Confidentiality in the Model Law and the European Mediation Directive

A comparison of solutions offered in the Mediation Directive and the Model Law on Conciliation with examination of the actual situation in selected Civil and Common Law Countries


Master's Thesis, 2009

71 Pages, Grade: 1,5


Excerpt

Table of content

1. Introduction
1.1 Mediation/ Conciliation
1.2 Confidentiality

2. Confidentiality and Mediation Privilege in Civil-Law and Common-Law
2.1 Common Law
2.1.1 The “without prejudice rule”
2.1.1.1 England and Wales
2.1.1.2 United States
2.1.1.3 Australia
2.1.1.4 Criticism
2.1.2 Exceptions relating to disclosure of documents
2.1.2.1 Exceptions concerning the validity of the settlement agreement
2.1.2.1 (1) Investigation as to whether a settlement agreement was concluded
2.1.2.1 (2) Misrepresentation, fraud, threat, undue influence
2.1.2.1 (3) Estoppel
2.1.2.1 (4) Perjury, blackmail or other “unambiguous impropriety”
2.1.2.2 Exceptions in multi-party disputes
2.1.2.2 (1) General Rule: Rush & Tompkins Ltd v Greater London Council
2.1.2.2 (2) Reasonableness of mitigation: Muller v Linsley and Mortimer
2.1.2.2 (3) Distinct case relating to reasonableness of mitigation
2.1.3 Mediator privilege
2.1.4 Parties to the mediation
2.1.5 Conclusion
2.2 Mediation privilege in Civil - Law systems
2.2.1 Austria
2.2.2 Germany
2.2.3 Switzerland
2.2.4 France and Netherlands
2.2.5 Conclusion

3. Mediation Directive 2008/52/EC
3.1 Aims of the Directive
3.2 Scope of Application
3.2.1 cross-border mediation
3.2.2 Civil and commercial matters
3.2.3 Definition of Mediation
3.3 Art. 7 Confidentiality of mediation
3.3.1 Persons bound by art. 7 (1)
3.3.2 Civil commercial judicial proceedings and arbitration
3.3.3 Scope of confidentiality
3.3.4 Exceptions to confidentiality
3.3.5 Minimum Harmonisation in art. 7(2)
3.4 Options and problems for national legislation
3.4.1 Scope of application: What is mediation?
3.4.2 Right of Member State to enact broader provisions
3.4.3 Scope of confidentiality
3.5 Necessary changes in the Member States

4. UNCITRAL Model Law on International Commercial Conciliation of 2002
4.1 Scope of application
4.1.1 “International”
4.1.2 “Commercial”
4.1.3 “Conciliation”
4.2 Confidentiality rules
4.2.1 Art. 8 “Disclosure of information”
4.2.1.1 Definition of “information”
4.2.1.2 Disclosure of information
4.2.2 Art. 9 “Confidentiality”
4.2.3 Art. 10 “Admissibility of evidence in other proceedings”
4.2.3.1 Persons bound by art. 10
4.2.3.2 Kind of subsequent proceedings
4.2.3.3 Scope of the Privilege
4.2.3.4 Exceptions
4.2.4 Criticism

5. Comparison
5.1 Scope of application
5.1.1 Mediation/Concilation
5.1.2 “International”
5.2 Content of the provisions on confidentiality and mediation privilege
5.3 Persons bound to confidentiality
5.4 Concluding comment

Summary

Appendix A: Relevant provisions of the Directive 2008/58/EC of the European parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters

Appendix B: Relevant provisions of the UNCITRAL Model Law on International Commercial Conciliation 2002

Appendix C: Art 4-8 UMA

Appendix D: ADR Rules concerning confidentiality

ICC ADR Rules

LCIA ADR Rules

UNCITRAL Conciliation Rules

World Intellectual Property Organization Rules (WIPO)

Bibliography

1. Introduction

“International trade and commerce have grown rapidly with cross-border transactions being entered into by a growing number of entities, including small and medium-sized ones. With the increasing use of electronic commerce, where business is frequently conducted across national boundaries, the need for effective and efficient dispute resolution systems has be­come paramount.”[1]

Mediation and conciliation are Alternative Dispute Resolution (ADR) procedures, which serve as an alternative to litigation and can be characterised as dispute resolution based on the consent of the parties and taking place between them with the support of a third party. Media­tion and conciliation offer more cost-effective procedures than litigation and after negotiating and settling the issues in dispute by mutual agreement, both parties are more likely to be pleased with the outcome as the feeling of a win-win situation for both parties arises. To secure a situation where both parties are able and willing to speak frankly over the issues in dispute, confidentiality is a key feature of mediation.

This research paper evaluates how confidentiality in mediation is dealt with in different legal systems and whether improvements may be provided by implementation of the Directive on certain aspects of Mediation in Civil and Commercial Matters (hereafter “the Directive”)[2] and the UNCITRAL Model Law on International Commercial Conciliation (2002) (hereafter “the Model Law”).

It will commence with an explanation of the relevant definitions of mediation and confidenti­ality. Part 2 then examines confidentiality rules established in typical Common - Law and Civil - Law systems. The legal basis of confidentiality rules as well as their exceptions will be explored. Furthermore special reference is made to existing gaps in the rules which cause problems in practice.

Part 3 scrutinizes the Directive regarding its aims, scope of application and its confidentiality provisions. A further focus is put on existing gaps and challenging matters concerning the Directive and its implementation into national law. Subsequently the Model Law will be considered in Part 4 concerning the same issues as the discussion on the Directive. Finally in Part 5 the results are compared with each other and suggestions will be provided as to how mediation rules should deal with confidentiality issues to comprehensively.

