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Confidentiality

CONFIDENTIALITY IN MEDIATION: A BRIEF OVERVIEW
By Samuel Mani & Natasha Wilson
Mani Chengappa & Mathur

Mediation has risen in popularity in recent years as an alternate mode of dispute resolution between parties looking for a quick, cost effective and confidential process and outcome. The confidentiality aspect of mediation has played a significant role in its success as an alternative dispute resolution mechanism. This briefing note will briefly explain the role of confidentiality in mediation and examine how the law in various jurisdictions addresses the same. This note is not intended to be an exhaustive analysis or a definitive statement on the confidentiality aspects of mediation, but is only intended to be a general introduction to the concept.

Anyone who has been a party to mediation will know that one of the key aspects that the mediator emphasises is the confidential nature of the mediation proceedings. A mediator may also re-emphasise this point numerous times to the parties during the mediation process, both in joint sessions as well as in one-on-one sessions with each of the parties. Very often, confidentiality is also a specific requirement of the mediation agreement that parties enter into prior to mediating a dispute. This is significant in our examination of this concept under Indian law.

The confidentiality of the mediation process gives the parties the benefit of being able to disclose information without fear of the same being used in any subsequent law suit relating to the dispute. It is important to note that the expectation of confidentiality in the joint sessions is somewhat different from the expectation of confidentiality in one-on-one sessions between the mediator and each of the parties to the dispute. In addition to the benefit noted above, a party has the ability, in the one-on-one meetings, to share sensitive information with the mediator without fear of the other party becoming aware of the same. This sort of sharing would not be possible in litigation or arbitration since both parties are always present in the room and all disclosures made to the judge/arbitrator is available to both parties. Since a mediator is not adjudicating on the dispute, she can agree to keep certain information confidential between a party and herself and not be in violation of any obligation owed to the other party. Another aspect of confidentiality in mediation is the expectation that the mediator will not be summoned to lead evidence in a subsequent law suit relating to the dispute.

Some of the advantages of confidentiality in mediation, therefore, are as follows:

This leads to the question of whether this expectation of confidentiality has statutory sanction which prevents parties from seeking to void their confidentiality obligation in subsequent legal proceedings regarding the same dispute. The answer is that the questions of confidentiality in mediation are complex and not fully examined by courts. At the heart of the confidentiality debate lies an inherent tension between two contradictory interests. On the one hand, having broad confidentiality protection for the mediation process allows for frank and free disclosure of information which may promote the settlement of a dispute without having to resort to expensive and time consuming litigation. On the other hand, there is a case to be made for having all the evidence available for examination by a court or an arbitral tribunal in the event of a failed mediation.

Many countries have statutory support for confidentiality in the context of court annexed mediation. The statutory support for confidentiality in private mediation is far more limited. One commentator explained the position in the United States as follows:

Confidentiality in mediation is based upon a complex combination of constitutional rights including the First Amendment: free speech/the right of the public to know; the Fourth Amendment: the right to be left alone; the Fifth Amendment: granting protection from incriminating oneself; and the Fourteenth Amendment: liberty rights to make individual and family decisions. In addition, tort law protects parties from invasion of privacy by others.1

According to the Uniform Law Commission, there are nearly 2500 federal and state statutes that impact mediation and more than 250 of these relate to issues of confidentiality and privilege. Hence, the Uniform Law Commission (in its previous avatar as the National Conference of Commissioners on Uniform State Laws) collaborated with the dispute resolution section of the American Bar Association to promulgate the Uniform Mediation Act in 2001 which is focussed on bringing certainty about the confidential nature of mediation proceedings across the United States. Some of the states have adopted and enacted the Uniform Mediation Act but the majority of the states have yet to move in this direction.

In Europe, Article 7 of the European Directive on Mediation, 2008 states that:

“Given that mediation is intended to take place in a manner which respects confidentiality, Member States shall ensure that, unless the parties agree otherwise, neither mediators nor

those involved in the administration of the mediation process shall be compelled to give evidence in civil and commercial judicial proceedings or arbitration regarding information arising out of or in connection with a mediation process, except:

It then goes on to state that nothing therein shall preclude a member state from enforcing stricter measures to protect confidentiality of mediation. This directive is only applicable to trans-border disputes in the European Union but the directive does not prohibit members from adopting the principles laid out therein for mediation of internal disputes in the commercial arena.

The High Court of England and Wales, in 2007, in the case of Brown v. Rice and Patel , suggested that there needs to be mediation privilege available to all the parties who are a part of the mediation. Hence, there is a harmonised recognition of the need for confidentiality in mediation at the European Union level but individual countries still have the freedom to provide statutory backing for confidentiality with respect to disputes where all parties are domiciled in the same country.

