12th Al Jazeera Forum: Session 4 - Changing Alliances in the Region

10/n An Analysis of UAE's Commercial Mediation Law, Federal Law No. 6 of 2021, Confidentiality in Mediation, Part 1: The Analytical Framework

In an earlier post, analyzing party control over process choices, I talked about confidentiality in mediation.  I said: 

• This topic has confounded many organizations trying to set guidelines for confidentiality in mediation. In 2001, the National Conference on Uniform State Laws in the U.S. produced the Uniform Mediation Act after many drafting sessions occurring over several years. A large part of the draft law applies to confidentiality. After a lapse of 22 years, only twelve states have adopted it. Instead, other states rely on their own laws governing mediator confidentiality.

Similarly, various iterations of rules governing confidentiality exist all over the world.  Accordingly, to create some structure to the analysis, I am providing this discussion covering:

• What are the breakdowns in the process that lead to a desire to breach mediation confidentiality?
• What are the public policies supporting confidentiality in mediation?
• Why do we rely on a statute to protect these interests?
• What are the possible approaches to mediation confidentiality?
• Who is the holder of the privilege who may prevent the disclosure of confidential information?
• In what subsequent proceedings will confidentiality prevail?
• What is confidential?
• Who can enforce confidentiality?
• Against whom can confidentiality be enforced?
•  How absolute should the grant of confidentiality be?           
  

What are the Breakdowns in the Process that Lead to a Desire to Breach Mediation Confidentiality?

Parties may wish to breach confidentiality in an effort to void a settlement agreement when they discover later that the mediator committed malpractice or engaged in misconduct.  Similarly, a party may try to unwind a settlement agreement tainted by fraud or duress by introducing mediation communications showing a party's failure to disclose material information, a party's  intentional misrepresentation of material facts, or a party's proffer of incorrect financial data.  A party might also want to raise a defense of unfairness or unconscionably using mediation communications. 

A party may also wish to show that the other party failed to participate in a failed mediation in good faith or to use mediation communications to clarify an ambiguous provision of the settlement agreement. Finally, a party may simply have buyer's remorse and will search for any way to void the settlement agreement.

What are the Public Policies Supporting Confidentiality in Mediation?

Statutes, laws, or rules governing confidentiality in mediation attempt to address two conflicting public policies. The first seeks to preserve confidentiality in the mediation process to encourage the early, cost effective resolution of disputes. On the other hand, the justice system emphasizes the production and  consideration of all available evidence.

The reasons for preserving confidentiality in mediation include the following: 

First, effective mediation requires candor.  Because the mediator has no coercive power, he or she is dependent on increasing the amount and quality of the communication between the parties, if not their trust of each other.  Thus, a mediator uses confidential communications to identify interests, needs and issues; explore fully all possible bases for agreement; encourage parties to accommodate each other’s interests; and uncover underlying causes of the conflict. That process often results in the admission by a party of facts that he or she would not otherwise disclose.  These disclosures often come in a private caucus, in which the mediator promises confidentiality. 

Second, fairness to the disputants requires confidentiality. Typically, no specific rules or procedures exist to safeguard against one party's abuse of the process by using it as cheap discovery of relevant facts.  Mediation should not be used solely as a vehicle for making one's case at trial.

Third, the mediator must remain neutral in fact and in perception.  Thus, we need to avoid the potential situation where the mediator is forced to divulge information against one party when subpoenaed in a later proceeding by the other party.   Even the risk of this type of post-mediation disclosure could damage the public’s perception that individual mediators and the mediation process are neutral and unbiased.   In addition, subpoenas issued to mediators cause distraction and potential harassment.  Even lawyer-mediators may feel the need to hire a lawyer to resist a subpoena.  Even if a mediator appears pro se, the court appearance will take time and energy away from other aspects of the mediator's life and career.   In addition, the threat of subpoenas can discourage people from serving as volunteer mediators in various programs. 

