The words WITHOUT PREJUDICE are often added to correspondence as if they were a legal version of abracadabra. They are not.
Under English law, without prejudice protection applies to genuine attempts to settle an existing dispute. Its purpose is to allow parties to negotiate freely, without offers and concessions later being used against them on the merits of the case.
Suppose a party presents a demurrage claim for USD 1 million and offers to settle it for USD 400,000. This is a genuine settlement proposal in an existing dispute. It will usually be protected by the without prejudice rule.
But adding WITHOUT PREJUDICE to an ordinary demand letter does not make it confidential or inadmissible.
Payment is overdue. Please remit USD 2,000,000 immediately, failing which we will commence arbitration.
This is a demand for payment, not a settlement offer. The sender is insisting on full performance and making no concession. The heading does not change the substance of the letter.
The reverse is also true. A genuine settlement exchange may be protected even if nobody uses the words WITHOUT PREJUDICE.
A court or tribunal will look at what the parties were actually doing:
If the answer is yes, the protection may apply regardless of the label. If the answer is no, the label alone will not create it.
Before marking a letter WITHOUT PREJUDICE, ask whether it is genuinely part of settlement negotiations.
Without prejudice protection depends on the substance of the communication, not the words typed at the top.