1.1 Mediation/ Conciliation

“Mediation is a flexible process conducted confidentially in which a neutral person actively assists parties in working towards a negotiated agreement of a dispute or difference, with the parties in ultimate control of the decision to settle and the terms of resolution.”[3]

The terms “mediation” and “conciliation” are not used uniformly.[4] Sometimes mediation and conciliation are regarded as being interchangeable[5] while others draw a distinction based on the actual involvement of the third party.[6] In both, the conciliator and the mediator assist the parties in reaching a settlement through negotiation. Since the power of the mediator/ con­ciliator depends on the parties’ agreement and the criterion of the third person’s involvement is rather vague, there is no need to distinguish between conciliation and mediation.[7] Even though the Model Law applies the term “conciliation” in art. 1(3)[8], while art. 3(a) of the Di­rective[9] utilizes “mediation”, they both also state, that the choice of nomenclature does not matter. Therefore for purposes of this research paper no difference between the terms exists.

1.2 Confidentiality

A successful mediation demands that the parties and the mediator discover and understand the issues between the parties, the background and circumstances and the possibilities to over­come and settle the dispute.[10] It can occur that the scope of discussion becomes broader than the initial concern which was submitted to conciliation.[11] For the discussions to succeed it is crucial that the parties are willing to talk about matters normally not included in dispute reso­lution processes, particularly those that they consider sensitive or confidential.[12] Since the parties would be reticent during the mediation and less likely to settle the dispute, if they run the risk that information could be disclosed to third parties or made public or that one party could use statements or disclosures as evidence in arbitral or court proceedings after the fail­ure of mediation, safeguards to provide legal protection against unwanted disclosure of cer­tain facts and information are critical.[13] “These safeguards are the centrepiece of the media­tion regime and a particularly important reason why legislation on mediation is needed.”[14]

Confidentiality in mediation actually comprises a number of different features: The parties are not bound by concessions or admissions made in the mediation process in later court proceed­ings. Statements of the parties or proposals of the mediator cannot be referred to in later pro­ceedings as well.[15] Separable meetings between the mediator and one party only are held in private and are confidential, which means information given to the mediator is not passed to the other party without the first party’s permission.[16] Furthermore the mediator has no power or authority to judge the merits of a party’s case. The settlement decision is entirely up to the parties.[17] As a minimum, the mediation agreement regularly provides that nothing said during the proceedings is binding unless and until reduced to writing and signed by the parties.[18]

2. Confidentiality and Mediation Privilege in Civil-Law and Common-Law

In the following section, selected Civil-Law and Common-Law systems will be examined as to how they deal with confidentiality duties and mediation privileges.

2.1 Common Law

Regarding Common-Law countries, reference will be made to United States and Australian law, but the focus lies on English law. The reason is that English procedural law is the histori­cal basis for all procedural matters in Common-Law countries. Australian law does not di­verge much from its predecessor, so that only a few differences have to be mentioned.

Problematic about United States mediation law is that it differs from state to state, at federal level depending on the parties and between federal and state courts.[19] The attempt of the National Conference of Commissioners on Uniform State Laws (NCCUSL) to unify state laws concerning mediation led to the enactment of the Uniform Mediation Act (UMA).[20] The UMA serves as a Model Law for implementation in any state of the United States.[21] Even though one of its aims is to unify the laws and abolish the inconsistencies in cross-state me­diations regarding the mediation privilege, until 2007 there was only little endeavour to unify state and federal confidentiality rules or case law.[22]

In terms of federal law, two separate approaches are used, one for mediations involving fed­eral agencies (Administrative ADR Act) and one for cases brought to federal courts where the Act does not apply.[23] Nevertheless each federal court may adopt its own distinct approach for mediation involving federal law and mediation privilege, so that it is unclear whether or not a

Common-Law privilege exists.[24] Due to the many different approaches reference in this paper will only be made to the UMA.

2.1.1 The “without prejudice rule”

2.1.1.1 England and Wales

In England and Wales the courts gave effect to mediation privilege by applying the well- established “without prejudice” rule[25] for negotiations and its exceptions, but without creating a special mediation privilege.[26] The without prejudice rule renders negotiations and without prejudice documents inadmissible in evidence and those documents privileged from disclo­sure.[27] The rule that statements made during negotiations which were agreed to be “without prejudice” are privileged from disclosure in litigation, unless the parties waived the privilege, was established in Walker v Wilsher.[28] As long as the offer to settle the dispute was made in good faith and declared to be “without prejudice” and the plaintiff does not consent to disclo­sure, the material is privileged.

Initially it was held that declared “without prejudice” material cannot be taken into considera­tion in determining which party has to pay the litigation costs.[29] This interpretation was re­viewed for “without prejudice” offers relating to claims that are not simple money claims, and which clearly reserved the right to refer to the offer on the issue of costs.[30] Moreover it is not
necessary that the parties use the term “without prejudice”. If the surrounding circumstances show their intention to keep their negotiation confidential, it is not admissible before a court.[31]

The justification for the “without prejudice” rule in terms of mediation was referred to in Cutt v Head[32] as being based on public policy and convention to encourage parties to settle dis­putes by excluding admissions made during negotiations from evidence[33]. Another reason for the mediation privilege is the implied agreement about the common consequences of negotiat­ing without prejudice.[34] Until the recent decision Ofulue v Bessert[35] the privilege nevertheless just applied to admissions but not to mere acknowledgements of facts which were undisputed or not relied upon for their truth.[36] Now the House of Lords applies a more robust approach, stating that a “without prejudice” letter made during negotiations with a view to a compro­mise, could not be used as evidence that the owner’s title to the property was acknowledged so as to frustrate a subsequent adverse possession claim in new proceedings between the same parties.[37] Unless stated differently in Walker v Wilsher the “without prejudice” privilege does not cease to exist when the negotiations succeded and a settlement was reached in two party disputes.[38]

