27 September 2021|
Prince Andrew Settlement Agreements
In August 2021, Virginia Giuffre sued Prince Andrew for battery and emotional distress, saying that she was sexually abused by him and forced to have sex with him on multiple occasions whilst under the age of 18. This is the most recent incident in the ongoing scandal surrounding Prince Andrew following his association with the late financier and sex offender Jeffrey Epstein. In a court hearing on Monday 13 September 2021, lawyers for Prince Andrew argued in federal court that a settlement agreement protects him from liability in the lawsuit brought by Ms Giuffre.
Alan Dershowitz, Epstein’s former defence attorney, last week requested that Judge Loretta Preska (who is presiding over a separate lawsuit brought by Giuffre against Dershowitz himself) allow him to provide Prince Andrew’s lawyers with a copy of the settlement agreement and general release of claims agreed to by Giuffre and Epstein in her 2009 lawsuit against Epstein. Last month, Giuffre dropped her sexual battery lawsuit against Alan Dershowitz after he invoked this part of the 2009 settlement agreement. “The same reasons for dismissing the case against me seem to apply to Prince Andrew,” Dershowitz said in a statement. “These documents should get the charges against Prince Andrew thrown out.”
The exact content of the settlement agreement and the relevant clause are still not known. However, assuming that the clause does, on its face, waive Giuffre’s claims against Prince Andrew as part of a general release of claims against third parties, would such a clause be enforceable here under the laws of England and Wales? Let’s assume that the agreement is not invalidated for any other reason, such as duress. For the purposes of addressing this question, it will also be assumed here that a claim like Giuffre’s would be made as one for personal injury, unless another alternative is explicitly stated.
The law is clear that this type of clause, i.e. a ‘release of claims’ clause, is permissible in settlement agreements made in England and Wales. However, it would have to be carefully and explicitly worded and the parties must have complete knowledge of the scope of what they are agreeing to.
An analogous issue was discussed by the House of Lords (as the Supreme Court was known until October 2009) in BCCI v Ali and Others  UKHL 8. There, the House of Lords had to consider whether clauses waiving a claimant’s rights in relation to future claims are permissible. The Court said that such clauses should be interpreted by giving the words “the meaning which ought reasonably to be ascribed to those words having due regard to the purpose of the contract and the circumstances in which the contract was made.” Lord Bingham stated that parties could waive their right to make future claims, even ones of which they were not aware or could not be aware, but that “clear language” was required in order to do this.
This case also made clear that this principle is constrained by the remedy of ‘sharp practice’ whereby it is not permissible for a party to withhold disclosure of a claim or potential claim that they are aware that the other party could bring in the process of agreeing a release clause. Lord Nicholls and Lord Hoffmann stated that where a party withholds information in this way, the release clause will not be enforceable. However, it has been made clear in subsequent case-law that the doctrine of sharp practice will not automatically apply in all cases and the Court will not intervene with freedom of contract where it is clear that the parties have sought to address the risk of unknown claims (Yukos Hydrocarbons Investments Ltd v Georgiades and another  EWHC 173).
What is also clear from Ali, and how it has been applied in subsequent case-law, is that such release clauses can cover both future claims arising out of past acts (i.e. pre-dating the settlement agreement) and future claims arising out of future acts. However, it was stated in the recent case of Vugts v Christie  EWHC 2270, which cites Ali, that the release of future claims arising out of future acts is possible but requires “strong words” which make that intended result clear, more so than if the future claim relates to past acts.
Importantly, the principle in BCCI v Ali was applied in the recent case of Maranello Rosso Ltd v Lohomij BV  EWHC 2452 (Ch), where the High Court upheld a release clause that sought to waive all future claims, including against individuals who were not a party to the agreement. This type of clause is particularly relevant in the case of Prince Andrew given that the relevant 2009 settlement agreement was between Ms Giuffre and Epstein. The Court in Maranello Rosso held that the waiver of claims against third parties was enforceable because the clause which stated who benefitted from the release was sufficiently “wide and far-reaching” to capture the defendant – the clause clearly stating that the waiver covered parties against whom no allegations had yet been made, as well as ‘Agents and Affiliates’ (as defined in the agreement).
