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L'accord amiable

 | 
Denis MOURALIS
, 
Walid BEN HAMIDA

Troisième partie - l'efficacité de l'accord amiable

Les suites de l’accord amiable en Californie

William Peterson

Résumé

fr

Texte intégral

1Settlement agreements in the United States, whether reached through mediation or not, would generally be enforceable as contracts under applicable law. An oral agreement, although possible, is simply difficile to prove in court or arbitration because of procedural rules restricting admission of evidence from a mediation to be used. These procedural rules effectively require a writing.

  • 1 See Striving for the « “Bullet-Proof” Mediation Settlement Agreement » by E. Sussman and C. A. We (...)
  • 2 See the Section 3 Importance of uniformity, to the Prefatory note to the Uniform Mediation Act.
  • 3 Ibid.

2With fifty state jurisdictions and a federal jurisdiction, there is no single body of law governing mediation or the enforcement of settlement agreements achieved through mediation. Research on the subject is frustrating because of this diversity. Through evidence rules, applicable state laws or court procedures can be determinative of the result obtained.1 More than 2,500 statutes exist on the subject of mediation2. There is a Uniform Mediation Act but to date, only twelve states have adopted it and there is no uniform federal mediation law3.

3The key then when reaching settlement through mediation where enforcement may need to be obtained in the United States is to prepare a written settlement agreement and to review local law to assure that the terms of your agreement are sufficient. Note that one state requires a « cooling off » period.

4This paper focuses on the enforcement of mediated settlement agreements in California but also shares a few war stories, practices of colleagues in San Francisco, Santa Clara, New York, London and Sidney. The importance of confidentiality (I) and of a written instrument (II) must be underlined. The settlement reached while a court action is ongoing must also be discussed (III).

The importance of confidentiality

  • 4 See Mediation: Confidentiality and Enforceability, Kimber Taylor, Esq. writing for JAMS, 6 April (...)

5As is evident for all mediation professionals, confidentiality is an essential element of a successful mediation. Participants in mediation must be able to rely on the confidentiality of the process if they are going to be candid with the meditator about their settlement positions, pressure points, litigation strategy and other sensitive issues.4

  • 5 California Evidence Code section 1119 (Added by Stats. 1997, Ch. 772, Sec. 3. Effective January 1 (...)
  • 6 See « Mediated Settlement Agreements – Special Requirements Under California Law for Such Agreeme (...)

6In California, the legislators have taken confidentiality in mediation seriously as proof of the settlement is not admissible unless certain criteria are met. California Evidence Code Section 1119(b) bans all writings prepared during the mediation from discovery and makes them inadmissible to encourage the parties to freely and candidly discuss the dispute.5 The scope of mediation confidentiality is so broad in California that even a term sheet or memorandum of understanding setting out the terms of an agreement reached during the mediation is protected and thus not admissible6.

The Importance of a written instrument

  • 7 Section 1123(Added by Stats. 1997, Ch. 772, Sec. 3. Effective January 1, 1998.):

7Section 1123 of California Evidence Code provides exceptions for inadmissibility for written agreements created during a mediation to be enforceable. Notably, when the written agreement signed by the parties provides that it is « enforceable or binding or words to that effect. »7 In other words, the settlement agreement expresses an intent to make it enforceable or admissible. The California Supreme Court interprets this section strictly and literally.

  • 8 Fair v. Bakhtiari, 40 Cal. 4th 189 (2006), Rebecca Callahan and Steven Kruis in their articles ci (...)
  • 9 JAMS is a well-known mediation and arbitration chamber in the United States.

8In a case before the Supreme Court in 20068, the parties signed a handwritten, single-page memorandum titled « Settlement Terms ». The final provision provided, “Any and all disputes subject to JAMS9 arbitration rules ». The Court found that the terms of a settlement agreement reached must make clear that it is binding, and not simply be a memorandum of terms (without more). The agreement must be signed by the parties and include an affirmative statement to the effect that it is enforceable or binding. Reference to arbitration clauses, forum selection clauses, choice of law provisions and the like that are commonly negotiated in settlement discussions are insufficient.

  • 10 See the articles cited above by Ms Callahan, and Mr Lambirth, and Ms Schau.

