practicality of this decision. First, as Mr Justice Norris (whose decision was reversed on this point) said it may lead to the result that documents communicating an offer to settle would not be before the Court at trial but some of the discussions leading up to that offer would be.

Secondly, it may prove difficult to apply in practice. It may be difficult to draw the line between a communication within a company that is discussing a commercial settlement of the dispute and other communications concerning settlement. It is generally accepted that litigation privilege can be claimed by an unrepresented person.

Thirdly, it is unclear whether other forms of discussions relating to the settlement (prudential or strategic communications for example) also fall outwith the protection.

Finally, one might ask why communications discussing a commercial settlement cannot be described as communications ‘obtaining information’ in connection with actual or contemplated litigation. As the Court of Appeal itself pointed out in the ENRC case, there is a significant public interest in disputes being settled rather than litigated to judgment. That public interest surely dictates a practical and flexible approach to the extent of litigation privilege in this context.

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