2.1.1.2 United States

In most states of the United States mediation confidentiality is achieved by privileges. Some states apply exclusionary rules, but by adopting the privilege approach in the UMA, the draft­ers rejected the exclusionary approach.[39] Most states adopting the UMA did not modify the privilege provisions much, but as some variations occurred, overall uniformity cannot be achieved.[40] The confidentiality provisions of the UMA are contained in section 4-8.[41] Section 4[42] deals with the inadmissibility of privileged communication. It applies an objective ap­proach, which means that the material itself is privileged. Nevertheless just the parties are holders of the “privilege”.[43] The 2003 amendments also incorporated the Model Law on International Commercial Conciliation (2002) by reference in section 11 of the UMA.[44] Unless otherwise agreed, the UNCITRAL Model Law applies to international commercial conciliation, but nothing in art. 10 of the Model Law derogates from ss. 4, 5 and 6 of the UMA. Any conflicts are therefore to be resolved in favour of the UMA.

2.1.1.3 Australia

Australia applies the Common Law principle which assumes “without prejudice” communica­tions to be “privileged” from evidence and disclosure.[45] The “without prejudice” rule pertains to communications made for the purpose of or during mediation, but there is no distinct me­diation privilege.[46] In addition to the “without prejudice” rule some statutes have been en­acted, sometimes corresponding with the exceptions in Common Law,[47] sometimes overriding them without definitive consequences.[48]

2.1.1.4 Criticism

While mediation is seen as being without prejudice negotiation by courts in England, accord­ing to Cornes

“Mediation is about much more than just ‘assisted without prejudice negotiations’ but confi­dentiality and privilege are the very cornerstones of the success of mediation.”[49]

He stresses the importance for the parties to a mediation to be sure that what they said in the mediation proceedings and the documents produced for the mediation will not become public knowledge or evidence in arbitration, litigation or adjudication proceedings, unless the parties agreed.[50] Moreover the spawning of satellite litigation arising out of particular mediation
would damage the cause of mediation somewhat.[51] Since the established exceptions to the without prejudice rule have been used by courts to lift the veil of the privilege to receive evidence of otherwise privileged material,[52] it is necessary to examine the exceptions which have an impact on confidentiality and privilege in mediation. A non-exhaustive list of excep­tions was considered in Unilever Plc v Proctor & Gamble Co. [53] The exceptions that will be discussed can be divided into exceptions relating to documents and those relating to a the question of a distinct mediator privilege.

2.1.2 Exceptions relating to disclosure of documents

At first the exceptions relating to disclosure of without prejudice documents produced in mediation proceedings are considered. Exceptions mentioned in Unilever without impact or relevance for the mediation privilege are not part of this discussion.

2.1.2.1 Exceptions concerning the validity of the settlement agreement

Exceptions to the “without prejudice” rule may apply to approve or challenge the validity of the settlement agreement. This includes questions as to whether a settlement agreement was actually concluded and whether it is still valid.

2.1.2.1 (1) Investigation as to whether a settlement agreement was concluded

In Brown v Rice and Patel (and ADR Group)[54] the mediation agreement included an express term as to the without prejudice nature of the mediation and that no agreement would be binding unless it was in writing and signed by or on behalf of, the parties. On the day of me­diation the dispute could not be settled, but an offer was left on the table overnight and alleg­edly accepted the next day in a telephone discussion. Since this settlement was neither in writing nor signed by the parties, the case could not be resolved on this basis alone. Con­versely the court decided that it was allowed to look at the without prejudice material in order to decide whether or not an agreement to settle had been concluded, even though accepting the possibility of finding later that the material had been inadmissible.[55]

Although in Steel v Joy and Halliday[56] it was held that if the integrity and confidentiality of the (ADR) process is to be respected, the court should not know, and therefore not investigate, why the process did not result in agreement, the judge and the parties in Brown v Patel did not consider it necessary to decide if a special mediation privilege exists.[57] The ADR Group’s submission that nothing said or done before, at or in result of mediation can ever be used outside mediation and in the absence of credible evidence of impropriety that the court should not scrutinize without prejudice discussions in a mediation, was denied.[58] In accordance with the view of May L.J. in Aird v Prime Meridian Ltd.[59] the judge ruled that mediation takes the form of assisted without prejudice negotiation.[60] Bearing in mind that a conduct based on express terms in a mediation agreement is more than just “assisted negotiation”, the exception to prove the existence of a concluded agreement might limit the without prejudice rule cru­cially. Brown v Patel and ADR Group is also acknowledged in Australia[61] and the exception as to prove the settlement agreement is recognised by section 6 (b) (2)UMA.[62]

2.1.2.1 (2) Misrepresentation, fraud, threat, undue influence

Evidence of the negotiations is admissible to show that an agreement between the parties actually concluded during the negotiations can be set aside on the grounds of misrepresenta­tion, fraud, threat or undue influence.[63] The question whether economic duress should be a ground to set aside a mediated settlement was put forward by Ruttle in Ruttle Plant Hire v The Secretary of State for the Environment and Rural Affairs[64] Unfortunately as the judgment concerned a preliminary matter, the court did not decide this issue,[65] so that one has to wait for further judgments relating on this point.[66] According to Cornes the mere fact that this case was proceeding shows that further consideration needs to be given to mediation privilege.[67] In Australian Law misleading conduct, misrepresentation, oppression or unconscionable conduct may give rise to exceptions.[68]

2.1.2.1 (3) Estoppel

Negotiations where no settlement was reached, but a clear statement was made by one party to negotiations, on which the other party is intended to react and does in fact react, may be admissible as to giving rise to an estoppel.[69] The possibility of other remarks made during the negotiations giving rise to an estoppel in the absence of a concluded settlement has also been referred to in Australia.[70]

