Confidentiality of Mediation and Arbitration

AuthorMichael Erdle
DateJanuary 15, 2015

Confidentiality and privacy are often mentioned as advantages of mediation and arbitration over litigation in commercial disputes.

In some cases, of course, the threat of publicity can be a tactical advantage for one party. But, going into an agreement at least, both parties usually have an interest in protecting trade secrets and business goodwill. Even after a dispute arises, private and public-sector organizations may be reluctant to air their disputes in public, for a variety of reasons. So they want any agreed dispute resolution process to be private and confidential.

Recent cases in Canada and elsewhere illustrate the care parties must take to ensure that this intention is realized – especially, in situations where one of them later decides that they would gain an advantage if they are able to make some details public.

Supreme Court of Canada’s unanimous decision earlier this year in Union Carbide Inc. v. Bombardier Inc., 2014 SCC 35, recognizes a broad public policy in favour of maintaining the confidentiality of settlement discussions, including mediation. But there are limits.

The case involved efforts to enforce the terms of a settlement agreement reached following mediation. The parties disagreed whether the settlement applied globally or just to Canadian litigation. When Bombardier brought a motion to enforce payment of the settlement amount, supported by documents it said proved the narrower scope of the settlement, Union Carbide brought a motion to strike on the basis that it referred to documents exchanged and discussions that had taken place in the course of mediation.

A standard mediation agreement signed by the parties contained the following confidentiality clause: “Nothing which transpires in the Mediation will be alleged, referred to or sought to be put into evidence in any proceeding.”

In light of the clause, the motions judge found that the mediation process was confidential and could not be referred to in enforcement proceedings. The Quebec Court of Appeal disagreed. When mediation results in a settlement agreement, communications made in the course of the mediation cease to be privileged, the court said. Settlement privilege does not prevent a party from producing evidence of confidential communications to prove the existence of a disputed settlement agreement arising from mediation or to assist in the interpretation or enforcement of the settlement.

The Supreme Court of Canada agreed with the result, but for different reasons...

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