What Exactly is Mediation?
Mediation is a process where two or more parties engage the services of a neutral third party to assist them in resolving some dispute or issue. It is a voluntary process, and usually only occurs if the parties are at an impasse and want to resolve some or all of their issues.
The neutral person does not decide the outcome for the parties, nor does he or she instruct the parties as to what they must do. The purpose of having the neutral individual, generally referred to as a mediator, is to assist the parties in reaching resolution themselves.
In many legal contexts where mediation is used, it is often referred to as alternative dispute resolution. Many people confuse mediation with other forms of alternative dispute resolution, however, such as arbitration. In actuality, the two processes are very different. In arbitration, the parties agree to submit their disputes to either one (single arbitrator) or three (panels of arbitrators) individuals who will be selected by either the parties themselves or through the administration of a given arbitration institution. These arbitrators will then hear evidence from the parties and make a decision in favor of one of them. Arbitration is similar to litigation in that it is a binding process, meaning that the decision of the arbitrator or arbitration panel will be final and not subject to appeal to a court system .
Mediation, on the other hand, has no ruling power. The mediator will listen to each side of the party’s arguments and then work to facilitate discussion and negotiation. The parties are responsible for making the decision of how to handle the situation and coming to resolution accordingly. The mediator cannot direct the outcome, but will act only as a facilitator and counselor through the process. Further, mediation is not binding, meaning that if a party feels that it has not been treated fairly through the process or that the settlement reached at mediation is not in its best interests, it can go forward with other litigation measures if it so chooses.
Some people confuse mediation and litigation because they both have similar court processes behind them. However, mediation is a voluntary process where the parties agree to mediate and where the mediator acts only as a facilitator of the communication process. Courts require the mediation of some issues before the litigation process will even begin, such as issues relating to child custody, child support, and visitation. If the case goes to trial, the parties then have a judge or jury make a decision regarding the outcome of the case.
Are Mediation Agreements Legally Binding?
A mediation agreement becomes legally binding when all of the parties agree with the settlement terms as finalized. This does not mean, however, that a mediation agreement is legally binding as soon as the parties know that they have reached some type of agreement in principle. What it does mean is that unless and until an agreement is signed, there is no obligation on any of the parties to pursue a settlement. In other words, a mediation agreement must be in writing and signed by all parties for it to be legally binding.
It is also important that, particularly in family law matters, the parties obtain legal counsel to assist them in pursuing the terms of the mediation agreement to ensure that the terms that each of them has agreed to be reduced to writing.
Bear in mind that the process of meditating is not a guarantee that a real settlement will be reached in writing by the parties. In some situations, settlement terms simply cannot be agreed upon after the mediating session. In such case, the mediation agreement is not legally binding.
Mediators and Legally Binding Agreements
It is not the duty or responsibility of mediator’s to mediate a legally binding agreement as this is the parties’ role in the mediation. A mediator is neutral third party who facilitates the process of two parties reaching their own agreement in a non-confrontational setting. The mediator does not push for agreement or force parties to sign an agreement at mediation, likewise a mediator does not force parties to honour an agreement once signed. The flexibility and control that mediation gives parties, does not mean that a written record of agreement or conditions agreed is not formed by the mediator during the day. Without a written record of an agreement it is not enforceable and therefore there is little incentive for parties to engage fully in negotiations. A written record of agreement, whilst not legally binding in itself, is nevertheless a critical part of the process in order to further encourage engagement as it confirms what has been agreed and makes clear the issues that still need to be worked through or resolved. A mediator will often take the lead in drafting and agreeing the wording of the written record which will then be signed at the mediation by both parties and any legal representatives present. In striking the right balance of facilitating the process of negotiation but taking the lead in formalising agreement, a mediator can often create a written record of settlement reasonably quickly during the course of the mediation day. This is particularly important in family financial disputes where the parties might only be able to agree during the summer holidays to afford to meet at mediation so that a financial settlement is reached before the start of the new school year. While the finance approval process can often take many months following the signing of a court order, once parties have reached agreement at mediation, the priority for them and their lawyers is to act as swiftly as possible to bring that agreement to a close. Giving rise to the least amount of stress or uncertainty for the children may well be the motivating factor to the leading lawyer drafting a Consent Order that day with the parties signing it at the end of the mediation. The mediator will then send the paperwork over to the lawyers who will make the appropriate application to court. A copy of the signed record of agreement can also just be sealed by the mediator and a divorce reference number added to it if required. A mediator does have a role to play in formalising an agreement and making it enforceable, by preparing and sealing the agreement so that this can be lodged with the family court and a divorce reference number added should the parties wish to use the court process to implement the agreement. Once a record of agreement has been signed there is no way back, a mediation is binding. Parties will have picked up on and made concessions to each other throughout the day that means that when they sign an agreement they fully commit to its terms. If they are not sure whether they understand something, or want to consider it further, then a mediator will let them go away, think about it and come back another day before anything is signed.
