Mediation and confidentiality

Mediation is an increasingly popular method for resolving disputes outside of formal litigation. Key to its success are two fundamental legal principles that foster open and honest communication: confidentiality and "without prejudice" privilege. These concepts are often conflated but operate separately to protect the integrity of the mediation process and encourage settlement. This article explores the nuances of each. For more about the process of mediation, generally, and how it can help the parties to a dispute, visit our mediation page.

The bedrock of trust: confidentiality

Confidentiality in mediation serves as the cornerstone of trust, ensuring that what is discussed in the process remains private. It creates a safe space for parties to express candid views, test ideas, and make concessions without fear of those statements being used against them later. This protection typically extends to all communications, documents created for the mediation, and the terms of any settlement discussions themselves.

The scope and enforceability of confidentiality are primarily contractual, established through a signed mediation agreement before the process begins. Most agreements stipulate that participants, including the mediator, cannot be compelled to disclose information in subsequent legal proceedings. Although this is strong protection, it is not absolute. Legal exceptions exist, such as when there is a serious risk of harm to an individual, or evidence of a criminal act. These exceptions (see below) are critical safeguards that balance the need for privacy with broader public interest concerns.

Encouraging frank discussion: 'without prejudice' privilege

"Without prejudice" (WP) privilege is a specific rule of evidence rooted in common law. Its primary purpose is to encourage parties to negotiate freely and attempt settlement by ensuring that genuine attempts to compromise cannot be used against them if the negotiations fail and the case proceeds to court.

When a communication is labelled "without prejudice," it generally cannot be admitted in evidence at trial as proof of an admission against the interest of the party making it. For example, a settlement offer or an admission of a weak point in one's case made during a WP discussion is shielded from the court's view. The privilege automatically applies to all bona fide settlement negotiations, whether labelled explicitly or not, provided they are genuinely aimed at reaching a compromise. Bear in mind, however, that using the WP header will not protect a document if, in fact, its contents do not reflect any attempt to resolve a dispute.

It is crucial to understand that WP privilege is not a blanket protection for all facts revealed. Factual information that would have been discoverable through other means (e.g., standard disclosure in litigation) does not become privileged simply because it was mentioned during a mediation. The privilege protects the admissions and concessions made in the context of negotiation, not the facts themselves.

Distinction and intersection

So, the key distinction between confidentiality and WP privilege lies in their source and scope. In practice, these two principles work in tandem within the mediation setting. The confidentiality agreement prevents general disclosure of what occurred, while the 'without prejudice' rule provides specific legal immunity for settlement-related admissions in future litigation. Together, they create a uniquely secure environment conducive to constructive dialogue and resolution, making mediation a powerful tool in dispute resolution.

While confidentiality and WP privilege are central to mediation, they are not absolute. The protections can be lifted in specific, limited circumstances to prevent abuse of the process or to serve a greater public interest.

Exceptions to confidentiality

Circumstances that may result in confidentiality being lost include:

• Public safety and criminal activity: the most common exception arises where information disclosed indicates a risk of serious harm to an individual, or evidence of a criminal act (e.g., fraud, money laundering, or threats of violence). In such cases, the public interest in preventing harm or crime typically outweighs the duty of confidence.
• Legal obligations and court orders: a mediator or party may be compelled by law or a court order to disclose information — although this would only be likely to happen in exceptional circumstances. The court must balance the public interest in preserving mediation confidentiality against the interests of justice in the specific case.
• Waiver by all parties: if all parties to the mediation mutually agree to waive confidentiality, the protections will no longer apply. This can also happen inadvertently if a party refers to confidential information in an open setting and the other party does not promptly object.
• Enforcement or interpretation of a settlement: communications may be admissible if they are necessary to determine whether a settlement agreement was reached, or to interpret the terms of a validly concluded agreement.

Exceptions to WP privilege

Exceptions to this privilege are applied only in clear cases of abuse and certain other circumstances:

• Unambiguous impropriety: this is a key exception where the privilege would otherwise conceal perjury, blackmail or some other “unambiguous impropriety". This includes situations where a party makes a genuine threat, or attempts to use the mediation process to further a dishonest case or exert improper pressure.
• Misrepresentation, fraud, or undue influence: evidence from mediation may be used if one party alleges that they were induced into a settlement agreement by the other party's fraud, misrepresentation, or undue influence.
• Explaining delay or mitigation of loss: WP communications may be admissible for the limited purpose of explaining a significant delay in the proceedings or to show that a party has made reasonable attempts to mitigate their losses (e.g., in a professional negligence claim against a former solicitor).

Ultimately, while the courts generally seek to uphold the principles of confidentiality and privilege to encourage effective dispute resolution, they retain the discretion to lift these protections when fairness and the interests of justice demand. They will not do so lightly and they do not do so frequently.