A recent Court of Appeal decision has given rise to concern regarding the extent to which litigation privilege is available to protect an organisation’s internal deliberations on its settlement options in a dispute.
In WH Holding Ltd v E20 Stadium LLP  EWCA Civ 2652 (outlined here) the Court found that litigation privilege applies only to documents created for the dominant purpose of obtaining advice or information/evidence in relation to litigation, and not the conduct of litigation more broadly. As a result, the privilege did not apply to emails between a company’s Board members which had been prepared to discuss a commercial proposal for the settlement of a dispute.
The decision causes real practical difficulties for commercial parties, exposing an awkward gap in the protection afforded to documents prepared for the purpose of settling a dispute.
Maura McIntosh has published a post on Practical Law’s Dispute Resolution blog which considers the decision and its implications. Click here to read the post.
On 6 March, the Civil Justice Council held a workshop to discuss the recommendations made in its interim report on ADR, which was subject to consultation late last year. The interim report addresses concerns regarding a perceived underuse of ADR within some sections of the civil justice system and suggests a variety of possible corrective measures. The proposals include a power for the court to determine whether costs sanctions should be imposed for unreasonable conduct relating to ADR (such as an unreasonable refusal to mediate) not only at the end of a case, as currently, but during the matter when the decisions regarding ADR are taken.
Jan O’Neill has published a post on Practical Law’s Dispute Resolution blog in which she questions how realistic the suggestion of “midstream” assessment of parties’ conduct relating to ADR would be in practice. She suggests that many of the concerns expressed in the report as to the underuse of ADR are not relevant to many larger, complex claims, and urges the working group to tailor any final recommendations to the specific courts or dispute types for which the evidence suggests they are needed and practicable.
Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).
The Court of Appeal has recently applied the rarely invoked "unambiguous impropriety" exception to without prejudice ("WP") privilege, to find that a written settlement offer conveyed through a mediator following an unsuccessful mediation was not protected by WP: Ferster v Ferster  EWCA Civ 717.
Communications in connection with a mediation (including when the mediator acts as a conduit for negotiations after the mediation) will of course normally be protected by WP privilege. However, one of the narrow exceptions to the WP privilege is where the communication involved some 'unambiguous impropriety', in the sense of an attempt to abuse the protection afforded by the privilege. In the present case, the Court of Appeal found that correspondence conveying a settlement offer on behalf of the claimants constituted an unambiguously improper threat against the defendant in the nature of blackmail and, as such, was not protected.
The decision serves as a reminder that WP privilege cannot be used as a cloak for impropriety. It also underlines the fact that there is a distinction to be drawn between the use of proper leverage in the context of settlement discussions and the making of improper threats. The courts will take a dim view of the latter. Read more commentary on the decision here.
Julian Copeman, a Herbert Smith Freehills partner and accredited mediator with CEDR (the Centre for Effective Dispute Resolution), recently published an article in Solicitors Journal addressing whether litigating parties are required to attempt ADR in the UK. He charts developments from the Woolf reforms to Lord Justice Jackson’s proposals, and explores key judgments in relation to refusals to mediate and disclosure of mediation documents and information. Julian concludes that ADR is correctly a consensual process, whereby judicial encouragement rather than compulsion to undertake ADR is the preferred course.
Click here to download a copy of the article, which was first published by Solicitors Journal in Litigation Focus on 25 September 2012, and is reproduced with their kind permission (www.solicitorsjournal.com).
With the Chinese courts under increasingly heavy case loads, use of “judicial mediation” continues to be encouraged by all levels of the Chinese courts as a means of effective case management. Although mediation and “judicial mediation” both have long histories in China, foreign parties may find judicial mediation in China very different from what they expect. This is because unlike common law jurisdictions, judicial mediation in China is not strictly speaking an ADR mechanism, but rather an integral and important part of PRC litigation procedure. Chinese judges will often undertake dual roles, with the same judge acting as both mediator and the ultimate adjudicator in the same litigation.
Mainland China disputes specialists May Tai and Damien McDonald discuss judicial mediation and how best to prepare for it. Continue reading
Mediation is one of the cornerstones of the Civil Justice Reform in Hong Kong, and has now become a fixture in civil proceedings. Despite the judicial emphasis on mediation, there is a perception that many parties are not yet comfortable with using documents and passing information to each other as part of the mediation process. With the introduction of legislation that expressly protects the confidentiality of communications that are made not only in the course of but also for the purpose of mediation, it is hoped that litigants will make better use of the mediation process with the comfort that such statutory protection exists. Continue reading
In June 2011, the European Parliament published a draft report on ADR in civil, commercial and family matters. The report can be viewed here. Continue reading
In an effort to provide a legal framework for conducting mediation in Hong Kong, the Mediation Task Force has recently announced that it aims to introduce the Mediation Bill into the Legislative Council towards the end of 2011. The Bill will primarily define the meaning of mediation and will cover important issues such as confidentiality and privilege in mediation. Continue reading
On 5 April 2011, Herbert Smith held a webinar to update clients and contacts from a range of industry sectors on ADR developments. The webinar was presented by Alexander Oddy, partner in the Litigation and Arbitration division and head of the firm’s ADR practice, Ian Gatt QC, partner in the Advocacy Unit and David Phillips, senior associate in the firm’s core ADR team. All three speakers are accredited mediators. Topics included significant recent cases on mediation confidentiality and privilege, the implementation of the Mediation Directive in the UK and its impact on mediation practice, and changes to the way mediation is being used in commercial disputes. Notable points for debate included implementation of the Mediation Directive in England and Wales (see item 1 above), and contractual agreements to mediate. To download the webinar contact Jane Webber.
On 7 January 2011 the Supreme Court of India, in the case of Moti Ram (D) Tr. LRs and Anr. Vs Ashok Kumar and Anr (Civic Appeal No. 1095 of 2008), held that mediation proceedings were confidential in nature, and that only an executed settlement agreement or alternatively a statement that the mediation proceedings were unsuccessful, should be provided to the court by the mediator. Continue reading