Counsel and witnesses

Are the parties typically represented by lawyers in commercial mediation? Are fact- and expert witnesses commonly used?

It is not uncommon for parties to be represented by lawyers in commercial mediations, but often parties represent themselves while accompanied by their lawyers.

In some instances, parties may choose to seek out or otherwise agree on a respected expert in the subject area of dispute to provide a more informed settlement. 

Procedural rules

Are there rules governing the mediation procedure? If not, what is the typical procedure before and during the hearing?

Organisations such as the American Arbitration Association and the American Bar Association publish guidelines for mediation procedures. These procedures are subject to modifications by the parties. A typical mediation hearing begins with the parties making a mutual agreement to mediate. Parties may also provide brief statements on the nature of their dispute and include comments on the relief they wish to seek. Before the mediation, parties also negotiate their expectations of the mediator involved. Parties will also negotiate and inform one another on who will be representing their side of the matter whether it be themselves, counsel or another representative. After the parties agree on a mediator, they wait for the mediator to clear himself or herself of any conflicts. The parties also exchange any and all materials they deem relevant and necessary for the purpose of finding a resolution to the issues at hand. Once the mediator and the parties are in mediation, the mediator is often authorised to conduct separate meetings and other communications with the parties or their representatives at any time. However, the mediator may not impose a solution on the parties, he or she may only attempt to help the parties reach a satisfactory resolution to their dispute. When the mediator and the parties have caucuses and plenary sessions, the goal is to get as much information for a resolution to come into fruition.

Tolling effect on limitation periods

Does commencement of mediation interrupt the limitation period for a court or arbitration claim?

Commencement of mediation does not interrupt or toll the limitation period for a court or arbitration claim. A request for mediation may be made concurrently with the filing of a complaint. Washington Tennis & Education Foundation, Inc v Clark Nexsen, Inc, 324 F.Supp.3d 128 (U.S. Dist. Ct., District of Columbia 2018).

Enforceability of mediation clauses

Is a dispute resolution clause providing for mediation enforceable? What is the legal basis for enforceability?

Dispute resolution clauses providing for mediation are enforceable. In many instances, the subject matter of a contract is governed by a state statute, which automatically mandates parties to mediate a dispute. For example, federal or state labour laws may require parties to mediate their dispute if they have issues over their labour contracts. In private contracts, where there is no overriding federal or state law governing the contract, the dispute resolution clause will be subject to ordinary contract principles. Accordingly, parties will have to produce sufficient evidence to show that there was a contract according to their state law, which may include showing that there was an agreement and that the terms of the mediation clause were mutually agreed upon. Basic contract defences apply to dispute resolution clauses. Thus, a court will not enforce an unconscionable mediation clause in an agreement. In Garrett v Hooters-Toledo, the Northern District of Ohio applied Ohio law on unconscionability and found that a mediation clause in an agreement was unconscionable because it required an employee to travel from Ohio to Kentucky to participate in a mediation (Garrett v Hooters-Toledo, 295 F. Supp. 2d 774 (N.D. Ohio 2003)).

Courts may order various remedies to a breach of mediation clause in an agreement. Parties seeking specific performance of a mediation clause will need to show the predicates for specific performance, such as an absence of an adequate remedy of law. Courts may also enforce a mediation clause under the Federal Arbitration Act, allowing parties to bypass proving the elements necessary to achieve relief through specific performance. Like any breach of contract claim, a party may seek damages if the other party breaches a contractual duty to mediate. The damages can include attorneys’ fees and costs for having to compel arbitration. Additionally, parties may waive the mediation clause in an agreement if they file for relief in court concerning a topic that would have been subject to mediation under the governing agreement. Courts have struggled with determining whether there is harm when a party breaches a contractual duty to mediate because mediation may not always lead to a resolution.

Confidentiality of proceedings

Are mediation proceedings strictly private and confidential?

In the United States, mediation proceedings are meant to be strictly private and confidential. Confidentiality is the cornerstone of mediation because it enables parties to discuss openly the elements of their case without consequence. Confidentiality of mediation proceedings have been assured by operation of law and by agreement. Specifically, most states have statutes mandating the confidentiality of mediation proceedings. Some states’ statutes are more expansive than others. For example, Indiana Code, §4-21.5-3.5-27 provides that mediations are confidential and privileged, and the confidentiality of the procedure cannot be waived by the parties. However, Nebraska Revised Statutes, §25-2914 allows parties to agree in writing to waive confidentiality. Additionally, West's Idaho Code Annotated, §9-806 allows parties to waive their privilege so long as the mediator is not compelled to do so.

