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The CAT considers the threshold for without prejudice privilege in Sportradar AG v Football DataCo Limited

Overview

In a recent decision of the Competition Appeal Tribunal ("CAT"), the CAT held that an email inadvertently disclosed by a party was protected by without prejudice privilege ("WPP").

The purpose of WPP is to protect communications between parties that are aimed at resolving a dispute from being put before the court.  This enables parties to communicate constructively to reach settlement without fear that any statements or admissions made in those communications may prejudice their position in the ongoing legal proceedings.

In its ruling, the CAT indicated that the threshold at which litigation is in contemplation in order for WPP to arise may be lower than that for litigation privilege.

The judgment also contains a helpful summary of the key legal principles underpinning WPP, and endorses the courts' broad approach to the application of this rule.  In particular, the CAT confirmed that a communication is covered by WPP where the aim of that communication is the settlement of a dispute, even if it also covers other commercial matters that may be part of a broader negotiation.

Background

On 1 July 2022, the CAT ruled on competing applications brought by Football DataCo Limited ("FDC"), supported by BetGenius Limited and Genius Sports Group Limited ("Genius"), and Sportrader AG and Sportradar UK Limited ("Sportradar").

The applications related to the disclosure of a document by FDC to Sportradar in the course of proceedings. The document, known as FDC-775, was a Board Paper which contained in Appendix 1 a copy of the body of an email from FDC to Genius (the "Email"). Although FDC-775 contained a number of redactions, the Email was unredacted and it did not include the original subject line of "Private & Confidential / Without Prejudice". FDC argued that the disclosure of the Email was inadvertent and that it was protected by WPP, and that it should be returned and replaced with a redacted copy. In contrast, Sportradar applied for an order permitting it to rely on FDC-775 as disclosed.

The CAT's judgment considered two key questions:

  1. Was the Email protected by WPP in circumstances where it covered numerous commercial issues as well as a point of dispute?

  2. If the aim of the Email was to reach an agreed position on the point of dispute, had that issue matured sufficiently to establish WPP?
The Email

The Email, dated 26 February 2021, referred to the contractual arrangements between FDC and Genius: FDC had granted Genius exclusive rights to live match data from certain football events for betting purposes, which were subject to an upcoming three-year break point. The Email proposed an arrangement whereby FDC would not exercise its upcoming termination right on the condition that Genius agreed to certain terms set out within the Email.

One proposed term related to the scope of indemnity provisions in the contract (the "Indemnity"), which was a point of disagreement between FDC and Genius. The remaining points were commercial points or related to the litigation with Sportradar. FDC averred that the purpose of the Email was to propose terms to either resolve the Indemnity disagreement or terminate the relationship, noting that the Email concluded with FDC stating that if the terms were not acceptable to Genius then "we all need time to pursue a different path".

In August 2021, FDC and Genius entered into a deed to vary the contractual arrangements (the "Variation Deed"), which recorded FDC's revocation of a termination notice that it had issued in the interim, the agreement to resolve the Indemnity issue and agreement on the other items included within the Email.

Key legal principles

The CAT considered the following legal principles to inform its decision:

  • WPP is founded on public policy aims of encouraging parties to reach settlement. It is a broad rule, covering oral and written communications, that aims to exclude all negotiations that genuinely strive for settlement from being admissible as evidence.

  • A document being headed 'without prejudice' indicates that the author intended for the document to be treated as part of a negotiation process where admissions may be made, but this is not conclusive as to the document's status.

  • WPP does not solely relate to protecting negotiations aimed at resolving legal issues. If the criteria for "genuinely aimed at settlement" is met, the nature of the proposals or the character of the argument is irrelevant.

  • The relevant test for likelihood of litigation in order for WPP to apply is "whether in the course of negotiations the parties contemplated or might have reasonably contemplated litigation if they could not agree."

  • Where litigation has not commenced, WPP should not extend further than necessary to encourage parties to settle their differences without litigation. In determining this, the courts have taken a generous view on what is covered to ensure that parties can speak freely when seeking compromise or settlement.
The CAT's analysis

Nature of the Email

The CAT determined that the Email was part of a negotiation aimed at settlement of the Indemnity issue, which was brought into discussions alongside other matters including FDC's ability to exercise its termination rights. The fact that the settlement of the Indemnity issue was raised in the Variation Deed made this clear.

The CAT noted that this was consistent with the author of the Email labelling it "Private & Confidential / Without Prejudice" in the subject title. Although not determinative, this provided a strong indication that the Email was created in an attempt to settle a dispute.

The CAT rejected Sportradar's argument that the Indemnity issue was so subsidiary to other commercial matters in the negotiation that WPP did not arise. The CAT took a pragmatic approach, reaffirming the importance of protecting communications aimed at settlement and observing that:

  • There is no case law to indicate that there is a test under which the resolution of a point in dispute must be the "essential aim" of a negotiation, thus retaining the established broad approach to the WPP rule;

  • It is not unusual for parties to a dispute to bring into account commercial matters; it would be artificial and impracticable to separate those issues, and contrary to the principle of encouraging parties to resolve their disputes;

  • The negotiation was a genuine attempt to settle the Indemnity dispute; there was no indication that the parties sought to abuse the privilege by seeking to cloak a commercial negotiation as privileged by bringing in an unconnected dispute; and

  • FDC's threat to terminate the contractual relationship did not change the analysis; parties will deploy their respective points of leverage to better their position in a negotiation and to bring about a settlement, which is consistent with the principles of WPP.

 

Litigation in contemplation

The CAT noted that the test for litigation being in contemplation for WPP to arise "should not be confused with the test that applies to the application of litigation privilege". WPP has a distinct test where the question is whether the parties had contemplated, or might reasonably have contemplated, litigation in the event they did not reach an agreement.

The CAT considered that the Indemnity issue concerned a dispute over a significant amount of money and the Email expressed FDC's intent to pursue a different path in the event agreement was not reached. This was sufficient evidence to conclude that the parties might reasonably have contemplated litigation if they had not agreed to a resolution, even though litigation had not commenced and there were no expressions of strengths or weaknesses of the parties' positions within the Email.

Conclusion

Parties to a potential dispute can continue to be confident in the protection that WPP affords to communications aimed at resolving the dispute, both in advance of and during proceedings. The CAT has indicated that the threshold for WPP to apply is arguably lower than that for litigation privilege, and Sportradar's attempts to narrow the scope of WPP have been rebuffed.

On a more practical front, parties would be well advised to retain any marker on a document indicating that privilege applies when forwarding that document or an extract of it.  In this case, had the original "Private & Confidential / Without Prejudice" subject title been included in Appendix 1, it is more likely that the Email would have been redacted prior to disclosure and the time and costs of these court applications avoided.

Read the full judgment

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