Definition of ADR Responsibilities by the Courts

Courts have had ample opportunity to define the legal responsibilities of partici­pants in ADR. Typically, the principles they apply are ethical principles, including neutrality, fairness and confidentiality.

A. Advice

i. Lawyers Providing ADR Advice

Whether or not lawyers are actively involved in providing ADR services, the availabil­ity of such services impinge on practice in many areas. For example, lawyers may need to insert a dispute resolution clause into an agreement. This possibility requires that consideration be given to the best model and forum for the types of dispute that might arise. Lawyers might also be asked to advise on the possible outcome of mediation. Some

⁶¹ A Boon, P Urwin and V Karuk, ‘What Difference Does it Make?: Facilitative Judicial Mediation of Discrimination Cases in Employment Tribunals’ (2011) 40(1) Industrial Law Review 45. codes counsel that parties should not reach agreement without taking legal advice. Mediators may suggest this in the particular circumstances of the case.

The possibility of involvement in advising mediation participants gives rise to com­plicated responsibilities. Subjecting mediated outcomes to legal scrutiny may subvert the ethical principle of promoting client autonomy. Lawyers should therefore be wary of substituting their own preferences for the party’s.^[3233] They must also be aware, however, of the possibility of liability for negligence if they do not warn a client that they may be under-settling their claim. Therefore, when lawyers are asked to review proposed mediation agreements in this way, they should be sensitive to the distinctive aims of mediation, the specific context and consider both the interests of the party and their position in law in framing their advice.

ii. Unreasonable Refusal to Mediate

a. The Overriding Objective and Costs

Inclusion in the mainstream methodologies for dispute resolution imposed different kinds of obligations on lawyers. In theory, they had to be aware of the potential of the new methods, their advantages and disadvantages and relative costs in order to offer clients comprehensive advice. This duty arose from the CPR and the obligation to achieve the overriding objective of doing justice.

The overriding objective, applied to costs, required that courts take into account all the circumstances when making and order for costs. The circumstances included the conduct of all the parties and whether a party has succeeded on part of its case. The court had to consider offers to settle under Part 36. It might also take into account admissible offers to settle not being an offer to which costs consequences under Part 36 applied.^[3234] The conduct of the parties was defined by the CPR to include conduct before proceedings, including following pre-action protocols. It also included the rea­sonableness of parties raising, pursuing or contesting particular allegations or issues, the manner of handling the claim and whether the claim was exaggerated.^[3235]

b. The Obligation to Mediate

The decision in Dunnett v Railtrack,^[3236] which caused considerable concern, suggested that the conduct of the parties in refusing mediation was relevant to the court’s deci­sion in awarding costs. In Dunnett the judge, while granting leave to appeal, had advised consideration of alternative dispute resolution. The claimant (C) approached the defendants (R) regarding the possibility. R refused to consider mediation at the time, but made an offer to settle nearer to the hearing date. R succeeded in an appeal and sought costs against the claimant. It was held that there should be no order as to costs.

It was said that, if a party rejected alternative dispute resolution out of hand when it had been suggested by the court, they would suffer the consequences when costs came to be decided.

c. Factors in Determining Reasonableness of Refusal to Mediate

In subsequent cases, the harsh lesson of Dunnett was somewhat softened. In Halsey r Milton Keynes General NHS Trust,^[3237] the Court of Appeal demonstrated a sophis­ticated understanding of the issues surrounding ADR and compulsion. In the case, the claimant (H) sued for medical negligence causing the death of her husband. The defendant (M) disputed liability and refused H’s invitation to take part in alternative dispute resolution. M was awarded costs at first instance. It was said that the CPR were not designed to compel parties with a good defence to settle claims that they ultimately went on to win.

Dismissing the widow’s appeal against the costs order, the Court of Appeal agreed that M had not acted unreasonably by refusing to mediate. The judge had found that the claimant’s offer was ‘somewhat tactical’. The cost of mediation would have been disproportionately high compared with value of the claim and the prospective costs of trial. In the circumstances, H had not discharged the burden of proving that media­tion had a reasonable prospect of success.

