Mediator’s obligations regarding a Settlement Agreement

The purpose of mediation is to explore whether or not the parties can be assisted in reaching an agreement. If agreement is reached the terms of the Agreement should be clear, unambiguous, and precise.

A recent High Court decision in England and Wales determined in July 2025 (Zaloumis v Steele [2025] EWHC 1858 (KB)) drew attention to the important area of mediation practice concerning Settlement Agreements.

The facts are somewhat complex and unfortunate in that a son as a claimant sued his father for breaching an agreement reached to resolve prior financial disputes.

The core issue agreed at mediation was that a payment of £200,000 was to be made by father to son in exchange for the son resigning a directorship and transferring shares.

The father paid late, and the son alleged that the late payment caused the loss of some business ventures and investments and he also claimed, with some imagination, £8 million in lost profits.

The son failed because the judge found that although a breach of the Mediation Agreement had occurred, the damages were deemed to be too remote. The Court reviewed the authorities on remoteness of damages and considered the strength of the evidence given by the parties.

So far so interesting, but what of the role of the mediator? In mediation training, mediators are often advised that they should assist the parties to reach a settlement, but they should not draft the Settlement Agreement. In practice, many mediators who have been present with each party will have gained their trust and is very well placed to assist in both ensuring that all the terms that had been discussed with the mediator are reflected in the Agreement, and that the language of the resolution is correct.

However, it is for the parties to draft the Agreement. In the Zaloumis case, the claimant was a litigant in person. It could be that the imprecise drafting arose because there was a lack of legal guidance on both sides. The Defendant’s lawyers apparently drafted the Agreement.

Some might say that the mediator should have stepped in to express a view as to whether the terms relating to payment were sufficiently precise and invite the parties to consider what should be the consequences of any late payment.

In the event, the Settlement Agreement did not sufficiently do its job in ensuring an enduring settlement with clear terms and clear consequences.

A Mediation Settlement Agreement of course simply creates a contract between the settling parties. That contract is as enforceable as any other contract. It is subject to the same legal rules which apply when enforcing a contract. These rules include the interpretation of the terms. A Court may have to imply terms if there is ambiguity or uncertainty. However, after going through a mediation to resolve one dispute the parties really do not expect to have another dispute to determine the true position of what they had in fact agreed.

Leaving aside the drafting responsibility or otherwise of a mediator, this type of case where there is dispute as to what the parties agreed or what they meant can give rise to complex problems of the mediator providing evidence of what had been agreed or what parties had said.

Mediation is a Without Prejudice and confidential process, however there are exceptions to the rule of confidentiality, particularly where there is dispute as to what was agreed. In the Zaloumis case, emails between the parties and the mediator and the mediator’s responses were produced.

This, after the mediation, does give rise to significant questions as to the limits of mediation confidentiality and so-called mediation privilege. Although discussed over the years mediation privilege has not yet become a firmly established legal principle.

When a dispute arises after a Mediation Settlement Agreement there will often be recollections of what the parties said to the mediator in the minds of the parties. However the mediator cannot be responsible for how the parties ended up expressing what they had agreed in their written Agreement.

In the Zaloumis case, the claimant alleged that they had made clear to the mediator the importance of a timely payment of the sum they had eventually agreed to accept. The importance of the timely payment was disputed as the father said that he was not aware of the importance being attached to the timeliness of the payment.

This flags up a very central role for the mediator. This is to obtain authority for proposals that are made, and to ensure that the priority and importance of issues to one party and which are part of the rationale as to why they are agreeing, are communicated effectively to the other party. Then the mediator can assist in ensuring they are properly reflected in the eventual Settlement Agreement.

In this case, accepting that the claimant son told the mediator that it was important that the payment was made quickly because of related business transactions, it would be incumbent on the mediator to have explained that the acceptance of the £200,000 was on the basis that it was critically important for a timely payment. The father should have understood the importance of the timeliness of payment.

In the end, the parties reached their Agreement. However, there were gaps in what they had agreed to create the clarity that was required. The matter then ended up being litigated with consequential attention being paid to the role of the mediator. The matter ended up not resulting in an enduring settlement at all.

There are some lessons from this case. One is that the mediator must be sensitive to areas which are of high importance to each party. Those high importance issues must be reflected in any proposal that is made. This will allow appropriate emphasis to be given to important points for each party and will enable the parties to understand fully which points are important and why. The mediator will have to take care not to breach confidence in explaining why one party attaches importance to an issue.

The mediator should take an interest in the terms of the Settlement. The mediator is being paid to assist the parties to reach an agreement. There is no point in reaching an agreement that is ambiguous or uncertain and simply gives rise to interpretation disputes or factual disputes or litigation arising from breach of agreement.

The question of whether the mediator themselves should take responsibility for drafting is perhaps not so clear. It is prudent that the mediator, particularly where there are parties who are legally represented, leaves the drafting to the parties, but the mediator should intervene if some wording or phraseology does not capture what the mediator understands to be how the parties have in fact agreed matters.

The mediator’s role is to assist the parties to reach an agreement that will work, not to reach an agreement that will fail.

Brian Speers Solicitor, Mediator