This decision originating from Quebec may be of interest for
Canada's legal community.
In the judgment Union Carbide Canada Inc.v.Bombardier Inc. authored by Justice Wagner
(with no dissents) and released on May 8, 2014, the Supreme Court
of Canada unanimously concluded that in the context of a mediation,
the parties can agree to a mediation contract that provides for
more confidentiality than the common law settlement privilege. Such
contract, if clearly drafted to that effect, can even remove the
possibility for a party to rely on the settlement privilege
exception to prove the existence or scope of a settlement.
During the course of a multi-million dollar law suit, the
parties agreed to a private mediation and signed a standard
mediation agreement which contained the following clause:
Nothing which transpires in the Mediation will be alleged,
referred to or sought to be put into evidence in any
A settlement offer was made by Dow Chemical and accepted by
Bombardier, but because of a divergence in the interpretation of
the scope of the settlement, the settlement amount was never paid.
A motion for homologation of the settlement agreement was filed by
Bombardier before the Superior Court. Said motion contained
allegations referring to what had been said and done during the
mediation. Dow Chemical filed a motion to strike out these
The Superior Court granted the motion to strike allegations
based on the confidentiality clause of the mediation agreement,
this ruling was overturned by the Court of Appeal and Dow Chemical
appealed to the Supreme Court of Canada.
The issue before the Court was whether a mediation contract with
an absolute confidentiality clause modified the common law
settlement privilege including its exception, foreclosing parties
from proving the terms of a settlement.
The Court answered by rejecting "the presumption that a
confidentiality clause in a mediation agreement automatically
displaces settlement privilege, and more specifically the
exceptions to that privilege that exists in common law". To
confirm if it did displace the exception to the privilege, the
Court applied Quebec's contract law and its principles of
Reviewing the nature of the contract, the circumstances in which
it was formed and the contract as a whole, the Court found that
Bombardier had not signed away its ability to prove a settlement,
if need be.
In Union Carbide Canada Inc. v. Bombardier
Inc. the Supreme Court of Canada therefore reasserted the
common law settlement privilege and its exception but set out the
parameters on how it may be set aside.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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