The Court of Appeal adopted a passage of the main work containing the court rules and commentary:^[3238]

The hallmark of ADR procedures, and perhaps the key to their effectiveness in individual cases, is that they are processes voluntarily entered into by the parties in dispute with outcomes, if the parties so wish, which are non-binding. Consequently the court cannot direct that such methods be used but may merely encourage and facilitate.^[3239]

The court went on to reiterate that the court’s role is to encourage, not compel.

The Court of Appeal decided that unreasonable refusal to mediate should be pun­ishable by an order in costs, but that the burden must be on an unsuccessful party to show why there should be a departure from the general rule on costs. The fundamen­tal principle was that the loser paid the winner’s costs unless the winner was guilty of an unreasonable refusal to agree to ADR. The stronger the encouragement from the court to participate, the easier it will be for the unsuccessful party to discharge the burden of showing that the successful party’s refusal was unreasonable.^[3241]

The Law Society made a successful intervention regarding the factors relevant to the question of whether a party had unreasonably refused ADR. These were: (i) the nature of the dispute; (ii) the merits of the case; (iii) the extent to which other settle­ment methods had been attempted; (iv) whether the costs of the ADR would be disproportionately high; (v) whether any delay in setting up and attending the ADR would have been prejudicial; and (vi) whether the ADR had a reasonable prospect of success. The Court of Appeal emphasised that in many cases no single factor would be decisive, and that the factors were not an exhaustive checklist. ^[3242]

The conclusion drawn from Halsey was that ignoring a court direction to mediate would be almost certain to be punished by costs sanctions,^{[3243] [3244] but otherwise, sanctions were less likely. In Allen v Jones,13 Dunnett was distinguished. It was held that, as a matter of principle, a successful party should not be deprived of costs merely because he had refused to submit to mediation in an ‘all or nothing’ case. In the circumstances, there was no middle way between the parties to be explored and the court had not sug­gested that mediation should take place.}

d. Timing

The timing of an offer to mediate is a critical factor in its own right. Parties can be penalised for a refusal to mediate at any stage of a dispute. Therefore, when one side suggests mediation before proceedings begin, the court can scrutinise the reasons for refusal.^{[3246] [3247] Subsequently, parties must seriously consider a recommendation by a judge to mediate. If, however, a losing party is to avoid a costs order they must show that their offer to mediate was not merely motivated by the real prospect of losing, that it was sincere and that it was timely.}

Depending on the circumstances, other informal methods of dispute resolution may be preferable to mediation. This is particularly the case when an offer to medi­ate is made near to trial date. This proposition was amply demonstrated by ADS Aerospace Ltd v EMS Global Tracking Ltd.¹⁶ The case involved a $16 million claim for the breach and repudiation of an agreement heard in the Technology & Construction Court. The contract was for the exclusive distribution of satellite-tracking devices for aeroplanes or helicopters. The defendant successfully defended the claim. It was found that it had not acted unreasonably in not wishing to participate in mediation. For two months before the offer of mediation, the defendant’s solicitors had tried several times to initiate settlement discussions with the plaintiff’s solicitors.

An offer to mediate came from the claimant six weeks before the trial date. It was made in the light the claimant’s firm assessment that it would not accept much less than $16 million. In these circumstances, the Court said, the defendants should not be penalised for refusing mediation. They were entitled to take the view that they had a strong case on liability, causation and quantum.

e. A Duty to Constructively Engage with Offers of Mediation

Following the Jackson review of civil litigation the signs were that the courts would continue to follow a hard line on the obligation to mediate. In PGFIISA v OMFS Company 1 Ltd,¹¹ the claimant made a thoughtful and detailed offer of mediation and, having received no response, repeated the offer three months later. The defendant made a Part 36 offer to settle which was accepted just before the hearing. Normally, this would entitle the defendant to costs from when the offer was made. The Court of Appeal noted that, since Halsey v Milton Keynes General NHS Trust, the court had imposed costs sanctions, usually when parties gave reasons for not participating in mediation. What, asked the court, ‘should be the response of the court to a party which, when invited by its opponent to take part in a process of alternative dispute resolution (“ADR”), simply declines to respond to the invitation in any way?’.