9This case has given rise to the saying « Don’t forget the BEEF in your mediated settlement agreement » to encourage parties and their counsel to include the words « Binding, Enforceable, Effective and Final » in any settlement agreements, term sheets, memoranda of understanding prepared in mediation is the parties want these documents to be admissible.10 Another way to say this is: » you need to BEEF up your mediation settlement agreements ».

  • 11 Section 1118 (Amended by Stats. 2010, Ch. 328, Sec. 64. (SB 1330) Effective January 1, 2011.) :

10The lesson here is that not only does a mediated settlement agreement need to be in writing, it needs specific language for it to be enforceable. Although an oral agreement made in mediation is also theoretically admissible in California, for it to be admissible, a recording by a court recorder or by other reliable means of audio recording is needed that must be reduced to writing and signed by the parties.11 So effectively, a writing is still needed.

  • 12 The States of Washington, Idaho, Utah, South Dakota, Nebraska, Iowa, Illinois, Ohio, New Jersey, (...)
  • 13 Re Estate of Thottam, 165 Cal. App. 4th 1331 (2008).
  • 14 See Settlement (Civil Litigation) Q&A: US (New York), in Practical Law (Thomson Reuters), by by C (...)

11The Uniform Mediation Act provides for confidentiality but also permits a written agreement signed by all parties to be admitted in a subsequent court proceeding.12 Note that provisions authorizing disclosure may be in a mediation agreement signed at the outset of the mediation, but it would be more efficient to also put them in the agreement that may need to be enforced.13 In New York, to be enforceable, a settlement agreement must be in writing, at least in the presence of a court action but apparently, the courts require a writing.14

12If the mediation is international, California Code of Civil Procedure section 1297.401 provides that :

If the conciliation succeeds in settling the dispute, and the result of the conciliation is reduced to writing and signed by the conciliator or conciliators and the parties or their representatives, the written agreement shall be treated as an arbitral award rendered by an arbitral tribunal duly constituted in and pursuant to the laws of this state, and shall have the same force and effect as a final award in arbitration.

13A writing is of course needed. A discussion of the impact of the NY Convention on Enforcement of Arbitration Awards is beyond the scope of this article but suffice it to say that California procedural law would have to apply in the enforcement action.

Settlement with an ongoing court action

14California Code of Civil Procedure Section 664.6 provides that if parties agree to a settlement in writing or orally before the court, the court can enter judgment pursuant to the terms of settlement upon motion. Thus, parties should sign a stipulation for settlement or settlement. Section 664.6 also allows parties to request that the court retain jurisdiction over the parties to enforce the terms of the settlement.

15Alternatively, if the entire case has been settled, and performance will require time, consider a conditional settlement under California Court Rules of Court Rule 3.1385. The case would not have dismissed until performance is complete. If a breach occurs, the aggrieved party may bring a motion to enforce the settlement since the action is still pending, even though it is no longer on the active docket.

16In England, where there is an ongoing court action, if the parties settle, they can use what is known as a Tomlin Order. The proceedings are stayed on agreed terms with those agreed terms scheduled (attached) to the order, with the schedule remaining confidential.

17To conclude, the lack of uniformity in the law for the enforcement of settlement agreements exists also in the United States. However, California law provides an interesting solution by treating international mediated settlement agreements as an arbitral award rendered by an arbitral tribunal duly constituted in and pursuant to the laws of this state so that they shall have the same force and effect as a final award in arbitration.

18Fruit for thought.

Notes

1 See Striving for the « “Bullet-Proof” Mediation Settlement Agreement » by E. Sussman and C. A. Weiner, NYSBA New York Dispute Resolution Lawyer Spring 2015, Vol 8, N° 1.

2 See the Section 3 Importance of uniformity, to the Prefatory note to the Uniform Mediation Act.

https://www.uniformlaws.org/committees/community-home?CommunityKey=45565a5f-0c57-4bba-bbab-fc7de9a5911

3 Ibid.

4 See Mediation: Confidentiality and Enforceability, Kimber Taylor, Esq. writing for JAMS, 6 April 2015.

5 California Evidence Code section 1119 (Added by Stats. 1997, Ch. 772, Sec. 3. Effective January 1, 1998.). « Except as otherwise provided in this chapter:

(a) No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.

