Is a mediation settlement legally binding?
Posted on May 25, 2017 by Jeremy Frost
The aim of mediation is to reach an agreement by the end of the session and that agreement should be in writing, rather than verbal. This begs the question: is that agreement legally binding?
Drafting the agreement
The starting point is that there is no agreement until everything is resolved! Clearly, if agreement is reached on the day it will need drafting. If the parties have retained solicitors, then the ideal situation is that the solicitors will draft the agreement for signing there and then.
However, it is quite likely, although not ideal, that there will be some finer details to be sorted out and theses will need to take place after the mediation.
If some form of written agreement can be produced then it should be, recognizing of course that a detailed agreement might well follow. This will also give time for the parties to review and check the document although both sides will be encouraged to focus on the areas of detail rather than seeking to unravel other areas of the agreement.
Litigants in person
In the case of litigants in person, i.e. where the parties do not have legal representation at the mediation, the parties might ask the mediator to draft the agreement and he will have a draft available. He might ask both parties to also write down what they think has been agreed and attach that to the document, in case there are any errors or omissions.
Whichever way the agreement is drafted, once signed it becomes legally binding.
Avoid creating a new dispute out of the old
When drafting the agreement, it is important to consider the potential future impact, so as to avoid framing the terms of a resulting dispute from the settlement itself.
The agreement remains the property of the parties not the mediator although the mediator might sometime challenge the parties to focus on whether the agreement matches what is drafted and what the commercial outcome of that agreement might be.
The mediation agreement will include detail on how any litigation is to be concluded and If one of the parties subsequently defaults on the mediation agreement, the other party. i.e. the claimant, will be looking to sue based on the terms of the mediation agreement.