Fourth, confidentiality is an incentive for many to choose mediation.  Some parties will use it to protect information like trade secrets or patents.  Other parties will use it to avoid airing their "dirty laundry" in public that could damage a party's reputation or brand, or make hiring of quality employees more difficult. Many parties will use mediation to avoid adverse court precedent when the stakes are high or when liability is uncertain. 

Why do we Rely on a Law to Protect these Interests?

Evidentiary exclusions at trial governing compromise and settlement negotiations are under-inclusive. Some courts have ruled that only offers of settlement are excluded, not any admission of facts made during negotiations.  Problems also exists where the two -- offers and admission of facts -- are intertwined.

First, some evidentiary rules, like Rule 408 of the U.S. Federal Rules of Evidence, do not preclude information revealed in settlement negotiations to be used for another purpose.  They can be used 

• to show bias of a witness,
• to show an obstruction of justice, or
• to show a prior inconsistent statement.

Moreover, some evidentiary rules of exclusion, like Rule 408 of the U.S. Federal Rules of Evidence, do not apply to administrative proceedings or criminal proceedings.

Second, rules governing discovery of information in litigation are under-inclusive and permit discovery of information that may lead to admissible evidence.

Third, private agreements to keep mediation communications confidential are under-inclusive.  The agreement cannot bind parties who did not sign the agreement.  Confidentiality agreements may lead to enforcement problems and create difficulty in calculating damages caused by the breach of confidentiality.  Moreover, public policy typically precludes contracting to exclude evidence needed at a subsequent trial or hearing.

What are the Possible Approaches to Mediation Confidentiality? 

Who is the holder of the privilege who may prevent the disclosure of confidential information?

• Mediator only?
• Parties only?
• All participants?
• Jointly between mediator and parties?
• Parties control disclosures as between themselves
• Mediator given means to avoid being compelled to give testimony about the mediation

In what subsequent proceedings will confidentiality prevail?

• Any subsequent legal or administrative proceeding between parties?
• Any other context involving the parties?
• In legal or administrative proceedings involving third-parties to the mediation?
• In formal discovery process by parties to mediation or by third parties?

What is confidential?

• The mere fact of settlement?
• The terms of a settlement?
• Statements made by the parties in the course of settlement discussions – oral or written?
• Acts or conduct of the parties?
• Pre-existing documents, other written evidence, or tangible items disclosed in mediation?
• Documents or other evidence created in mediation process?
• Statements made by or notes of the mediator?
• Appraisals, fact- or legal-expert opinions, etc. obtained to prepare for settlement negotiations?
• Agreement to mediate?
• Communications in setting up the mediation? Even “ex parte” communications with mediator? Intake information?
• Communications made between multiple sessions? 
• Communications made at the time between reaching agreement in mediation and the final execution of the settlement agreement?
• Information assembled for research or program accountability or assessment?

Who can enforce confidentiality?

• Parties to the mediation? 
• Witnesses or other participants?
• The mediator?
• Interested non-parties?
• Courts and other public agencies?

Against whom can confidentiality be enforced?

• Parties?
• The mediator?
• Non-party participants or witnesses?
• Private third-parties?
• Public third-parties?

How absolute should the grant of confidentiality be?

• Absolute with no exceptions?
• One broad exception: when interests of justice or public policy requires disclosure?
• A list of specific exceptions, like:
• Bad faith
• Past illegal conduct or crime
• Fraud
• Abuse of process
• Threats to commit crime or disclosure of ongoing crime
• Threats to commit child abuse or adult abuse or other bodily harm
• Only when such disclosure is mandated by local law?
• Threats to commit child abuse or adult abuse or neglect by a governmental agency in charge of persons in its care
• Only when such disclosure is mandated by local law?
• Threat of harm to property
• Commission of crime in mediation
• When disclosure is mandated by another state law
• When disclosure is mandated by court or administrative agency

In my next post, I'll apply this analytical framework to the UAE Commercial Mediation Law. 

Also, this reminder:  The 2021 law has now been replaced by Federal Decree-Law No. 40/2023 On Mediation and Conciliation in Civil and Commercial Disputes, issued on September 28, 2023, and effective 90 days after its publication, which is some time in December 2023.  A copy of the English-language version is available here.