(b) No writing, as defined in Section 250, that is prepared for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation, is admissible or subject to discovery, and disclosure of the writing shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.

(c) All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential ».

6 See « Mediated Settlement Agreements – Special Requirements Under California Law for Such Agreements to be Binding and Enforceable » Excerpt from handout materials developed for the 2016 Essential Mediation Skills presented in Los Angeles at the American Arbitration Association – written by mediator Rebecca Callahan;« Enforcement of Mediated Settlement Agreements » by Steven H. Kruis, Esq., Los Angeles Daily Journal, July 20, 2012.

7 Section 1123(Added by Stats. 1997, Ch. 772, Sec. 3. Effective January 1, 1998.):

« A written settlement agreement prepared in the course of, or pursuant to, a mediation, is not made inadmissible, or protected from disclosure, by provisions of this chapter if the agreement is signed by the settling parties and any of the following conditions are satisfied:

(a) The agreement provides that it is admissible or subject to disclosure, or words to that effect.

(b) The agreement provides that it is enforceable or binding or words to that effect.

(c) All parties to the agreement expressly agree in writing, or orally in accordance with Section 1118, to its disclosure.

(d) The agreement is used to show fraud, duress, or illegality that is relevant to an issue in dispute ».

8 Fair v. Bakhtiari, 40 Cal. 4th 189 (2006), Rebecca Callahan and Steven Kruis in their articles cited above point out this case; see also « Where’s the BEEF? » by Timothy Lambirth and Jan Frankel Schau (Febuary 2007 issue of Journal of Consumer Attorneys Associations for Southern California).

9 JAMS is a well-known mediation and arbitration chamber in the United States.

10 See the articles cited above by Ms Callahan, and Mr Lambirth, and Ms Schau.

11 Section 1118 (Amended by Stats. 2010, Ch. 328, Sec. 64. (SB 1330) Effective January 1, 2011.) :

An oral agreement « in accordance with Section 1118 » means an oral agreement that satisfies all of the following conditions:

(a) The oral agreement is recorded by a court reporter or reliable means of audio recording.

(b) The terms of the oral agreement are recited on the record in the presence of the parties and the mediator, and the parties express on the record that they agree to the terms recited.

(c) The parties to the oral agreement expressly state on the record that the agreement is enforceable or binding, or words to that effect.

(d) The recording is reduced to writing and the writing is signed by the parties within 72 hours after it is recorded.

12 The States of Washington, Idaho, Utah, South Dakota, Nebraska, Iowa, Illinois, Ohio, New Jersey, Vermont and Hawaii.

13 Re Estate of Thottam, 165 Cal. App. 4th 1331 (2008).

14 See Settlement (Civil Litigation) Q&A: US (New York), in Practical Law (Thomson Reuters), by by Carolyn M. Branthoover and Eric M. Matava, K&L Gates LLP (current as of 31 March 2017). The authors explain that a settlement agreement must be in writing under rule 2104 of the New York Civil Practice Law and Rules that has not been modified, which provides that: « An agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered. With respect to stipulations of settlement and notwithstanding the form of the stipulation of settlement, the terms of such stipulation shall be filed by the defendant with the county clerk. » They further explain that New York courts have referred to rule 2104 as “a statute of frauds », meaning that the agreement must be in writing, that governs the enforceability of a settlement agreement (citing Sears, Roebuck and Co. v. Sears Realty Co., Inc. 932 F. Supp. 392, 401¬–03 (N.D.N.Y. 1996)); and the requirement of “a writing” has been consistently applied (also cited are Apple Corp. Ltd. v. Sony Music Entm’t, Inc., No. 91 Civ. 7465, 1993 WL 267362 (S.D.N.Y. July 14, 1993); In re Lady Madonna Indus. Inc., 76 B.R. 281 (S.D.N.Y. 1987); Klein v. Mount Sinai Hospital, 462 N.E.2d 1180 (N.Y. 1984); Greenidge v. City of New York, 179 A.D.2d 386 (N.Y. Sup. Ct.1992)).

Auteur

Partner at Ringlé, Roy & Associés, Lecturer/Co-Chair of the International Litigation Programme at IDA, Member of the Bars of Marseille and California and their International Sections, Arbitrator (CMAP, Chambres in Barcelona & Vienna) 

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