The trial judge had found the refusal to mediate unreasonable and had denied the defendant costs that would otherwise have been recoverable by them. He did not however, order the defendant to pay the claimant’s costs over the same period. Both parties appealed. The Court of Appeal agreed that a failure to respond was itself unreasonable, whether or not the defendant had reasonable grounds to refuse media­tion. Lord Justice Briggs said that

the constraints which now affect the provision of state resources for the conduct of civil liti­gation (and which appear likely to do so for the foreseeable future) call for an ever-increasing focus upon means of ensuring that court time, both for trial and for case management, is proportionately directed towards those disputes which really need it, with an ever-increasing responsibility thrown upon the parties to civil litigation to engage in ADR, wherever that offers a reasonable prospect of producing a just settlement at proportionate cost.^{[3248] [3249]}

The Court of Appeal found some support in precedent for treating silence as refusal to participate in ADR.^[3250] It found that there is a duty to ‘constructively engage’ with any request for ADR.^[3251] This may amount to no more than giving grounds for refusal,^[3252] but the response must be given at the time that the offer of ADR is made.^[3253] In dismissing the cross-appeals, the court was aware that this seemed be a little harsh on the defendant. It would be deprived of substantial costs, despite having an offer to settle accepted late in the day. However, Briggs LJ took comfort in the thought that:

The court’s task in encouraging the more proportionate conduct of civil litigation is so important in current economic circumstances that it is appropriate to emphasise that message by a sanction which, even if a little more vigorous than I would have preferred, nonetheless operates pour encourager les autres^[3254]

iii. Summary

The decision in Dunnett, and subsequent cases, had clear implications for lawyers in terms of the advice they offered to clients. In Dunnett it was said that it was a lawyer’s duty to further the overriding objective of the CPR. That duty included an obligation to consider whether alternative dispute resolution might provide a solu­tion. In a later case, Lord Woolf said that ADR must be considered when advising on disputes, resulting from the ‘heavy obligation to resort to litigation only if it is really unavoidable’.^[3255]

The cases on the obligation to mediate carry clear guidelines for lawyers to consider with clients. In Halsey it was said that ‘all members of the legal profession who con­duct litigation should now routinely consider with their clients whether their disputes are suitable for ADR’.^[3256] Clients must also be warned that they must positively engage with offers of ADR, even where there are good reasons for not trying to resolve disputes in this way. If such an offer is made a response should always be provided, with clear reasons given if the offer is declined.

B. Representative Responsibilities

Lawyers have complex responsibilities in acting as representatives in mediation. This starts with the issue of whether they should act at all, given the theoretical arguments for non-lawyers as representatives or for clients to represent themselves. As represen­tatives, lawyers must demonstrate ordinary standards of competence and possess a level of appreciation and skill enabling them to participate in meeting clients’ inter­ests. In a business setting, for example, they must be aware of the commercial context of the dispute, the interests of the party in a continuing relationship, the potential for mutually beneficial agreement and so on.^[3257]

If they decide to act, they must be careful not to subvert the purpose of mediation, which includes finding a ‘non-legal’ solution to a problem, while being constantly aware of what legal solutions offer. They must be clear what their role is in the par­ticular kind of mediation and have a clear agreement with the client about what is offered. If mediation is occurring during litigation, it will be necessary to consider issues of timing and purpose. It is unclear whether a representative in mediation has a broad discretion in handling the case, like an advocate, or whether they are more tightly bound to clients’ instructions.

