This article traces the origin and history of the use of ‘sealed offers’ as part of the ongoing negotiations between the parties engaged in litigation, with an objective to identify common principles which may be adopted in conducting international arbitrations. In common law jurisdictions, the sanctity of ‘without prejudice’ communications, is widely supported under the Evidence Acts, as well as by English case law. As an allegory to ‘without prejudice’ communications, the treatment of Sealed Offers and Calderbank Offers are established in English Courts as Civil Procedure Rules; and in Common Wealth countries, as Rules of Courts. However the treatment of ‘Sealed Offers’ in International Arbitrations is generally not regulated under the Arbitration Acts or in the Institutional Rules of Arbitrations, save for a few exceptions like in the Malaysian Arbitration Act. There have been some complexities in treating sealed offers and challenges faced by the arbitrators over the last five decades. The ambiguities and the treatment of sealed offers vary with the jurisdiction, and the background of, not only the arbitral tribunals but also the counsels of the parties represented. This article identifies the need for establishing common guidelines for practicing international arbitrators and discusses the findings, based on the review of cases and the survey of arbitration laws and procedures, of some major seats of arbitrations. In civil cases, it is a public policy (in the majority of the common law jurisdictions worldwide) that, parties should be given as many opportunities as possible to settle their disputes by amicable means, before proceeding with litigation through courts or arbitration proceedings. It is also a common practice to exchange ‘without prejudice’ offers of settlement between the parties. With an objective of encouraging settlements between the parties, ‘without prejudice’ documents or oral exchanges are therefore not admitted as evidence, in courts or in arbitration. The sanctity of this privilege to such ‘without prejudice’ exchanges in common law jurisdictions can be traced back in history to an English Case of ‘Walker v. Wilsher’, of 1889.[1][1] In this case defendants tried to use the ‘without prejudice’ communications for depriving the plaintiffs of the costs and were successful at the court of first instance. But in the appeal it was set aside. Lord Justice Bowen, as he then was, stated in his judgment that: It is most important that the door should not be shut against compromises, as would certainly be the case if letters written without prejudice and suggesting methods of compromise were liable to be read when a question of costs arose. The agreement that the letter is without prejudice ought, I think, to be carried out in its full integrity. Thus the mode, methods of negotiations for settlement and respective choices shall be a matter that remains between the parties and not for the courts to intervene. In Civil Law Jurisdictions, the sanctity of the ‘without prejudice’ communications is subject to the prevailing evidentiary privileges of the relevant jurisdiction; there is no canon adopted by civil law countries, on this subject. The focus of this article is on the prevailing practices in the common law jurisdictions, unless otherwise stated. An allegory to the ‘without prejudice’ negotiations is provided in the Civil Procedure Rules (‘CPR’) of England & Wales and Rules of Courts (‘ROC’) in several common law jurisdictions. This is termed as settlement offers by payment-in the courts, for cases where litigation has commenced and the trial is not yet started or underway.[2][2] Such offers to settle are concealed from the Judge until after the substantive issues have been dealt with. The existence of the settlement offer will be brought to the attention of the judge while making costs order. In special circumstances where payment-in court is not feasible, a Calderbank offer of a ‘without prejudice, save as to costs’ can be made; which is actually modification of the ‘Walker v. Wilsher’ without prejudice offer, and is well established since the Case of Calderbank v. Calderbank in 1976.[3][3] This is not a sealed offer unknown to the offeree, but nonetheless remains concealed from the judge until the decision on substantive issues has been given and issue of costs needs to be determined. In litigation through courts since the Calderbank Offers, the practice of settlement offers is long established through prescribed procedures and forms. The rules of the courts or CPR do not apply to arbitration. Also the arbitral tribunals are not bound by the Evidence Act or rules of evidence prevailing in courts at the seat of arbitration. Procedures like Calderbank Offer or sealed offers are a common knowledge in courts of England, arbitrations in UK and some common law jurisdictions. However in the Arbitration Act 1996 of England and international arbitrations in other jurisdictions, it is not mandatory. The tribunals are given wide discretion in awarding costs to the parties. In my view, a generalized statement that, ‘a sealed offer is an arbitration equivalent of payment-in courts’ is a misnomer. Though in very few international arbitration acts or the lex arbitri, makes a specific reference to a sealed or settlement offer, for example in the Malaysian Arbitration Act 2005, s44 (2) and Hong Kong Arbitration Ordinance of 2011, Cap. 609 s74 (2). In any event, arbitral tribunal is guided by such provisions and not bound unlike in Courts, when applying Rules of Court or CPR. The ‘offers for settlement’, ‘without prejudice’ communications, ‘sealed offers’ etcetera, are all part and parcel of the overall negotiation strategies adopted by the parties, in meeting their respective objectives, or reaching a compromise. Thus legislating one or more of such tools of negotiation, may, depending upon the circumstances, become a suppression of justice or unfair treatment of a financially weaker party. If the settlement offer is not accepted, the party may for fear of costs in context of uncertainty of the outcome of the trial or arbitration award, succumb to accepting the offer, however prejudicial it may be, to its case. This article is based on the survey inspired by the need to find the answers to some of the questions in the mind of international arbitrators, such as: 1) should the procedure for dealing with ‘offer to settle’ or ‘sealed offers’ in international arbitrations be harmonized? 2) Should the ‘payment-in’ type of procedures prevailing in courts be adopted in international arbitration? 3) Should such tactics be left to party autonomy, as the art of negotiations between the parties, without intervention of arbitral tribunals unless any evidence is submitted in substantiation of the issues in reference? During the survey, a review of arbitration acts, arbitration institutional rules and prevailing practices in some of the popular seats of arbitration in common law jurisdictions was carried out, including some of the excellent articles published on similar subject and case laws. The findings provided, can be useful for the practicing arbitrators, when conducting arbitration in different jurisdictions outside their home countries. The objective is to encourage the relevant legislative authorities to establish internationally accepted and harmonized treatment of ‘sealed offers’ type instruments of negotiations, in arbitrations. [1]: #fn-1 [2]: #fn-2 [3]: #fn-3