Ireland: The Mediation Act 2017: Well-Intentioned, But Flawed

Introduction

The Mediation Act 2017 (the "Mediation Act") was commenced with effect from 1 January 2018.1

The Act, amongst other things:

  1. imposes obligations on solicitors to provide advice and information prior to instituting proceedings;
  2. provides an ability for courts, either at their own instance or at the request of a party, to invite the parties to consider mediation; and
  3. enables the courts to consider an unreasonable refusal to consider mediation when awarding costs.2

Initiating proceedings

The key immediate effect is that, for most types of proceedings, a practising solicitor, including an in house solicitor, is obliged, before issuing proceedings, to:

  1. advise the client:
    1. to consider mediation as a means of attempting to resolve the dispute;3
    2. that mediation is voluntary and may not be an appropriate means of resolving the dispute where the safety of the client and/or their children is at risk;4
  2. provide the client with information about:
    1. mediation services;5
    2. the advantages of resolving the dispute by means other than by way of the proposed proceedings;6 and
    3. the benefits of mediation;7
  3. inform the client:
    1. that the document commencing the proceedings8 must be accompanied by a statutory declaration made by the practising solicitor evidencing that the solicitor has performed the obligations above; 9
    2. that if the originating document is not accompanied by such a declaration, the court will be obliged to adjourn the proceedings to enable such a declaration to be furnished; 10
    3. about the provisions regarding the confidentiality of communications regarding mediation (discussed below);  11 and
    4. about the provisions regarding the enforceability of mediation agreements (discussed below);12  and
  4. make the statutory declaration referred to at 3(a) above.13

Confidentiality of communications

Section 10 of the Act provides:

  1. that, all communications, records and notes relating to mediation are confidential and shall not be disclosed in any proceedings before a court or otherwise except as required for a mediator to provide a report to the court where mediation was initiated at the invitation of the court, or where disclosure is:
    1. necessary in order to implement or enforce a mediation settlement,
    2. necessary to prevent physical or psychological injury to a party;
    3. required by law,  
    4. necessary in the interests of preventing or revealing:
      1. the commission of a crime (including an attempt to commit a crime);
      2. the concealment of a crime, or
      3. a threat to a party;
    5. sought or offered in a civil claim concerning the negligence or misconduct of the mediator occurring during the mediation or a complaint to a professional body concerning such negligence or misconduct; however
  2. evidence introduced into or used in mediation that is otherwise admissible or subject to discovery in proceedings shall not be or become inadmissible or protected by privilege in such proceedings solely because it was introduced into or used in mediation.

It should be carefully noted that Section 19(1) of the Criminal Justice Act, 2011 provides that:

  • "A person shall be guilty of an offence if he or she has information which he or she knows or believes might be of material assistance in—
    1. preventing the commission by any other person of a relevant offence, or
    2. securing the apprehension, prosecution or conviction of any other person for a relevant offence,
  • and fails without reasonable excuse to disclose that information as soon as it is practicable to do so to a member of the Garda Síochána."

The schedule to that Act lists relevant offences, which include a number of offences relating to companies, including, by way of example, a company improperly providing financial assistance for the purchase of its own shares.

Irrespective of whether or not such information in the hands of the lawyers for the parties might be privileged, disclosure in the course of mediation would appear impose a duty on the mediator to make disclosure in accordance with this section. This is a key risk and a clear disadvantage of mediation in disputes which contain an element of alleged fraud or improper conduct.

Enforceability of mediation agreements

The Act defines a "mediation settlement" as

"an agreement in writing reached by the parties to a dispute during the course of a mediation and signed by the parties and the mediator".

Section 11 of the Act provides:

       
"(1) The parties shall determine—
(a) if and when a mediation settlement has been reached between them, and
(b) whether the mediation settlement is to be enforceable between them.
(2) Notwithstanding subsection (1) and subject to subsection (3), a mediation settlement shall have effect as a contract between the parties to the settlement except where it is expressly stated to have no legal force until it is incorporated into a formal legal agreement or contract to be signed by the parties.
(3) Without prejudice to sections 8 and 8A (inserted by section 20 of the Status of Children Act 1987 ) of the Family Law (Maintenance of Spouses and Children) Act 1976 and subject to subsection (4), a court may, on the application of one or more parties to a mediation settlement, enforce its terms except where the court is satisfied that—
(a) the mediation settlement —
(i) does not adequately protect the rights and entitlements of the parties and their dependents (if any),
(ii) is not based on full and mutual disclosure of assets, or
(iii) is otherwise contrary to public policy,
or  
(b) a party to the mediation settlement has been overborne or unduly influenced by any other party in reaching the mediation settlement.
(4) Where a mediation settlement relates to a child, a court, in determining any application with regard to the mediation settlement, shall be bound by section 3 (amended by section 45 of the Children and Family Relationships Act 2015 ) of the Guardianship of Infants Act 1964 ." [emphasis added]

It appears that an error was made in drafting this section. In particular, "full and mutual disclosure of assets" was suggested by the Law Reform Commission as a provision that should apply to family law mediations. The section of the Act applies this to all mediation settlements.  

There is no principled basis on which a commercial party should need to make disclosure of its, or his or her, assets to another party in order to settle a dispute. For instance, a lender, creditor, or insolvency practitioner should not need to make disclosure of its, or his or her, assets to a debtor in order to make a settlement agreement binding and enforceable. It is very unlikely that such disclosure would ever be made.

However, it appears that settlement agreements executed by the parties, but not the mediator, would fall outside of the definition of mediation settlement in section 2 of the Act and they should then be enforceable as a simple contract.

Comment

Mediation is a very useful tool in dispute resolution and is routinely advised by lawyers to clients. 

However, while the cosmetic and political attraction of having a mediation act is acknowledged, the central thesis that, without it, lawyers would not properly advise their clients is inherently objectionable. More objectionable however, is the ham-fisted implementation of certain provisions, for example requiring a corporate party to a mundane commercial dispute to be told that mediation may not be appropriate if its children are at risk!

The requirement for a solicitor in all cases to advise a client in a particular and prescribed manner which may not reflect the reality of the dispute and to make a statutory declaration before initiating proceedings, will likely result in pro forma compliance, delay and additional costs.

Separately, the unfortunate application of mutual disclosure of assets to all mediation settlements would appear to render such settlements unusable by most commercial parties.  

It remains to be seen if any societal benefit will flow from this well-intentioned, but flawed, legislation.

Footnotes

1 S.I. 591 of 2017 made on 8 December but published on 26 December 2017.

2 S 21.

3 S 14(1)(a).

4 S 14(1)(d)

5 S 14(1)(b).

6 S14(1)(c)(i).

7 S 14(1)(c)(ii).

8 Summons, claim notice, originating notice of motion etc.

9 S 14(1)(e) and S 14(2).

10 S 14(1)(e) and S 14(3).

11 S 14(1)(e) and S 10.

12 S 14(1)(e) and S 11.

13 S 14(2).

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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