In the context of the CPR representatives should engage with one eye on the over­riding objective of achieving justice. This involves participating, and ensuring that clients participate, in good faith. They must seek to assist the mediator in finding the best way to handle the dispute and not disrupt the process. Mindful of the costs sanction, lawyers must persist with mediation, even if they think initial proposals inadequate. They will also be bound by conventional obligations relating to litigation.

The risk on costs that flows from not engaging with mediation creates a potential for conflict between solicitors and clients. If a client is found liable for not engag­ing, they may argue that they were not properly advised by their lawyer on either the advantages of ADR or the risks regarding costs. They may well seek to recover costs from a lawyer in negligence. It is also possible that they could claim in negligence if they lose a claim that might have been settled, if there is evidence that they were not properly advised.

There are some aspects of lawyers’ responsibilities in mediation that are less clear. One of these is whether a representative owes the mediator a duty equivalent to the duty to the court or whether the duties are more like those owed to a third party in negotiation. There are arguments both ways and their strength may vary depending on the type of process. For example, if the mediation is a judicial mediation as part of employment proceedings, the argument for a higher duty is strong. It may be less strong in other situations, particularly since representatives in mediation need not be lawyers. Such representatives are not subject to any higher duty.

C. Responsibilities as Third Party Neutrals

i. Roles and Duties

‘Neutral third party’ is an omnibus term covering the central role in ADR processes, whether arbitrator, mediator or conciliator. The ethical principles binding third party neutrals are clear and are reflected in legal decisions. They include general duties of honesty, integrity, neutrality, impartiality and candour with the parties. They also include more specific responsibilities such as avoidance of conflicts of interest, includ­ing over fees and fee arrangements.^[3258]

There are various sources of specific duties. The authority and duties of arbitrators may be found in the arbitration agreement or the law of the specified jurisdiction or the rules of the arbitrator’s organisation. In international contexts they may include international codes including professional codes.^[3259] They may be incorporated in the contractual agreement giving rise to the claim or agreed after the dispute arises.

The rules will differ according to the type of ADR process in use. In mediation, for example, a mediator can ignore a lawyer’s legal submissions when it is clear that a cli­ent is asserting an alternative agenda.^[3260] In arbitration it could be negligent to ignore legal submissions. In MediationZArbitration the position depends on the agreement. Typically, third party neutrals attempt to mediate between the parties but, in default of agreement, can make an arbitral award.^[3261] Therefore, there is an obligation to take account of legal argument.

The volume of rules may also differ according to the type of ADR and the involve­ment of the courts. Because arbitration has been operating for longer, and because of the fact that it mirrors court outcomes, a more developed case law underpins it. There are fewer cases dealing with mediation and conciliation.

Cases come to court from ADR for a variety of reasons, usually because one side does not like the outcome. In arbitration, because the parties have agreed to accept the decision, they have to attack the integrity of arbitrator or the process. The case law reflects ethical principles that should guide practice in the relevant area. Arbitrators and mediators are also subject to civil liability, for example for breach of contract, breach of fiduciary duty or professional negligence. This area of liability also produces cases relevant to the ethics of process.

The brief overview that follows is intended as a sketch of the ethical responsibili­ties of third party neutrals in the different ADR methods. This overview focuses on three methods, arbitration, mediation and conciliation, and four legal and ethical requirements, competence, neutrality, impartiality and confidentiality. In relation to mediation and conciliation the main focus is confidentiality.

D. Arbitration

Arbitration awards are particularly susceptible to review by courts on the grounds of the arbitrator’s misconduct, lack of neutrality or partiality. It is important to dis­tinguish neutrality from impartiality. Neutrality is not supporting or assisting either side in a dispute or conflict, whereas impartiality is not favouring one side more than another’.^[3262] Neutrality is consistent with a pre-existing state of non-alliance, whereas impartiality relates to later behaviour. Therefore, an arbiter can be formally neutral, yet partiality can develop during the course of a matter.

