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Challenging the mediation agreement?
A successful mediation results in a negotiated settlement between the parties. This is a formal contract that memorializes the agreed-upon resolution of the legal dispute. Once the parties enter into this agreement, it takes the place of the underlying dispute. The parties can no longer pursue litigation for the underlying dispute without breaching this contract. If, after the settlement agreement is signed, the parties wish to dispute the agreement, they must bring a contract action in court attacking the validity of the agreement. In this situation, however, the suing party is not suing regarding the underlying dispute but is arguing that the settlement agreement is not valid based upon some contract law principle. If the party is successful in rescinding (doing away with) the mediation agreement, the parties would be free to litigate the underlying dispute or pursue other forms of ADR.
Discussion: Should parties be able to revisit the subject of the mediation even if the mediation resulted in a settlement agreement? What are the arguments for and against disregarding the settlement agreement?
Practice Question: Venus and Maria submit their dispute to mediation. After several hours, they reach a resolution of their dispute and sign a settlement agreement. The next morning, Venus regrets having signed the settlement agreement. She thinks that the hours of mediation unduly pressured her into reaching an agreement. What are Venus’s options for pursuing litigation of the original dispute?
- Venus can bring an action before the court against the contract. The contract that is being disputed in this case would not be the original dispute that prompted mediation but rather the settlement agreement that was the result of the mediation process. The aggrieved party must show and prove that the mediation process was not held or conducted lawfully and hence the settlement agreement is unlawful. The issue here will be for the party to challenge the legality of the core of the settlement agreement on the face of contract law principles – such as undue influence, fraud, or duress. If Venus is success in challenging the settlement agreement and have it thrown out, then she and Maria will have to begin the litigation process to solve the original dispute.
Kinchin, Niamh, Mediation and Administrative Merits Review: An Impossible Goal? (2007). (2007) 18 Australasian Dispute Resolution Journal 227. Available at SSRN: https://ssrn.com/abstract=2569457