Prince Andrew and the complexity of settlement agreements

A judge in America has ruled that Prince Andrew cannot rely on a settlement agreement reached between Virginia Giuffre and Jeffrey Epstein to avoid a trial of claims against him. 

Although the decision is of course not on construction law, nor even on the law of England and Wales, it does shine some light on typical issues around settlement and reaching agreements generally.

The agreement that Prince Andrew tried to rely on said that it included settlement of claims by anyone that “could have been included as a potential defendant” in an action between Ms Giuffre and Mr Epstein back in 2009. Prince Andrew – raising a few eyebrows – said that included him, because the case itself apparently referred to royalty, although it did not mention Prince Andrew specifically. On this point, the judge said that it was a principle that where there was ambiguity, that must be resolved by a trial of fact – ordinarily a jury trial. So it wasn’t appropriate for this to be resolved on what was effectively an interim motion before the judge only.

The judge then considered whether Prince Andrew would be able to enforce the agreement even if he did come under the ‘potential defendant’ bracket – which a later jury might still find that he did. He noted that it was a general principle that only parties to a contract can enforce its terms (which is also the position under English law, although the Contracts (Rights of Third Parties) Act 1999 (“the 1999 Act”) changes this in some instances) – the only way round that was if the original parties (Giuffre and Epstein) had clearly intended that the agreement was directly and substantially to benefit Prince Andrew. The fact that there was a confidentiality clause which prevented disclosure to Prince Andrew, and an explicit provision that the parties “agree that the terms of this Settlement Agreement are not intended to be used by any other person”, suggested this was not the case. But at best, the agreement was ‘reasonably susceptible to more than one interpretation’ and so again, couldn’t lead to the dismissal of the claim without a trial.

So Prince Andrew will now have to defend the claims on their merits – or hope that these technical defences have better luck before a jury. Either way, unless a settlement can be reached, his hoped for outcome of avoiding a potentially damaging trial appears to have failed.

But what can we learn from this in the world of construction disputes?

Most importantly, the case shows that settlement agreements are complex. They frequently seek to settle not just specific claims that have been made, but others that might be made – and sometimes which might not even be known about or at that point exist. Clean break settlements such as this can make a lot of sense when parties’ relationships have broken down, and one party pays out more than they might think is due but in return, wants the security that a line has been drawn under the entire thing. But particularly for the claiming party, they should be wary of defining releases too widely, for risk of losing out on claims that they didn’t intend to settle.

One of the problems with settlement agreements is that they invariably come at the end of a long and bitter disputes process, where all parties are tired. Frequently the parties will be to at least some extent dissatisfied with a settlement – typically to arrive at a settlement concessions will have had to be made on both sides – so are at a point where they just want the agreement done so they can move on. That is understandable – but carries risk if they are not careful in thinking about and drafting the terms of settlement. Parties should pause and think about what they are intending to settle and, just as importantly, what they’re not intending to settle. And if they want another party to be able to rely on the settlement – such as related parties – they need to ensure they are made a party to the agreement or they have properly invoked the 1999 Act.

Carolyn wrote in a recent article about the importance of documenting agreements at all: that stemmed from a case where parties had agreed a settlement of liquidated damages and loss and expense claims on a phone call, but one party later argued they hadn’t. Nothing was recorded in writing in that case, and that led to a dispute. The Prince Andrew saga shows that even where agreements are properly documented – and indeed, drafted by no doubt well paid lawyers – uncertainty can still creep in.

Virginia Giuffre will be able to pursue her claim for now – but a trial might yet find that her settlement with Epstein was inadvertently wide. Careful consideration of exactly what a settlement agreement is trying to achieve, and setting that out plainly, can help avoid later disputes. And after spending so much time settling an initial dispute, a dispute about that settlement is the last thing anyone wants.

We’re experts in construction disputes. If you have a dispute that you’d like to discuss, we can help – just get in touch.

Note on the picture: we know judges don’t use gavels in England – but excuse us this opportunity to use a picture of one as it concerns an American case!