2.1.2.1 (4) Perjury, blackmail or other “unambiguous impropriety”

Limited to the clearest cases of abuse of a privileged occasion, one party can give evidence of what the other party wrote or said in “without prejudice” negotiations, if the exclusion of the evidence would act as a cloak for perjury, blackmail or other unambiguous impropriety.[71] The case Venture Investment Placement Ltd v Hall[72] concerns the circumstances in which some­thing said during mediation ca be asserted to amount to threats, lying outside the scope of the “without prejudice” rule and confidentiality term in the mediation agreement.[73] The judge, referring to the importance of confidentiality for the parties in a mediation to be able to be frank and open, decided that such issues could not be decided by a judge at an interlocutory hearing and therefore granted an injunction to restrain disclosure to third parties.[74] According to Cornes, the situation of one party wanting to abandon a strong claim because of threats made by the other party during mediation is unlikely to happen in practice: Since solicitors and mediators can and should avoid and/or deal with serious threats, courts should not be concerned with this exception.[75]

Another case where the cloak of privilege ends is if the privilege was abused to mislead the court.[76]

2.1.2.2 Exceptions in multi-party disputes

The question as to whether information is to be regarded as confidential often arises and is often critical in multi-party disputes.

2.1.2.2 (1) General Rule: Rush & Tompkins Ltd v Greater London Council

In Rush & Tompkins Ltd v Greater London Council it was held that “without prejudice” nego­tiations which had led to a settlement between the parties could not thereafter be disclosed to a third party but remained privileged.[77] [78] The House of Lords ruled that in general the “without prejudice” rule made inadmissible any admissions made with a genuine intention of reaching a settlement in any subsequent litigation connected with the same subject matter.[79] Admis­sions made to get to a settlement with a different party within the same litigation are also inadmissible, whether or not settlement was reached with that party.[80] Furthermore they held that the general public policy that applied to protect genuine negotiations from being admissi­ble in evidence also applied to protect those negotiations from being disclosed to third par­ties.[81] Therefore the privilege also covers “without prejudice” material in relation to third parties. Another multi-party case where one party sued her solicitors over their conduct in a mediation occured in Australia, but in contrast to the English cases referred to above the judge allowed an exception.[82]

2.1.2.2 (2) Reasonableness of mitigation: Muller v Linsley and Mortimer

Muller v Linsley and Mortimer concerned a multi-party dispute regarding the question whether disclosure of documents may be ordered in subsequent proceedings on the question of reasonableness of mitigation by settling the prior dispute. The plaintiffs (Mr and Mrs Mul­ler) put in issue the reasonableness of mitigation in the subsequent litigation and the solicitors therefore wanted to use the settlement agreement in evidence, so that the Mullers produced their settlement agreement, but not the documents through which it was reached.[83] [84].The court ordered disclosure of documents and Hoffmann L.J. stated

"The public policy rationale is, in my judgment, directed solely to admissions. In a case such as this, in which the defendants were not parties to the negotiations, there can be no other basis for the privilege. If this is a correct analysis of the rule, then it seems to me that the without prejudice correspondence in this case falls outside its scope“.[85]

A slightly better justification is the that of the other judges Swinton Thomas L.J. and Leggatt L.J. who held that by putting the reasonableness of the settlement in issue, Mr and Mrs Muller waived their mediation privilege.[86] So in Muller v Linsley and Mortimer “without prejudice” documents between two parties to a settled dispute have been ordered to be disclosed to a third party in a different dispute, which was just factually related to the first dispute.[87]

2.1.2.2 (3) Distinct case relating to reasonableness of mitigation

The Muller decision was considered in Cumbria Waste Management Ltd, Lakeland Waste Management Ltd v Baines Wilson (A Firm)[88] In this case, a third party not involved in the prior mediation applied for disclosure of privileged material so the court could consider the reasonableness of mitigation in terms of the actual dispute. The High court judge France Kirkham J. did not see Baines Wilson in the same position as the solicitor in Muller:

“The circumstances in Muller are different from those which obtain here. In that case, it was the plaintiff who sought to deny disclosure of without prejudice material. Here, the question is whether a third party’s without prejudice material should be disclosed. The Court of Appeal in Muller gave no considerations to the position of a third party.”[89]

The judge stressed that the privilege belongs not only to the claimant, but also to DEFRA. The reasons for this decision had firstly been the express “without prejudice” agreement between DEFRA and the claimants and secondly public policy allegations: DEFRA should be protected from disclosing material which may embarrass them in other disputes.[90] The judge furthermore held “In my judgment, whether on the basis of the without prejudice rule or as an exception to the general rule that confidentiality is not a bar to disclose, the court should support the mediation process by refusing, in normal circumstances, to order disclosure of documents and communications within a mediation.”[91] Being a strong reasoned decision which supports mediation privilege and confidentiality, it draws a fine distinction to the Mul1er decision of a superior court,[92] so that a third party in multi-party disputes cannot necessar­ily obtain disclosure of the privileged documents produced in the course of mediation.

2.1.3 Mediator privilege

Besides the documents in a mediation, the mediator himself can be the object of investigation undertaken by the court or parties in subsequent adjudication. As to the question whether the mediator can be ordered to disclose documents, the judge in Cumbria[93] answers this to the negative, with reference to the importance of the fact that the mediator should be able to conduct mediation with the confidence that no one could see his papers. Nevertheless this privilege just applies to the documents of the mediator to prevent disclosure of the negotia­tions, but the person of the mediator himself is not protected.[94] Therefore no mediator privi­lege in English and Australian case law exists yet.[95] However, according to Cornes the exis­tence of a distinct “mediator privilege” is an open question: He deems it possible to regard the mediator privilege as belonging to the parties’ agreement.[96] They can therefore waive it by agreement, but can they also call the mediator to give evidence? Since most mediation agree­ments provide for not calling the mediator to give evidence, this is unlikely to happen. Never­theless courts are not bound by this contractual agreement and might hence be able to call the mediator to give evidence.[97] If the mediator could be compelled by a court to give evidence, confidentiality in mediation would just remain an empty vessel, since the mediator does not only know about the relations between the parties but also many details about the general situation.[98] Therefore the issue of the “mediator privilege” still needs to be solved in English and Australian Law, while the mediator is protected against calls from courts or other adjudi­cation to give evidence in the UMA.[99]

[...]