i. Competence

The courts have determined that competence is a question of fact rather than an issue of position. Therefore, if an arbitrator loses a position which led to the initial appointment, such as a formal position in a professional association, he may still retain the competence to act.^[3263] Arbitrators must follow agreed procedures and apply the principles of natural justice in reaching decisions.^[3264] If they fail to do so they may be removed or their decisions reversed. In Oakstead Garages Ltd v Leach Pension Scheme (Trustees) Ltd,^[3265] for example, an appeal was allowed against the decision of an arbitrator in a rent review. He had told parties that he would inspect relevant comparable properties but failed to do so. In Mabanaft GBMH v Consentino Shipping Company SA,^[3266] an arbitrator’s decision was based on a theory not raised with the applicants. This was potentially a reason to set aside the decision. It was held to be an issue of fact and degree whether a party should have an opportunity to respond to points affecting the decision.

ii. Neutrality

The duty of neutrality requires that any possible conflict of interest be disclosed at the outset. An objection should be made at that stage. If a party is aware of a con­flict of interest and does nothing, they cannot complain later that the arbitrator was not neutral. In Fletamentos Maritimos SA v Effjohn Internation BV,^{[3267] [3268] [3269] an arbitrator had, in another matter, provided a witness statement highly critical of the applicants’ solicitor. He also failed to formally disclose the possible conflict. This was drawn to the applicants’ attention early in the proceedings, but no objection was raised at the time. A later attempt to remove the arbitrator failed, there being no evidence of partiality in his handling of the case.}

Where it is alleged that an arbitrator has a conflict of interest it must be shown that there is a proper foundation for such a claim. In Bremerhandelsqueseuschaft mbh v ETS Soules etc cie & Anar,⁹¹ for example, an application by a commodity seller for removal of the director of a commodity house from a Board of Appeal was refused. Although the third party neutral was from the other side of the commodities industry, there was nothing in the individual’s record suggesting bias towards buyers.

An alleged conflict of interest must also be shown to be material. An interest­ing application of this principle arose in Kuwait Foreign Trading Contracting and Investment Co⁹ⁱ In that case, a barrister was appointed arbitrator in a case in which a barrister from the same chambers was instructed by one of the parties. It was held that

this was insufficient connection for a conflict of interest. There had to be ‘material’ or ‘intellectual’ connections with one of the parties. An English barrister’s membership of chambers was found not to create ‘common interests or any economic or intellec­tual interdependence among its members’. The sharing of chambers was, surprisingly, not a material connection which affected a barrister’s status as a sole practitioner.

There may be circumstances where it is difficult to find an arbitrator who is seen as neutral to all sides, as in international matters.^[3270] Where this occurs a common solution is for a panel of three arbitrators to be appointed. One panel member is nominated by each side to interpret local laws and customs and to ensure that all arguments are heard. A neutral third is appointed by agreement or nominated by an institution, either under the arbitration agreement or otherwise.

iii. Impartiality

An arbitrator must not be seen to lean towards either side. A decision can be over­turned and an arbitrator removed for bias if, on the evidence adduced and arguments made, the decision was unfair^[3271] or the arbitrator’s conduct was unreasonable viewed from the perspective of a reasonable man. Most of the decisions on unreasonable conduct fall into two categories. The first is the arbitrator’s failure to observe a judi­cial distance from the parties.^[3272] The second area relates to the admission of evidence.

In order to maintain judicial distance, arbitrators should not normally communi­cate with either party in the absence of the other except regarding purely administra­tive matters. If an arbitrator is observed sitting behind one party’s counsel, apparently giving instructions, the reasonable man would think that the arbitrator was in the enemy’s camp and that there was a real likelihood of bias.^[3273]

Arbitrators can suggest the parties should explore settlement, but should not participate unless this is allowed by the governing rules and agreed to by the parties. There must be substantial grounds for alleged bias, going beyond mere suspicion. In Christopher Alan Turner v Stevenage Borough Council, an application to remove an arbitrator for bias because one side had complied with his request for interim payment, but the other had not, was rejected.^[3274]

In relation to the second ground, admission of evidence, the failings must be sub­stantial rather than mere procedural errors.^[3275] Arbitrators must be careful in using any power to call witnesses or using their own knowledge and experience in interpreting evidence. They must not use their experience to supply evidence that the parties have not chosen to supply themselves.

