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Just exactly how confidential are mediation proceedings?

14 December 2020 | Ken McEwan

Most lawyers will say as an article of faith that the confidentiality agreement which the parties sign up to ahead of the mediation is sacrosanct, as is the litigation privilege to which such proceedings are subject.

However, in a recent case in which Ken McEwan, Head of Personal Dispute Resolution at GL Law acted for the Claimant, the Defendants made a determined effort to open up the mediation proceedings to judicial scrutiny. They went as far as claiming the right to call the mediator to give evidence of what occurred at the mediation itself.

The Defendants alleged that an agreement reached at a mediation was based on works they had agreed to carry out costing in the region of £70,000, whereas the actual cost had risen to £2m. They argued the agreement could not be enforced because:

  1. The terms were too uncertain.
  2. The works were now impossible to perform, and the contract was frustrated.
  3. The parties had entered the agreement by reasons of mistake and a fundamental mis-apprehension and or misrepresentation on the Claimant’s part.

The Defendant’s sought to support their position by introducing evidence and documents as to how the agreement was and upon what facts it was based. The Claimant naturally opposed the application relying upon the confidentiality agreement signed by all parties and the privileged nature of the proceedings. He also argued  the agreement spoke for itself and did not require extraneous evidence to interpret it.

The starting point is Part 14 of the civil Procedure Rules which states as follow:

Part 14.18 states  It is very important, for reasons of public policy, that communications between parties to a mediation, and between those parties and the mediator, remain private and confidential. The courts will, generally, be ready to enforce the cloak of confidentiality.

“………. Essentially, when considering whether matters in relation to a particular mediation

should remain confidential, the court will usually be involved in a careful public policy balancing act, weighing the importance of encouraging the parties to settle against, for example, some kind of impropriety.”

(B) However, in the case Farm Assist 2 the judge said:

“………. The court will generally uphold that confidentiality, but where it is necessary in the

interests of justice for evidence to be given of confidential matters the court will permit that evidence to be produced.”

So, there are exceptions. Some of these were listed in the case Unilever v Proctor and Gamble 2000:

  1. where the issue was whether the without prejudice communications had resulted in a concluded settlement agreement being reached;
  2. where it was admissible to show that an agreement apparently concluded between the parties during negotiations should be set aside on the ground of misrepresentation, fraud or undue influence;
  3. where a statement might be admissible as giving rise to an estoppel;
  4. where the exclusion of the evidence would act as a cloak for perjury, blackmail or other unambiguous impropriety;
  5. where the evidence was admissible in order to explain delay or apparent acquiescence;
  6. where, in an action for negligence, the evidence was admissible to show that the claimant had acted reasonably to mitigate his loss in his conduct and conclusion of negotiations brought by him against a third party;
  7. where the evidence was admissible as being an offer made without prejudice save as to costs

This decision was approved in the case Oceanbulk Shipping Trading SA v TMT Asia Limited 2010 where it was held  that evidence of pre-contract ‘without prejudice’ discussions and communications are admissible in a hearing when courts are looking at the ‘factual matrix’ as an aid to interpretation. In particular Lord Clarke set out at para 40 that:

In these circumstances, I see no reason why the ordinary principles governing the interpretation of a settlement agreement should be any different regardless of whether the negotiations which led to it were without prejudice. The language should be construed in the same way and the question posed by Lord Hoffmann should be the same, namely what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. That background knowledge may well include objective facts communicated by one party to the other in the course of the negotiations. As I see it, the process of interpretation should in principle be the same, whether the negotiations were without prejudice or not. In both cases the evidence is admitted in order to enable the court to make an objective assessment of the parties’ intentions.

The Defendants sought to rely upon this analysis exception, but in fact the judge held that there was no ambiguity in the words of the agreement used and therefore there was no need to introduce confidential or without prejudice information to understand it.

The fact is however the confidentiality agreement and the professional privilege may not be as watertight as one might think.

To contact Ken McEwan please call 0117 906 9400 or email k.mcewan@gl.law

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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