A similar clause was upheld in Starlight Shipping Company and Allianz Marine and Aviation Versicherungs AG and others  EWHC 3068 (Comm), where the clause waived any and all claims arising out of an insurance policy, including future claims the Claimant may have had, against individuals who were not a party to the agreement. This finding was based on the fact that the phrase ‘underwriters’ was used to define who could benefit from the waiver and this was deemed to be sufficiently wide so as to cover the underwriters’ servants and agents who were not a party to the agreement.
What these authorities make clear is that release clauses can waive future claims against third parties, as well as parties to the agreement. Clauses can also be wide in terms of the range of third-party individuals they cover, however, they have to remain clear and specific. Therefore, this range of individuals would have to be expressed in explicit terms, for example, ‘all employees of the HR Department of the company.’
Based on the authorities set out above, it would be legally valid for a settlement agreement made in England and Wales to include the type of clause we envisage Prince Andrew is seeking to rely on. However, it is likely that clause would have to be worded in such a way that it was very clear that it waived all future claims of the sort envisaged by the Epstein settlement agreement, for example, claims for sexual abuse and/or personal injury. If it was to prevent claims against ‘associates’ (which would arguably include Prince Andrew) the agreement would need to define ‘associates,’ but we do not believe that it would need to name the third parties specifically in order to be enforceable by that associate. The definition of associate would need to be clear and would be more likely to be enforceable if the victim waiving their claims understood fully the remit of the term. For example, the definition could simply capture those ‘associates of Epstein to whom an introduction to the victim was made by Epstein in person or by any other means of communication.’
As further example: a Claimant, Ms A, may have been subjected to sexual abuse and harassment by the owner of a business, Mr B. Mr B might have also introduced her to his associates and arranged and encouraged further abuse and harassment of Ms A by his associates. Were she later to bring a claim against him for personal injury relating to the sexual abuse and harassment and this were to settle, the agreement could include a clause that sought to release all of Ms A’s claims against Mr B and his associates relating to the relevant conduct. Such a clause might be worded in the following way:
“You will not bring any future claims against Mr B or any claim against any third party relating to any conduct which gives rise to a cause of action in personal injury where an introduction was made to that person via or through Mr B and the conduct complained of was arranged and/or facilitated by Mr B.”
As this type of release clause is highly likely to be legally enforceable in England and Wales, it is thus important that claimants are clear on exactly what they are agreeing to at the time an agreement is made. Practitioners should also give clear advice to their clients who are waiving their rights as to what the practical consequences of such a clause would be.
Employment law issues may also be relevant here, depending on the circumstances. It may be recalled that the abuse of Ms Giuffre occurred whilst she was, on the face of things, employed as a message therapist by Jeffrey Epstein. Case-law has made clear that release of future claims clauses are permissible to include in settlement agreements made in England and Wales in the employment context and will be enforceable provided the language used leaves no room to doubt that release is the parties’ intention (Hilton UK Hotels v Naughton EATS/0059/04).
The principle of double recovery may also be relevant here. This prevents the Claimant claiming for the same losses twice against two different parties. This may be an argument Prince Andrew’s lawyers seek to run. However, the argument could be made that in the scenario where the alleged conduct resulted in separate traumas, the double recovery principle would not prevent two distinct personal injury claims being made, provided there was no overlap.
Readers are also reminded of the SRA’s Warning Notice on non-disclosure agreements (NDAs). NDAs are confidentiality clauses which are often included in settlement agreements. The SRA Warning Notice makes clear that NDAs cannot be used within settlement agreements to prevent a Claimant from talking to lawyers or the Police about unlawful conduct, nor can they be used to attempt to cover up such conduct. ACAS have published guidance on the use of NDAs which is in a similar vein – a Farore Law blog on this guidance can be found here.