Competition Appeal Tribunal considers when there is a dispute sufficient to give rise to without prejudice privilege

In a recent decision, the Competition Appeal Tribunal (CAT) held that an email was protected by without prejudice privilege, where it sought to resolve a dispute about interpretation of a contractual indemnity as well as various commercial issues: Sportradar AG v Football Dataco Ltd [2022] CAT 29.

The without prejudice rule means that evidence of negotiations aimed at resolving a dispute are inadmissible and cannot be relied on by either party, unless both waive the privilege. The present decision is of interest for its discussion of when there is a dispute sufficient to give rise to the application of the rule. In particular, the decision suggests that there may be a lower threshold than for when litigation is in "reasonable contemplation" for the purposes of litigation privilege - though it seems likely that in most cases the two will go hand in hand. The test in the context of without prejudice privilege is whether, assessed objectively, the parties "have contemplated or might reasonably have contemplated litigation if they did not agree".

The decision also finds, unsurprisingly, that without prejudice privilege will apply to the whole of a negotiation aimed at settling a dispute, including discussions about commercial matters which may not form part of the dispute itself but which are brought into account in the negotiations. There is no scope for separating out primary and secondary aims of the negotiation and applying the protection only to the former.

Background

As part of its disclosure in proceedings before the CAT and the High Court, FDC disclosed to Genius and Sportradar a Board Paper which included, as Appendix 1, a copy of the body of an email from an FDC employee to a Genius employee. The email itself, but not the version reproduced in Appendix 1, was headed "Private & Confidential / Without Prejudice".

FDC said that Appendix 1 should have been redacted on the basis of without prejudice privilege (or common interest privilege, though this argument was not ultimately pursued), and that the unredacted version had been provided in error. It sought to have the document returned and replaced with a redacted copy.

Sportradar did not accept that the document was protected by privilege and applied for an order permitting it to rely on the document.

It was agreed that the CAT's decision on the applications would determine the status of the document in the High Court proceedings as well.

The email which was replicated in Appendix 1 noted that the contractual arrangements between FDC and Genius were subject to a three-year break point, which would arise in the next few months. It proposed a deal by which FDC would not exercise the termination right in return for Genius's agreement to six items listed in the email, including as to FDC's interpretation of an indemnity contained in the contract as well as a number of commercial points.

FDC's evidence was that the indemnity had been the subject of disagreement between itself and Genius, and that the email amounted to FDC setting out terms either to resolve the indemnity issue or to terminate the commercial relationship. Some months after the email, FDC and Genius had entered into a deed of variation recording (among other things) FDC's revocation of its termination notice and terms to resolve the indemnity issue.

By the time of the hearing, there were two issues in dispute:

1. whether the email was covered by without prejudice privilege, in circumstances where it addressed a number of commercial issues as well as the indemnity issue; and
2. whether the indemnity issue had matured into a dispute sufficient to enable the email to be covered by without prejudice privilege.

Decision

The CAT (Ben Tideswell, Chair) held that the email was subject to without prejudice privilege in its entirety. Therefore Sportradar was not entitled to use any of its contents, including those parts of the Board Paper and Appendix 1 which referred to or replicated it.

There had been a dispute between FDC and Genius about the indemnity. This issue was settled alongside FDC giving up its right to terminate, as set out in the variation deed. The email was therefore part of a negotiation which was genuinely aimed at settlement of, among other things, the indemnity issue. That was consistent with the labelling of the email which, while not determinative, was a strong indication that it was created in an attempt to settle matters in dispute.

The CAT did not accept Sportradar's argument that the indemnity issue was so subsidiary to other commercial matters in the negotiation that without prejudice privilege did not arise. There was no authority for separating out the primary aims of a negotiation from subsidiary ones. Negotiating parties will often bring into account commercial matters which are not part of the historical dispute, and to separate these out would be artificial as well as impracticable, leading to uncertainty as to what was or was not covered, which would be contrary to the public policy rationale of encouraging parties to resolve disputes without litigating.

As to whether there was a dispute sufficient to give rise to without prejudice privilege, the CAT noted that, as Sportradar had acknowledged, the test was "not to be confused with the test that applies to the application of litigation privilege", ie whether litigation is in "reasonable contemplation". The question is whether, assessed objectively, the parties have contemplated or might reasonably have contemplated litigation if they did not agree. Here there was sufficient evidence to conclude that this test was met.