Member Article

Confidentiality and the Mediation Process

With Watson Burton LLP Law Firm

Since Alternative Dispute Resolution was recognised in the Civil Procedure Rules in 1999, the number of mediations conducted within the litigation process has continued to increase and has been actively encouraged by the Courts in furthering the overriding objective of enabling the Court to deal with cases justly.

Mediation can be a more flexible and cheaper non-binding alternative to pursuing a claim to trial and parties to a dispute must think very carefully before refusing to mediate. However, for mediation to continue as a successful tool in the litigation process, it is important that all conduct during mediation remains confidential, whether or not a settlement is reached. The ‘without prejudice rule’ exists to protect mediation as well as party to party negotiations and allows the parties to settle a dispute without any discussions being used against them in any subsequent litigation. In order to protect themselves further, the parties to the mediation and the mediator will usually enter into a confidentiality agreement. However, despite this protection, recent case law has revealed that there are some instances where exceptions will be made and details from the mediation itself will be considered outside of the mediation.

In the 2007 case of Brown v Rice and Patel the parties had entered into a mediation agreement with standard confidentiality clauses and a provision that no agreement would be binding until it was written and signed by or on behalf of the parties. The mediation did not settle on the day. Brown claimed that Patel had bound herself to leave open, defined settlement terms for acceptance until noon the following day. Brown claimed that he had accepted those terms before the deadline. However, Patel denied that any such agreement had been made. In order to establish whether an agreement had taken place, the Court rejected a plea of ‘mediation privilege’, relying on the exception to the rule as set out in a 2001 case (’Unilever’) and confirmed that ‘without prejudice communications’ could be admitted in evidence to establish whether or not a settlement had been reached. The Judge admitted evidence of offers made by each side during the mediation, including contents of the notes of the mediation meeting and the mediator’s notes about the offers, and referred to subsequent email correspondence between the parties and the mediator.

On the facts of Brown v Rice, the Judge held that there had not been a settlement but, in his judgment, an acceptance made after the conclusion of mediation is just as much made in the mediation as if it was made at the mediation itself. He also stated that if there had been valid offer and acceptance it would have resulted in settlement within the terms of the agreement despite the fact that no written settlement had been finalised.

In the 2007 case of Chantrey Vellacott v Convergance Group plc the Defendants lost at trial and the Claimants sought to recover costs from a failed mediation that had been carried out three years earlier. The Judge considered what offers had been exchanged during and after the mediation and awarded the Claimants their mediation costs as the Defendants had acted unreasonably in their approach throughout the litigation process. This highlights the reliance on evidence of conduct during the mediation process in subsequent litigation and the need to act in a reasonable manner throughout.

In the majority of mediation cases today, confidentiality remains protected but the cases of Brown and Chantrey, for example, show that the Judge can consider the negotiations carried out during the mediation process where settlement issues and costs are in dispute and the Court can find exceptions to overcome the protection of confidentiality and without prejudice negotiations (Unilever).

In order to make sure that the mediation process continues to prosper, it is important that it remains confidential and, perhaps in the light of recent case law, some statutory guidance may be required. Whilst this has been encouraged by an EU Draft Directive on mediation (COM (2004) 718), whether such a step will be taken remains to be seen.

If you have any queries regarding this article or any other litigation issues please do not hesitate to contact Victoria Ferguson on victoria.ferguson@watsonburton.com.

This was posted in Bdaily's Members' News section by Ruth Mitchell .