[1] UNCITRAL Guide to Enactment and Use of the Model Law on International Commercial Conciliations (“Guide to Enactment”) (2002) para 15.

[2] Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of Mediation in Civil and Commercial Matters.

[3] See Center for Effective Dispute Resolution (CEDR) Mediator’s handbook.

[4] Compare Connerty “The role of ADR in the Resolution of International disputes” (1996) 12 Arbitration Inter­national 47 50; Pretorius “Commercial Mediation in the Southern African Development Community” (2007) paper presented to the Arbitration Workshop in Mauritius 1 5.

[5] See Binder “International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions“ 2nd ed. (2005) 10-001; Sanders “ADR in civil law countries” (1995) 61 Arbitration 35 with reference to I.L.O. (International Labour Office, Geneva) Study on ‘Conciliation and Arbitration Procedure’ 3rd print (1998) 15.

[6] See Connerty (1996) 12 Arbitration International 47 50.

[7] See Sanders (1995) 61 Arbitration 35 with reference to I.L.O. (International Labour Office, Geneva) Study on ‘Conciliation and Arbitration Procedure’ 3rd print (1998) 15; obviously also following this approach see De Witt Wijnen “ADR, the civil law approach” (1995) 61 Arbitration 38 39. Furthermore the SA Law Commission discussing arbitration agrees with this view: see SA Law Commission’s report para 2.38 and s 5(3) of the Draft International Bill; for the contradictory view see Eidenmüller “Establishing a Legal Framework for Mediation in Europe: The proposal for an EC Mediation Directive” (2005) SchiedsVZ 124 125.

[8] Art. 1 (3) UNCITRAL Model Law on International Commercial Conciliation (2002): “For purposes of this Law, ‘conciliation’ means a process, whether referred to by the expression conciliation, mediation or an expres­sion o f similar import, whereby parties request a third person or persons (“the conciliator”) to assist them in their attempt to reach an amicable settlement of their dispute arising out of or relating to a contractual or other legal relationship. The conciliator does not have the authority to impose upon the parties a solution to the dis­pute.”

[9] Art. 3 (a) Directive 2008/52/EC: “Mediation’ means a structured process, however named or referred to, whereby two or more parties to a dispute attempt by themselves, on a voluntary basis, to reach an agreement on the settlement of their dispute with the assistance of a mediator. (...)”

[10] See UNCITRAL Model Law on International Commercial Conciliation with Guide to Enactment and Use 2002, (2004) para. 58.

[11] See Wozniewski “Die neue Mediationsrichtlinie der EU in der Praxis des Handels- und Gesellschaftsrechts” (2008) NGZ 410 412.

[12] See UNCITRAL Guide to Enactment (2004), para. 58; Eidenmüller/Prause “Die europäische Mediationsrich­tlinie- Perspektive für eine gesetzliche Regelung der Mediation in Deutschland” (2008) NJW 2737 2739; Woz­niewski (2008) NZG 11 410 412-413.

[13] See UNCITRAL Guide to Enactment (2004) para. 58; see also Eidenmüller (2005) SchiedsVZ 124 126.

[14] See UNCITRAL Guide to Enactment (2004) para. 58; see also Wozniewski (2008) NZG 410 413.

[15] Pretorius (2007) paper presented to the Arbitration Workshop in Mauritius 1 3.

[16] 3.

[17] 4.

[18] 4.

[19] See Sharp “The Washington, D.C. Lawyer and Mediation Confidentiality: Navigating the complex and con­fusing waters” (2008) 7 Appalachian J.L. 179 182.

[20] See the amended version 2003 at Appendix C, available at http://www.law.upenn.edu/bll/archives/ulc/mediat/2003finaldraft.htm (accessed 11-06-2009). The UMA was drafted and approved and recommended for enactment in all states 2001 and then amended in 2003; see also Sharp (2008) 7 Appalachian J.L. 179 182.

[21] Cornes “Mediation Privilege and the EU Mediation Directive: An Opportunity?” (2008) 74 Arbitration 4 395 404 and Büchting/Mähler/Mähler “Außergerichtliche Streibeilegung” 9th ed. in Beck'sches Rechtsanwaltshand­buch (2007) para 96.

[22] ill 2007 only the District of Columbia, Illinois, Iowa, Nebraska, New Jersey, Ohio, Utah, Vermont and Washington implemented the UMA, see Modifications of the Uniform Mediation Act by States that have for­mally Adopted the UMA as of July 2007 at http://www.mwi.org/uma/UMA_Summary_by_State_v1.doc (ac­cessed 11-06-2009); compare also Cornes (2008) 74 Arbitration 4 395 404 and Sharp (2008) 7 Appalachian J.L. 179 182.

[23] See Sharp (2008) 7 Appalachian J.L. 179 183.

[24] 183 and n.12 with further references.

[25] The classic definition of “without prejudice” was given by Lindley L.J. in Walker v. Wilsher (1889) 23 Q.B.D. 335, 337 B-C: „What is the meaning of the words 'without prejudice'? I think they mean without preju­dice to the position of the writer of the letter if the terms he proposes are not accepted. If the terms proposed in the letter are accepted a complete contract is established, and the letter, although written without prejudice, operates to alter the old state of things and to establish a new one." This definition was confirmed in Cutt v Head [1984] Ch. 290, 305-306 (CA).

