Is Mediation Legally Binding in Australia?

Often, people involved in a legal dispute believe their first (and possibly only) way to settle the issue is by going to court. However, another avenue of dispute resolution is to agree to undertake mediation.


What is Mediation?

Mediation is a way to settle disputes without going before a judge. Mediation is a common practice across Australia as it streamlines the process of resolving a legal dispute. Mediation works with both parties in an attempt to:

  • Identify disputed issues
  • Develop options
  • Consider available alternatives
  • Work together to reach an agreement

In addition to being a faster process, mediation will cost both disputing parties less money, provide additional flexibility, and cause less stress than traditional courtroom proceedings. Ultimately, you and the other party involved have a greater degree of control regarding the outcome of mediation as opposed to deferring to the court’s decision.


What is a Mediation Agreement?

A mediation agreement is an understanding reached by disputing parties to settle the differences between them by means of mediation instead of through litigation, where the Court process, often referred to as litigation, can be adversarial.

The agreement outlines the course of mediation, the role of the mediator, any costs, including the mediator fee, conduct during the mediation, enforcement, termination, and the confidentiality between the mediator and each party undertaking mediation.


Important Elements of Mediation

Successful mediation can happen in several circumstances. However, most mediations that are successful have these elements in common:

  • Led by an impartial, skilled negotiator
  • All parties are willing and voluntary participants
  • Discussions are strictly confidential
  • The mediation takes place in a relaxed location under flexible circumstances.
  • Determinations depend on the agreement of all parties
  • The mediation focuses on the future and creating a win-win result
  • Both parties will be open and honest about the dispute and their part in it
  • Each participant strives to work cooperatively with the other so a solution can be reached
  • Both parties want to create a civilised relationship
  • All participants feel they are in a safe environment


Preparing for Mediation

You need to get ready for mediation, just as you would for any other legal happening. Before your first session, take time to clarify the following:

  • Your primary concern in the mediation, as well as the most helpful way to communicate this to the mediator and the other party
  • What might satisfy the other party; if and how you could accommodate this
  • Elements you are willing to offer in a resolution
  • The various outcomes if your dispute goes to court


Is Mediation Legally Binding?

An important part of mediation is allowing both parties the opportunity to settle a legal dispute outside of the courtroom. Mediations often begin as informal arenas to discuss options that can resolve issues. In that sense, mediations begin as nonbinding. Whether the outcome of a mediation is binding depends on several factors, including the type of dispute, the parties, whether lawyers are involved and if documents have been prepared, and considered for the purpose of signing an enforceable agreement at the end of the day.

*Please note that a signed mediation agreement is still a contract that can be set aside under the proper conditions.*


Does Signing an Agreement at Mediation Make the Agreement Legally Binding?

Unfortunately, there is no simple yes or no answer to this question. Whether the agreement would hold up in court depends on whether the parties intended it to be legally binding, along with a variety of other circumstances. The specific language of the agreement determines the intent. The wording puts the mediation agreement into one of two categories: either good faith or legally binding.

A good faith mediation agreement expresses the parties’ desire to attempt to keep up their end of the agreed-upon resolution to their dispute. Both parties agree to trust in the promises made without assigning legally enforceable language to the agreement. A phrase frequently added to good faith mediation agreements is we agree in principle.

A legally binding mediation agreement will specifically say the agreement is legally binding. Generally, the agreement will include phrases like both parties intend to be immediately bound.

*Key Takeaway*

An agreement in writing does not automatically guarantee the document will hold up in court. This means that good faith agreements can potentially hold no weight in court. You should opt for the specific language that leads to a legally binding agreement, as this is the best way to protect yourself.


Mediation Process

The mediation process is usually broken down into a series of stages. You should note that both parties can come to an agreement at any time during the process.

  1. Preliminary Stage – You and your legal advisors determine mediation is in your best interest. Legal counsel may discuss the goals of the mediation, and arrange for the mediator. Legal advisors can lay the groundwork for a legally binding outcome as part of preliminary discussions.
  2. Preparation Stage – You and your representative will work together to pinpoint the most critical points of the mediation. Decide which issues can be compromised and which are literal dealbreakers. The idea of legally binding agreements should be highlighted during this discussion.
  3. Information and Negotiation Stage – This stage may occur throughout several meetings, but the goal is to make your position known and assess the other party’s values. You can mentally (or literally) diagram the areas where both parties want similar outcomes, then build on this.
  4. Closing Stage – The details of the agreement have taken form, and it is time to finalise the mediation. You should ensure all points are in order and highlight any discrepancies. Additionally, you can add the phrases necessary to ensure the agreement is legally binding.


Consequences of a Broken Mediation Agreement

Suppose your agreement reached at mediation is legally binding, and the other party has failed to maintain their end of the deal. In that case, you should contact your legal representative immediately so the matter can be considered by the court if relevant. Even if your agreement is in good faith, speaking to your lawyer is your best option.

If you need legal assistance, do not hesitate to contact the professionals at My Legal Crunch. Our experienced team is compassionate and well-versed in all aspects of the law. We have worked with hundreds of clients in similar situations and can also help you.