Can a Mediated Agreement be legally binding?

Commentary by Dr Róisín O’Shea, Partner, Arc Mediation

The simple answer is yes!

Since the Mediation Act 2017 commenced in January 2018, we now have clarity about achieving a legally binding agreement in mediation. You as a party to the mediation now have the right to decide if you want a legally binding agreement, drafted by the mediator, as an outcome of mediation.

In several jurisdictions ADR statutes contain a provision that where the parties execute a written agreement that resolves a dispute, that agreement is enforceable in the same manner as any other written contract. There are four elements to a valid contract; an offer, an acceptance, the intention to create legal relations and consideration. Up until the commencement of the Mediation Act 2017 “the Act” in January 2018 contract law governed mediated agreements that were signed by both parties, and such agreements were therefore capable of enforcement, although there appeared to be little awareness of this. Since the commencement of the Act the enforceability of a mediated settlement or agreement has been placed on a statutory footing in section 11.

The parties shall determine

(a) If and when a mediation settlement has been reached between them, and
(b) Whether the mediation settlement is to be enforceable between them

It is for you and the other party or parties to a mediation to decide if and when an agreement has been reached, and to decide if you wish that that agreement to be enforceable s 11 (1) (a) and (b).

The Act also provides that where a mediated agreement is signed by the parties it will automatically have effect as a contract, and therefore be capable of enforcement, unless there is a clause in that agreement that specifically states that the agreement is not intended to have legal force until such time as the terms of that agreement are incorporated into a formal legal agreement or contract, s 11 (2).

At first reading the Act seems to allow the two approaches to mediated agreements in Ireland to continue. The first is the traditional two-step approach to a mediated agreement. An MOU (Memorandum of Understanding) is drawn up which states that it is not intended to be legally binding. The intention being that the MOU will subsequently move to solicitors for the parties who will re-draft the terms into language and a format that is capable of being enforced, which is then signed by the parties. The downside of this approach for clients is essentially two sets of professionals, mediators and solicitors, working independently of each other, an extended timeline, increased costs and a risk of re-interpretation, or a re-opening of issues not properly dealt with. The second more recent approach and now supported as Government policy by the Mediation Act 2017 is that mediators with sufficient legal knowledge and competency can draft a mediated settlement that is intended to be legally binding with the mediators ensuring that both parties are aware of their right to avail of independent advice including legal advice before signing.

However, which approach is desired is now at the discretion of the parties in mediation, not the mediator. The Act has fundamentally shifted the decision to the participants. So it is the parties themselves that decide if they want their agreement to be legally binding not the mediator. Therefore the mediator is obliged to produce an agreement that is competently written and can be enforced where the clients request an enforceable agreement.

Before you select a mediator or mediators for your dispute Section (8)(b) of the Mediation Act 2017 says that you now have the right to ask a mediator to provide you with information on their qualifications, their training, how many cases they have completed and what kind of cases, what code of practice do their adhere to and what continuous professional development they have undertaken.

The ARC Mediation team have produced hundreds of agreements capable of legal enforcement since 2010, and offer in-house drafting of Separation Agreements, Consent Terms for Divorce, Co-Habitants Agreements, Parenting Agreements (Access), Maintenance Agreements, Resolution of Contract Disputes, Partnership Disputes, Farm Family disputes including Succession Planning and Probate disputes.