[26] Cornes (2008) 74 Arbitration 4 395.

[27] Cutt v Head [1984] Ch. 290, 293 F (CA); Cornes (2008) 74 Arbitration 4 395 396.

[28] [1889] L.R. 23 Q.B.D. 335 337 with reference to Paddock v Forrester 3 Sc. N.R. 715, 734; see also Atkinson “Mediation -Privilege in Legal Proceedings” (2002) http://www.atkinson- law.com/cases/CasesArticles/Articles/Mediation-ADR_and_Privilege_in_Legal_Proceedings.htm (accessed 03­06-2009).

[29] Walker v Wilsher [1889] L.R. 23 Q.B.D 335 337-339 (CA); Paddock v Forrester 3 Sc. N.R. 715, 734; see also Atkinson (2002) http://www.atkinson-law.com/cases/CasesArticles/Articles/MediationADR_and_Privilege_in_Legal_Proceedings.htm (accessed 03-06-2009); and Cornes (2008) 74 Arbitration 4 395 402. A different opinion was expressed in Williams v Thomas 2 Dr. & Sm. 29, but has been regarded as not convincing to the judges in Walker v Wilsher.

[30] Cutt v Head [1984] Ch. 290, 312 B-H (CA) with reference to the Matrimonial Law case Calderbank v Calder- bank[1976] Fam. 93, 106. It was considered, that "without prejudice" letters written in an attempt to settle an action are admissible at the end of the case on the question of costs.

[31] Rush & Tompkins Ltd v Greater London Council [1989] A.C. 1280, 1298H (HL); see also Cutt v Head [1984] Ch. 290, 293 F (CA).); see also Atkinson (2002) http://www.atkinsonlaw.com/cases/CasesArticles/Articles/Mediation-ADR_and_Privilege_in_Legal_Proceedings.htm (accessed 03­06-2009).

[32] [1984] Ch. 290, 306 A-B (CA).

[33] See Rush & Tompkins Ltd v Greater London Council [1989] A.C: 1280, 1284F-H (HL); and Unilever plc v The Proctor & Gamble Co [2000] 1 WLR 2436 2444; see also Atkinson (2002) http://www.atkinson- law.com/cases/CasesArticles/Articles/Mediation-ADR_and_Privilege_in_Legal_Proceedings.htm (accessed 03­06-2009).

[34] These justifications have been raised in Muller v Linsey & Mortimer [1996] 1P.N.L.R. 74 79 (CA); see also Cornes (2008) 74 Arbitration 4 395 396. As in mediation express terms concerning privilege and confidentiality are mostly included in mediation written agreements, the second justification does not fit for most mediations.

[35] [2009] 2 WLR 749, para 11: Ms Bossert and her late father in 1981 were permitted to move in the property by a former tenant and took up residence there. In 1987 the Ofulues commenced possession proceedings and the Bosserts counterclaimed for the grant of a lease. In 1992 the Bosserts as the registered owners of the freehold made the “without prejudice” offer to buy the property, which was rejected, while the possession proceedings were still pending. The unsuccesful proceedings were finally terminated in 2002, but in 2003 the Ofulues started new possession proceedings, when Ms Bossert claimed adverse possession, which the judge accepted. The Ofulues’ only defence was that the 12 years limitation period had not elapsed until the second claim was com­menced and through this the without prejudice discussion came up. The respondent made the without prejudice offer to buy the property in 1992 and by that acknowledged the Ofulues’ title to sell. The UK Limitation Act 1980 states that the 12 year prescription period restarts after any such acknowledgement. The question arose whether the ”without privilege” letter was admissible for evidence.

[36] See Muller v Linsey & Mortimer [1996] PMLR 74, 79 and Bradford & Bingley Plc v Rashid [2006] 1 WLR 2066 para 16.

[37] Ofulue v Bossert [2009] 2 WLR 749 750 with further references to important parts of the decision.

[38] See Rush & Tompkins Ltd v Greater London Council [1989] A.C: 1280 1300G-1301D (HL).

[39] See Sharp (2008) 7 Appalachian J.L. 179 182; see also the comments in the amended version of the UMA to section 4, Appendix C or http://www.law.upenn.edu/bll/archives/ulc/mediat/2003finaldraft.htm (accessed 11-06­2009): In short, the Drafters’ rationales are that it effectively protects communications, but also can be narrowly tailored to satisfy legitimate interests, greater certainty in judicial interpretations and consistency with the major­ity of approaches taken by legislature.

[40] See Summary of implementation at http://www.mwi.org/uma/UMA_Summary_by_State_v1.doc; see also Cornes (2008) 74 Arbitration 4 395 405.

[41] See the amended draft 2003, available at http://www.law.upenn.edu/bll/archives/ulc/mediat/2003finaldraft.htm (accessed 11-06-2009) in Appendix A.

[42] SECTION 4 PRIVILEGE AGAINST DISCLOSURE; ADMISSIBILITY; DISCOVERY. “(a) Except as otherwise provided in Section 6, a mediation communication is privileged as provided in subsection (b) and is not subject to discovery or admissible in evidence in a proceeding unless waived or precluded as provided by Section 5.

[43] See Sharp (2008) 7 Appalachian J.L. 179 183.

[44] SECTION 11 INTERNATIONAL COMMERCIAL MEDIATION “(a) In this section, “Model Law” means the Model Law on International Commercial Conciliation adopted by the United Nations Commission on Inter­national Trade Law on 28 June 2002 and recommended by the United Nations General Assembly in a resolution (A/RES/57/18) dated 19 November 2002, and “international commercial mediation” means an international commercial conciliation as defined in Article 1 of the Model Law.