In Top Shop Estates Ltd v C. Domino,^[3276] an arbitrator’s award was overturned, inter alia, on the ground that he gathered evidence without the consent or knowledge of the parties, including conducting a ‘pedestrian court’. He accepted unsupported evidence without affording an opportunity to challenge his interpretations. Arbitrators must beware ‘discarding the role of an impartial arbitrator and assuming the role of an advocate for the defaulting side’.^[3277]

In the Australian case, Road Rejuvenating and Repair Services v Mitchell Water Board and Another, an arbitrator managed to demonstrate partial behaviour in rela­tion to both evidence and conduct. As to evidence, he had accepted hearsay and irrelevant material damaging to the plaintiff. As to judicial distance, he arrived for a meeting driven by an officer of the first defendant. The court called this an ‘inexcus­able alignment of an arbitrator with one party’. It went on to suggest that ‘arbitrators are not mediators. It is not their function to deal directly with disputants where legal representatives are retained’.^[3278]

E. Mediation

i. Competence

There is no universally accepted description of the mediator’s role or commonly agreed standards. Mediators should be capable of exploring the interests of the parties, the most suitable options for satisfying those interests and the costs and benefits of these options. Some models may require a more proactive approach, such as proposing pack­ages or mechanisms for reaching agreement, taking steps towards ‘operationalising’ the agreement and evaluating and monitoring enforcement procedures.^[3279]

Since mediation is voluntary, and terminable at any time, it is arguable that break­down of the process through incompetence of the mediator should not result in liability. There is, however, an argument that removal of a mediator for incompetence could result in an action for negligence or breach of contract.^[3280] This argument is strengthened where there are compulsory codes of mediator conduct, as there are for solicitors. The measure of damages could include costs thrown away.

ii. Impartiality

Most models of mediation stress the need for the mediator to be even-handed. They must be cautious about holding private meetings with the parties and about passing on information discovered in such meetings.^[3281] Even making recommendations to avoid breakdown of the mediation, at the request of the parties, may be seen as compromising impartiality. Rather, the Law Society’s Code of Practice for Civil and Commercial Mediation suggests advising parties ‘as to the desirability of seeking fur­ther assistance from professional advisers such as lawyers, accountants, expert valuers or others’.^[3282] This generally means that mediators cannot redress inequalities between the parties.^[3283]

iii. Confidentiality

Confidentiality and privilege refer to two different areas of protection. Confidentiality refers to a client’s expectation that anything divulged to another party will not be dis­closed in any context, whereas privilege means that it cannot be produced in court. The justification for attaching confidentiality and privilege to material produced with a view to settlement is twofold.^[3284] First, there is a public policy interest in encourag­ing settlement and protecting settlement negotiations, in whatever form they take. The intention to claim this protection is usually conveyed by using the words ‘with­out prejudice’ in communications aimed at settlement. Secondly, there is the express or implied agreement of the parties that their communications for that purpose be protected. There may be circumstances where one applies but not the other.

Effective ADR is often dependent on full disclosure of oral or documentary information. Conventions as to what this involves do differ between forms of ADR. Arbitration is a formal process and disclosure requirements are similar to those in litigation. Therefore, a solicitor is bound to notify the arbitrator and other side of discovery of documents that should be disclosed, such as an order form showing the incorporation of standard terms into a contract.^[3285] In mediation, however, discussion and agreement are generally the means of verifying information.

Although mediation processes seldom require the parties to produce specific relevant documents, disclosure may resolve misunderstandings. The disclosure and verification process may be different in court-annexed mediation. Disclosure of docu­ments may have already occurred or may be occurring before mediation takes place. If it has not, parties are under no specific obligation to disclose information. They may suffer in costs however, if they withhold information that later proves material.

