Area of Law: Arbitration & Mediation | ADR
Answer # 0532
Is the agreement reached in mediation final and binding?Region: Ontario Answer # 0532
Final and binding
The agreements of the parties in mediation are always made final only after each side sees his or her lawyer for legal advice. Once that happens, they can agree that either the lawyers or the mediator will draft the contract that the parties sign to end their dispute. What is important is that the contract contains a certificate from the lawyer for each side saying that legal advice was given. The contract is then binding. If either side makes an agreement that is in the contract and then doesn’t honour the deal, a court can make decisions based on the contract.
Who writes the agreement?
The question of who writes the agreement can vary depending on the mediator. Usually, the practice of mediators is to send a letter to the parties and their lawyers, which reports on the agreement that was reached. This report, which is often called a Memorandum of Understanding, will also say that what has been agreed to by the parties will be final once each side has discussed the agreement with their respective lawyers.
Some mediators will actually write the agreement of the parties in the form of a contract. The mediator will do this only if it is what the parties want. Sometimes, the parties want the mediator to prepare the contract because it may save some expense. However, even if the mediator writes the contract, it is still necessary for everyone to take the agreement to a lawyer to get legal advice before signing. The mediator cannot give legal advice to either party. If the mediator were to give legal advice, it would not be possible to remain neutral. If the mediator is not neutral, they may be seen by one or the other party as being biased against them.
Can there be a partial agreement?
In the course of the mediation, everyone can agree to write up an agreement on some of the matters that have been settled. This can be done in the same manner as above, but would result in a contract called interim. This interim contract can say that when everything is settled the interim agreement will become part of the final agreement, or it may say that the interim agreement will only be binding until a certain date.
What happens if the mediator’s report is never made into a final contract?
If the parties have agreed that the mediation is private, or what is called a closed mediation, the mediator cannot be asked later to tell what happened. In other words, if the Memorandum of Understanding never becomes a final contract, all the mediator can say is that there was an agreement or there was no agreement. So, if the parties change their minds when they see their lawyers and get legal advice, and if the mediation is private, the details will not be disclosed by the mediator if the parties later go to court.
If the mediation is not private, which is called open mediation, the mediator can write a report that tells what happened at the mediation and what each party proposed, accepted and rejected. The mediator should not give any opinion whether they think either party was “fair” or “reasonable.” The report of the mediator can be used by the parties if they go to court.
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