Moreover, many states have legislation that recognises a qualified mediation privilege modelled after the Uniform Mediation Act (UMA). The UMA provides that mediation communication is not privileged if a party seeking discovery can show that 'the evidence is not otherwise available, that there is a need for the evidence that substantially outweighs the interest in protecting confidentiality, and that the mediation communication is sought or offered in a criminal proceeding . . . or in a proceeding to prove a claim to rescind or reform or a defense to avoid liability on a contract arising out of the mediation.' Unif. Med. Act §6(b). Additionally, some states have adopted the UMA with modifications, while other states have created their own mediation privileges that are either absolute or qualified. For example, Indiana’s Alternative Dispute Resolution Rule 2.11 provides for an absolute mediation privilege. On the other hand, the Central District of California has not extended its mediation privilege to documents that were going to be offered for a purpose other than to prove a claim or defence (Milhouse v Travelers Com Ins Co, 982 F. Supp. 2d 1088, 1105 n.10 (C.D. Cal. 2013)). The Western District of Pennsylvania has held that a settlement document, 'to the extent that it is introduced to enforce the settlement embodied by it', are not subject to mediation privilege (US Fidelity & Guar Co v Dick Corp./Barton Malow, 215 F.R.D. 503 (W.D. Pa., 2003). 

Federal courts have also implemented local rules to protect the confidentiality of mediation proceedings. The Alternative Dispute Resolution Act, section 652(s) states that 'each district court shall, by local rule . . . , provide for the confidentiality of the alternative dispute resolution processes and to prohibit disclosure of confidential dispute resolution communications.' Federal courts with diversity jurisdiction (28 U.S.C. §1332) may disregard the local rules implemented by the federal courts, and instead may apply the state law statutes pursuant to Federal Rules of Evidence Rule 501. For example, in the unpublished decision of Pac Marine Ctr, Inc v Philadelphia Indem Ins Co, 2015 WL 1565362, Case No. 1:13-CV-00992-AWI (E.D. Cal. Apr. 8, 2015), the district court relied on California law to rule on mediation confidentiality. In addition to state statutes or court rules that expressly rule that mediation communications are confidential, pre-written rules and the parties’ own contractual mediation provisions can ensure the confidentiality of a mediation proceeding. For example, the Judicial Arbitration and Mediation Services adopted its Rule 26 to guarantee the confidentiality of mediation proceedings.

Accordingly, the confidentiality of mediation proceedings is not implied, in the absence of an express rule or agreement. Parties should expressly agree that the mediation proceeding is confidential, prior to the mediation, if they want to warrant the confidentiality of the mediation proceeding. Nevertheless, in certain circumstances, courts may disregard confidentiality provisions and permit confidential information to be disclosed. For example, the Procedures of the Mediation Program of the US District Court for the Southern District of New York states that 'Documents and information otherwise discoverable under the Federal Rules of Civil Procedure shall not be shielded from discovery merely because they are submitted or referred to in the mediation.' Additionally, courts may allow confidential mediation communication if there is: ‘waiver; consent; finding that the process was not mediation; finding that the provider of evidence was not a mediator; finding that confidential information was not actually disclosed or that there was insufficient evidence to establish whether confidential information was disclosed; concluding the evidence was offered for a permissible purpose; or concluding the evidence was not material or its introduction constituted harmless error.’ (James R Coben & Peter N Thompson, Disputing Irony: A Systematic Look at Litigation About Mediation, 11 Harv. Negot. L. Rev. 43, 66-67 (2006)).

The UMA also carved out exceptions to confidentially that include communications concerning ongoing criminal activity or plans to commit a crime, proving or disproving a claim of professional conduct against a mediator, plans to inflict bodily injury, and a waiver of the privilege by the parties (UMA §6(a)). While courts may allow confidential mediation communications in hearings, many jurisdictions have established rules sanctioning parties for breaching confidentiality. For example, the District Court of Appeals in Florida found that a trial court was proper in imposing sanctions on a plaintiff who knowingly and willfully violated an agreement and pertinent statute and rule (Paranzino v Barnett Bank of S Fla, NA, 690 So. 2d 725 (Fla. Dist. Ct. App. 1997)). The Supreme Court of Vermont also imposed sanctions on an attorney when the attorney filed unsealed materials from a confidential mediation session with the court (Lawson v Brown's Home Day Care Ct., In., 2004 VT 61, 177 Vt. 528, 861 A.2d 1048 (Vt. 2004). 

Success rate

What is the likelihood of a commercial mediation being successful?

Although statistics are not made public owing to the confidential nature of mediation proceedings, the general consensus on behalf of many respected entities is that mediation has a high success rate overall because parties participate in an environment where they can freely and confidently resolve their legal and factual disputes in front of a neutral third party. Some entities, such as the Department of Justice, have created a statistical summary of case reports across the United States of cases in which a private mediator conducted an ADR process. The results of the data from the Financial Industry Regulatory Authority (FINRA) show that in 2019, 93 per cent of cases filed through arbitration and mediation closed. Court-ordered proceedings, on the other hand, had a success rate of 55 per cent. Additionally, FINRA also reported that 168 (83 per cent) of its mediated cases through April of 2021 were settled (