2). When will the Courts require the disclosure of documents or discussions  that are generated at mediations? 

When we speak about mediation confidentiality we are in truth describing the effect of two separate principles.  

The effect of the confidentiality clause in the mediation agreement is to prevent all of the individuals at the mediation  and the  parties  from disclosing any of the material they learn from the mediation to third parties.   Thus if any of them disclose details of what was said or done at the mediation   they will be in breach of contract and liable either to be injuncted or to pay damages if the parties suffer a loss.

 But contractual confidentiality is of little use where a party seeks disclosure of the material in subsequent proceedings. Whatever the parties may have agreed the obligation to disclose relevant material will in practice override confidentiality. That is why without prejudice privilege is so important and why it, rather than confidentiality, has been the focus of the recent case-law. 

Where negotiations are undertaken in good faith to settle a dispute then they take place “without prejudice” and in broad terms the court will control  the use of any of the negotiation (or mediation) material at any subsequent stage of the proceedings.  English law has readily accepted that negotiations in a mediation are covered by without prejudice privilege on the basis both of the agreement of the parties, usually express, and separately of public policy. [6]  As in any negotiation  the parties to a mediation must feel free  to explore the case and above all to explore the possibility of settling the case without those efforts being exploited as a concession if the case ultimately goes to court.  If the mediation does not succeed then nobody will later be able to ask the question: “Mr. Jackson, if you are so sure that the widgets you supplied were compliant with the contract why did you offer to pay £60,000 to settle the case in a mediation last month?”. 

There is no threat to the core of either confidentiality or without prejudice privilege.  But in English law as in every other comparable legal system these restrictions are never absolute and never perpetual.  Not even the most ardent advocates of reform suggest that they should be. They are inevitably and necessarily subject to  defined  limits and exceptions.  The debate is  not for or against confidentiality. The debate is about  the proper extent of those limits and exceptions. We should remember too that our clients are content routinely to sign settlement agreements at the end of our mediations which include heavily qualified confidentiality clauses typically prohibiting any disclosure by the parties  “...   save to their insurers, reinsurers, professional advisers, auditors, and appropriate regulatory bodies or otherwise as required by law.”” 

First, there are a group of exceptions to the without prejudice privilege rule which allow one of the parties to the original dispute to refer to the contents of the negotiation/mediation  as against the other. Hence these are the “two-party” cases. The exceptions are listed out by Robert Walker LJ in Unilever v Procter and Gamble [7].

There are eight in all but the most important of the exceptions for our purposes are probably these: 

1)     Where one of the parties is guilty of some form  of impropriety such as an act or a threat of violence.

2)     Where there is an issue as to the fact or the terms of the agreement reached.

3)     Where one party alleges that the settlement agreement has been obtained by misrepresentation, fraud or duress.   

Brown v Patel fell squarely within  the second of these exceptions. Perhaps it needs to be said at an early stage of this analysis that the judges in all three cases applied the current law correctly.  If there are criticisms to be made they are criticisms of the substantive rules of evidence the judges  were required to work with.  

Plainly too material can be referred to where both parties to the mediation consent. In any of these two-party situations documents or evidence which would prima facie be inadmissible can be admitted as between the original parties to the dispute. Thus in Malmesbury  both parties chose to rely on the way negotiations proceeded at the mediation in support of their costs applications at the end of the case.    

The most important further  limitation concerns the use of the material in subsequent separate disputes involving other parties, the “three-party” cases. Here the material is sought to be disclosed and used not as between the original parties but in a dispute which one of them has with a third party.   

The three-party cases arise where the content of the original negotiation/mediation is in some way relevant to a subsequent dispute involving another party.   After any settlement (mediated or otherwise)  parties will often  look to raise a related claim against a third party.  Thus after a mediated settlement a disappointed insured may wish to blame his broker for an inadequate insurance pay-out.  Or a paying defendant may wish to blame a sub-contractor or an adviser for the liability he has incurred.  Clearly the mediation discussions and documents may be relevant to issues in the subsequent actions including most obviously  the reasonableness of the mediated settlement.  The courts up to and including the House of Lords have decided that if the without prejudice material is relevant to be disclosed in a related but separate dispute involving another party then the policy reasons for refusing disclosure may  no longer apply.[8] In effect the statements made at the mediation can no longer function as admissions and are not being relied upon as such; so permitting their disclosure cannot chill or discourage candid negotiation.  This approach has now been applied in a mediation context in the Cattley case. [9]   

The three-party case which has not yet been considered by the UK courts to my knowledge is the claim brought by a party against his lawyer or the mediator alleging negligence in the conduct of the mediation.   Applying Muller the mediation papers would be disclosable  even if the other party to the mediation objected.