In 2011, the Supreme Court of India held that mediation proceedings should be kept confidential and if mediation resulted in a settlement only a copy of the executed settlement need be provided to a court. The court has stated that no disclosure of anything that transpired during the mediation proceedings needs to be disclosed whether or not the mediation has been successful. If unsuccessful only the fact that the mediation was unsuccessful needs to be disclosed to the court. This again was considered largely in the context of court mandated mediation but it is instructive with respect to the thinking of the higher courts on confidentiality in the mediation process 5.

In light of the fact that courts encourage mediation, it would also be useful to look into what Indian law says with respect to confidentiality in mediation. The most relevant provision in this regard is probably Section 23, of the Indian Evidence Act, 1872:

“Admissions in civil cases, when relevant.—In civil cases no admission is relevant, if it is made either upon an express condition that evidence of it is not to be given, or under circumstances from which the Court can infer that the parties agreed together that evidence of it should not be given.”

Hence, it is possible to argue that an effective confidentiality provision in a mediation agreement will fall within the ambit of Section 23 of the Evidence Act and therefore, admissions and disclosure made during the mediation will not be admissible in court. Rule 20 of the Draft Mediation Rules, 2003 drafted by the Law Commission of India, in response to the request by the Supreme Court in the Salem Bar Association case states as follows:

Rule 20: Confidentiality, disclosure and inadmissibility of information:

(1) When a mediator receives factual information concerning the dispute from any party, he shall disclose the substance of that information to the other party, so that the other party may have an opportunity to present such explanation as it may consider appropriate, provided that, when a party gives information to the mediator subject to a specific condition that it be kept confidential, the mediator shall not disclose that information to the other party.

(2) Receipt or perusal, or preparation of records, reports or other documents by the mediator, while serving in that capacity, shall be confidential and the mediator shall not be compelled to divulge information regarding those documents nor as to what transpired during the mediation.

(3) Parties shall maintain confidentiality in respect of events that transpired during mediation and shall not rely on or introduce the said information in any other proceedings as to:

(4) There shall be no stenographic or audio or video recording of the mediation proceedings.

One of the problems with confidentiality in the mediation is when the underlying dispute relates to a public service or has a significant public interest element. Does this then mean that the public has the right to be aware of the facts and situation and not just the basic details of settlement? The obvious solution to such a situation is to consider offering confidentiality generally but to ensure that there are carve outs to cover exceptional

6 Salem Bar Association v Union of India, 2005 Indlaw SC 592.

situations, where there is a test to balance any conflicts of interest. There is no definitive answer to this question but mediators could consider adopting the “Wigmore Test” applied by American courts. This test helps determine whether the benefit of confidentiality outweigh any potential harm that may arise from the disclosure of the same. Under the Wigmore Test, any materials would have to pass four criteria to be afforded confidentiality. The four conditions that are laid down under the Wigmore test are:

It is very important to note that the confidentiality offered in mediation proceedings is not absolute. Any information or pertinent information that is otherwise admissible in a court of law or discoverable by a party’s diligence does not become inadmissible merely by revealing such information under the confidentiality provisions of the mediation proceeding. Additionally when mandated by an authorised entity or by way of applicable laws such information will have to be disclosed. This is a double edged sword as it frustrates the mediation process to an extent, however it prevents persons from choosing mediation as a method by which to supress the release of information.

Thus, it seems fair to say that confidentiality is a desirable aspect of mediation and one that has support from the courts, legal academics as well as rule makers. The confidentiality aspects of mediation, combined with the fact that the parties have significant control over the mediation outcome, have driven the adoption of mediation for the resolution of various types of disputes. It is particularly suitable for the resolution of commercial disputes since it allows parties to discuss matters that are confidential between them and which could have implications outside of the dispute if disclosed in litigation. For example, a company that is concerned about exposing a trade secret due to the disclosure of confidential information in a litigation will find mediation, with its emphasis on confidentiality, a much more attractive proposition to resolve a dispute with a key vendor. However, this is also an area that poses complex and sometimes conflicting issues and therefore requires more examination. It would also be good for legislatures to adopt formal mediation frameworks and specify the extent and limits placed on confidentiality in mediation, especially given some of the issues examined above.

Author Information

Name: Samuel Mani
Designation: Founding Partner, Mani Chengappa & Mathur,
Email: samuel@mcmlaw.in

Name: Natasha Wilson
Designation: Associate, Mani Chengappa & Mathur,
Email: natasha.wilson@mcmlaw.in