[45] See Limbury “Should there be a distinct ‘Mediation Privilege’?” presentation at IAMA NSW Forum 29.08.2007 published (2007) LEADR 1 www.leadr.com.au/articles/Mediation%20privilege.pdf (accessed 15.07.2009).

[46] See Limbury (2007) LEADR 3.

[47] Section 131 of the Evidence Act 1995 (Commonwealth) with corresponding State and Territory legislation; see also Limbury (2007) LEADR 8 with further references.

[48] For example Federal Court of Australia Act 1976 - section 53B Admissions made to mediators “Evidence of anything said, or of any admission made, at a conference conducted by a mediator in the course of mediating anything referred under section 53A is not admissible: in any court (whether exercising federal jurisdiction or not); or in any proceedings before a person authorised by a law of the Commonwealth or of a State or Territory, or by the consent of the parties, to hear evidence.” A similar approach is taken by ss 29, 30 and 31 of The Civil Procedure Act 2005 (NSW); see also discussion of Limbury (2007) LEADR 6.

[49] Cornes (2008) 74 Arbitration 4 395.

[50] 395.

[51] 395.

[52] 396.

[53]. [2000] W.L.R. 2436 2444-2448; see also the discussion of Cornes (2008) 74 Arbitration 4 395 396-401.

[54] [2007] EWHC 625 (Ch).

[55] Brown v Rice and Patel (and ADR Group [2007] EWHC 625 para 21(Ch) and Cornes (2008) 74 Arbitration 4

[56] 395 396-397; Limbury (2007) LEADR 2.

[57] [2004] EWCA Civ 576 (CA).

[58] Brown v Rice and Patel (and ADR Group [2007] EWHC 625 para 20 (Ch) ADR’s submission was based on a comment of Hoffman L.J. in Forster v Friedland, unreported, November 10, 1992, Transcript No 1052 of 1992: “the value of the without prejudice rule would be seriously impaired if its protection could be removed (for) anything less than unambiguous impropriety. This rule is designed to encour­age parties to express themselves freely and without inhibition.” see also Limbury (2007) LEADR 5.

[59] [2006] EWCA Civ 1866 para 5 (CA).

[60] Brown v Rice and Patel (and ADR Group [2007] EWHC 625 para 21(Ch).

[61] See Limbury (2007) LEADR 2-6.

[62] Section 6 (b) (2) UMA: “There is no privilege under Section 4 if a court, administrative agency, or arbitrator finds, after a hearing in camera, that the party seeking discovery or the proponent of the evidence has shown that the evidence is not otherwise available, that there is a need for the evidence that substantially outweighs the interest in protecting confidentiality, and that the mediation communication is sought or offered in. () except as otherwise provided in subsection (c), a proceeding to prove a claim to rescind or reform or a defence to avoid liability on a contract arising out of the mediation.”

[63] See e.g. the Canadian case Underwood v Cox [1912] 4 D.L.R. 66 82 (Ont Div Court), where it was held that communications will be admissible to prove duress, undue influence or coercion; for treat especially Unilever v Proctor& Gamble [2000] W.L.R. 2436 2444-2448; Ontario; see also Cornes (2008) 74 Arbitration 4 395 397.

[64] [2008] B.C.C. 790 792 para. 2-9 (QBD (TCC)), see Ruttle’s claim to set aside the settlement [2007] EWHC 2870 (TCC) para 9-12.

[65] See Ruttle Plant Hire v The Secretary of State for the Environment and Rural Affairs [2008] B.C.C. 790 (QBD (TCC)) 803 para 83-86.

[66] Cornes (2008) 74 Arbitration 4 395 397.

[67] 397.

[68] See with reference to the relevant cases Limbury (2007) LEADR 3.

[69] See Unilever Plc v Proctor & Gamble Co [2000] 1 WLR 2436 para 23 (3) citing Hodkingson & Corby v Wards Mobility Services [1995] F.S.R. 169, 178 & 191; see also Cornes (2008) 74 Arbitration 4, 395 398. For an implied waiver see Brown v Patel and ADR Group 2007] EWHC 625 (Ch) para 56, where Brown alleged that clause 1.4 of the mediation agreement (not binding unless in writing) was impliedly waived by virtue of Mrs Patel’s offer having been left open for acceptance until midday on the following day by stating that the accep­tance period otherwise would be deprived of any meaning.

[70] See Limbury (2007) LEADR 3 with reference to Hodgkinson & Corby Ltd. V Wards Mobility Services Ltd. [1995] FSR. 169, 178.

[71] See Forster v Friedland, unreported, November 10, 1992, Transcript No 1052 of 1992 with reference to Greenwood v Fitts 29 DLR (2d) 260 and Hawick Jersey International Ltd v Caplan The Times, 11 March 1988; Unilever Plc v The Procter & Gamble Co [2000] 1 WLR 2436 2444 G & 2448-2449 (CA); Berry Trade v Moussavi (No 2) [2003] EWCA Civ 715 para 48 (CA); Savings & Investment Bank Ltd (in liquidation) v. Fincken [2003] EWCA Civ 1630, para 53 (CA); Cornes (2008) 74 Arbitration 4 395 398.

[72] [2005] EWHC 1227 (Ch).

[73] Cornes (2008) 74 Arbitration 4 395 398.

[74] See Venture Investment Placement Ltd v Hall [2005] EWHC 1227, para 22 (Ch); Cornes (2008) 74 Arbitration 4 395 398. See for the satellite litigation Hall & Anor. v. Pertemps & Ors [2005] EWHC 3110 (Ch).

[75] 399.