Legally Binding Mediation Agreements
While generally respected and enforceable, the legal standing of mediation agreements can vary from jurisdiction to jurisdiction. In some locales, the mere fact the parties have reached an agreement does not impose on either party any formal or potential obligations unless there is a formal writing or contract. In other jurisdictions, however, the mere fact that the parties have reached an agreement, perhaps even if it is informal, does impose upon the parties when the agreement has been reached a binding obligation to comply with the terms of the agreement. Wherein lies the problem is when parties have an understanding or agreement of the settlement terms and one party backs out of the agreement the other party cannot have any recourse against that party unless there was a writing and an agreement to be bound. The former party could sue the other for possible fraud whereupon the party that backs out loses. The latter party could also sue the party that backs out based on detrimental reliance, which is where one party relies on the good faith representations of the other party to their detriment; however, without forfeiting mention of their agreement in writing to be bound by the agreement the former party will most likely lose because the other party will most likely not have performed any significant steps in order to enforce the agreement. So to best ensure that agreements reached are respected by law, parties should always seek to have all agreements in writing and preferably documented by having an attorney generate a written and signed contract as the enforceable instrument. The important thing for parties to remember is that just because agreements reached in mediation do not always have to be binding, they can be if that is what the parties desire.
Challenges to Legally Binding Mediation Agreements
Some parties often have a difficult time enforcing agreements "reached" in mediation. The reason is that the agreement may not be properly drafted, may contain loopholes, or may even contain conditions that were considered in mediation but not finalized. One example of a common loophole is language requiring a party to write another party a check, but is remaining silent about whether the check actually needs to be cashed by the other party.
Another issue that emerges in mediation agreements is a substantive change in language. As an example, one party and its attorney may believe that the agreement provides for a reduction in alimony upon the payor’s retirement, while the other party believes such provision was no longer agreed upon (and the language in the final Agreement is unclear) . In that example, the parties cannot remember the specifics of what occurred during the mediation.
One more example of a common problem arises when a proper agreement is created at the mediation. However, a party then fails to execute the formal settlement agreement. This issue can arise because some judges refuse to enter an oral agreement as an Order of court unless supported by a specific oral record. In such cases, the judge then refuses to enforce the Agreement because it is not part of the judicial record. The parties then have to "start from scratch" with their dispute.
Benefits of Mediation over Litigation
All litigation takes time and money, and unfortunately in the vast majority of cases, there is no way to avoid both. Court appearances have to be paid for, and the time spent by our clients, witnesses, and other experts has to be compensated as well. Even if your case lasts only a few months, this could still add up to many thousands of dollars. Since mediation can be completed in just one or two sessions in many cases, most clients find that they are able to save a lot of money – especially considering that the legal fees incurred for going to court are usually much higher than they would have been if the matter has been settled at mediation. Moreover, mediation tends to be faster than litigation. This is crucial in many cases, such as where one spouse or partner wants a speedy resolution in order to move on with their lives. Even if you and your partner are able to cooperate with one another, it could take months just to get a date with a judge, and the case could be prolonged even longer as motions need to be filed and considered by the judge. Or, in some situations, the parties need a quick ruling on their case in order to obtain insurance or implement a succession plan. For these people and many others, a decision quickly is imperative to their continued well-being. Not only is mediation faster than litigation, but it is also private. Once a case is filed, any documents submitted to the court system are generally accessible to any interested party, so if it is a high-profile case clear of media attention, anything highlighted in these documents may be exposed. Mediation, on the other hand, is a strictly confidential process, which means that you and your spouse are able to have candid and open conversations without worrying that the press will get a hold of this information.
How to Make Your Mediation Agreement Legally Binding
The process of finalizing an agreement can be an important step to ensure that your mediation is legally binding – in other words, that you can enforce the terms to their full extent and go back to court to enforce if they’re not followed. One of the first things to remember is to be absolutely clear that you mean your agreement to be binding – don’t simply agree in principle to some of the terms and allow the parties to later come back to it later to renegotiate.
Here are the steps parties can take to do this:
??There must be an offer by one party that he or she is willing to be bound by certain terms in relation to the dispute.
??The other party must unambiguously accept that offer. If there is some sort of reservation about fully agreeing (for example , expressing the hope that the other party will agree to something else in the future) then that reservation will turn the offer into an invitation to treat rather than an offer capable of acceptance.
??Any conditions which require the initial offer or acceptance to be in writing must be followed if the offer and acceptance are to be legally binding.
??If a condition specifically requires that something is to happen as soon as possible, that should be satisfied (a court may consider that the condition is not met unless the terms are carried out within a reasonable time).
??A party’s expectation that the other party understands the terms of an agreement is rarely enough to create a binding agreement – parties are expected to spell out the terms clearly and specifically if that is intended.
??References to an attachment in the terms of an agreement is unlikely to be specifically enforceable if the actual terms are not recited in the body of the document itself.
??The document must be signed by both parties, or at least the party to be bound by it (and that signature must be witnessed if that’s a requirement under a particular statute).