It is important that a party’s interests are protected when disclosing material against their own interests in mediation. While courts in the UK, and abroad, have asserted the importance of protecting the secrecy of settlement,^[3286] uncertainty surrounds the security of disclosed information. There are particular difficulties when privileged information is disclosed for the purposes of mediation and yet privilege is claimed for the same information in later litigation.

A case illustrating the problem of information security in mediation is Robert Aird and Karen Aird v Prime Meridian Ltd.^[3287] One of the parties to a court-annexed mediation wanted to use a joint experts’ report, prepared at the direction of the judge, in continuing litigation. The other party resisted this on the ground that they had understood that it would be privileged. The Court of Appeal held that the joint expert statement complied with CPR Rule 35.12, having been agreed by both sides, and was not a mediation document privileged from production.

The confidentiality and privilege from production in court enjoyed by mediation is based on the use of the ‘without prejudice’ formula and the mediation agreement. Suggesting that discussions are ‘without prejudice’ is not decisive.^[3288] The court is entitled to consider the purpose and nature of the discussion, and its relevance to settle­ment of the same dispute for which privilege is claimed.^[3289] The court is also entitled to consider whether it is fair and just to allow the use of material in litigation^[3290] and to consider whether settlement was reached.^[3291]

Inclusion of material gathered in mediation in a list of documents is not a waiver of privilege.^[3292] Continuing uncertainty regarding the security of confidential informa­tion disclosed in mediation has led to suggestions that no notes or records should be kept of confidential discussions.^[3293] This would not, however, prevent mediators being asked questions about what they could remember.

When mediators discover that there has been false information exchanged, or bad faith, the ethical arguments for keeping confidences are turned on their head. In such circumstances, it has been suggested that a mediator should try to persuade the par­ties to rectify the problem and, if this fails, to withdraw.^[3294] Whether this is sufficient is debatable, particularly if the process has concluded.

Mediators are legally obliged to bring some criminal activity to the attention of the authorities. The obvious risk is committing an offence under the Proceeds of Crime Act 2002, section 328.^[3295] This is most likely to occur where the lawyer becomes involved in an arrangement known or suspected to be facilitating ‘the acquisition, retention, use or control of criminal property by or on behalf of another person’.^[3296] Assisting in negotiating a settlement could be treated as being ‘concerned’ in an arrangement for the purposes of the Act. A mediator or representative lawyer would be obliged to report suspicious activity, as discussed in chapter 14. Clients cannot be informed of this disclosure if investigations are ongoing.

F. Conciliation

Conciliation does have some important similarities to, and differences from, other ADR processes. It was perceived that family conciliation, for example, should be voluntary and that for it to be compulsory may be counterproductive.¹²⁶ Nevertheless, it was anticipated that the third party neutral may have a role in counteracting attempts by a stronger party to exploit the weaker party.¹²⁷ There was a pilot family conciliation scheme in the 1980s and a practice direction issued in the early 1990s.

Privilege attaches to communications arising during the course of family conciliation¹²⁸ and to proceedings under the Children Act (1989).¹²9 Conciliation privilege may no longer rely on the ‘without prejudice’ formula, having developed into a new head based on the public interest in promoting the stability of marriage.¹³⁰ The effect is that neither advisers nor conciliators can be compelled to give evidence of what transpired in conciliation. The privilege extends from the parties, if they attempt conciliation themselves, to their advisers including lawyers¹³¹ or other official parties, like lawyers, probation officers or priests, or even private individuals, appointed as conciliators.¹³²

There are exceptions to the general principle against non-disclosure; where the pro­cess was not genuine or the parties consent to disclosure. In such cases, a third party neutral cannot themselves claim privilege.¹³³ Privilege may also be lost if the evidence concerns potential harm to a child, or a risk of such harm in future. Even here, however, the circumstances must be exceptional. The judge will exercise discretion in deciding whether protecting the child outweighs the public interest in preserving the confidentiality of matters raised in attempted conciliation.¹³⁴

V.