[76] See Limbury (2007) LEADR 3 and the references cited; see also section 5 (c) UMA: A person that intention­ally uses a mediation to plan, attempt to commit or commit a crime, or to conceal an ongoing crime or ongoing criminal activity is precluded from asserting a privilege under Section 4

[77] [1989] A.C. 1280 (HL): The plaintiffs concluded a building contract with the first defendants and had con­tracted with the second defendants as sub-contractors for certain works. The plaintiffs claimed against both defendants, but the plaintiffs and first defendants settled their claim after an exchange of without prejudice correspondence. The second defendants then applied for discovery of this correspondence, but the plaintiffs argued that it was privileged. While the judge in the District court upheld their claim and dismissed the applica­tion, the Court of Appeal allowed the second defendant's appeal and ordered discovery, but the plaintiffs appeal to the House of Lords was allowed.

[78] Rush & Tompkins Ltd v Greater London Council [1989] A.C. 1280 1301 A-E, 1304F-1305E (HL).

[79] See Rush & Tompkins Ltd v Greater London Council [1989] A.C: 1280 1300G-1301D (HL).

[80] See Rush & Tompkins Ltd v Greater London Council [1989] A.C: 1280 F-H (HL).

[81] See Rush & Tompkins Ltd v Greater London Council [1989] A.C:1280H.

[82] Tapoohi v Lewenberg & Ors (No.2) [2003] VSC 410, one party applied to set aside the settlement agreement, alternatively she sued her solicitor for damages; see also Limbury (2007) LEADR 4.

[83] [1996] 1 P.N.L.R. 74 (CA): Mr Muller was a director and shareholder in a software company. After hearing his concerns that the board of the company would dismiss him and require him to sell his shares at a fair value in accordance with the articles of the company, the solicitors Linsley and Mortimer advised him to put the shares into his wife’s name to avoid the effect of the articles. The solicitors were not successful in delivering a properly stamped share transfer to the company. Therefore the company declined to register the transfer. Mr Muller was dismissed and ordered to sell his shares. At first Mr Muller started proceedings against the company, but then negotiated a settlement. Afterwards Mr and Mrs Muller sued Linsley and Mortimer for damages. Since they argued that the settlement with the company was a reasonable attempt to mitigate the loss against their solicitors, the solicitors asked for disclosure of without prejudice documents going to the settlement and its reasonableness.

[84] Muller v Linsley and Mortimer [1996] 1 P.N.L.R. 74 81 (CA).

[85] Muller v Linsley and Mortimer [1996] 1 P.N.L.R. 74 80 (CA); see also Cornes (2008) 74 Arbitration 4 395 399.

[86] Muller v Linsley and Mortimer [1996] 1 P.N.L.R. 74 81

[87] See also Cornes (2008) 74 Arbitration 4 395 399.

[88] [2008] EWHC 786 (QB). Cumbria and Lakeland had settled disputes with the Department for Environment, Food and Rural Affairs (DEFRA) in two distinct mediations. Both disputes concerned agreements for the provi­sion of waste management services during the foot and mouth epidemic in 2001. Later Cumbria and Lakeland alleged negligence of their solicitors Baines Wilson relating to drafting and negotiationg the agreements with DEFRA to sue them for recovery. Baines Wilson asked the court to order disclosure of documents created in the two mediations which they said went to the reasonableness of the mediated settlement. Because Baines Wilson had not been a party to the mediation, DEFRA refused to consent to show them the documents. Although DEFRA was not a party to the litigation with Baines Wilson, they made a submission, while Baines Wilson relied on the principle in Muller.

[89] Cumbria Waste Management Ltd, Lakeland Waste Management Ltd v Baines Wilson (A Firm) [2008] EWHC 786, para 24 (QB).

[90] See also Cornes (2008) 74 Arbitration 4 395 400.

[91] Cumbria Waste Management Ltd, Lakeland Waste Management Ltd v Baines Wilson (A Firm) [2008] EWHC 786, para 30 (QB).

[92] See Cornes (2008) 74 Arbitration 4 395 400.

[93] Cumbria Waste Management Ltd, Lakeland Waste Management Ltd v Baines Wilson (A Firm) [2008] EWHC 786, para 31 (QB).

[94] See Limbury (2007) LEADR 2.

[95] See Limbury (2007) LEADR 2.

[96] Cornes (2008) 74 Arbitration 4 395 400.

[97] 400.

[98] 98401.

[99] See SECTION 7. PROHIBITED MEDIATOR REPORTS. “(a) Except as required in subsection (b), a media­tor may not make a report, assessment, evaluation, recommendation, finding, or other communication regarding a mediation to a court, administrative agency, or other authority that may make a ruling on the dispute that is the subject of the mediation.
(b) A mediator may disclose: (1) whether the mediation occurred or has terminated, whether a settlement was reached, and attendance; (2) a mediation communication as permitted under Section 6; or (3) a mediation communication evidencing abuse, neglect, abandonment, or exploitation of an individual to a public agency responsible for protecting individuals against such mistreatment. (c) A communication made in violation of subsection (a) may not be considered by a court, administrative agency, or arbitrator.”

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Details

Title
Confidentiality in the Model Law and the European Mediation Directive
Subtitle
A comparison of solutions offered in the Mediation Directive and the Model Law on Conciliation with examination of the actual situation in selected Civil and Common Law Countries
College
Stellenbosch Universitiy  (Departement of Mercantile Law)
Course
LL.M. International Trade Law
Grade
1,5
Author
Year
2009
Pages
71
Catalog Number
V174322
ISBN (eBook)
9783640947577
ISBN (Book)
9783640947713
File size
839 KB
Language
English
Tags
Mediationsrichtlinie, Model Law on Conciliation, Confidentiality, Vertraulichkeit, Mediation
Quote paper
Eva-Maria Henke (Author), 2009, Confidentiality in the Model Law and the European Mediation Directive, Munich, GRIN Verlag, https://www.grin.com/document/174322

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