Draft Mediation Agreement

Mediation Agreement / Settlement Agreement

When to use this

This skill covers two related but distinct documents:

1. Mediation Agreement — signed before mediation begins; submits the dispute to a mediator; establishes the procedural framework (institution, rules, confidentiality, costs, timeline)

2. Settlement Agreement — signed after mediation (or direct negotiation) succeeds; documents the agreed settlement terms; is a binding contract replacing or supplementing the original dispute

Both documents are commonly used together: the mediation agreement governs the process; the settlement agreement records the outcome.

Part I — Mediation Agreement

When to draft this

Draft a mediation agreement when:

• Two parties wish to attempt mediated resolution before or instead of litigation/arbitration
• A contract requires mediation as a pre-condition to arbitration or litigation
• A court has ordered or recommended mediation

Required inputs

Structure of the mediation agreement

1. Recitals — Identify the parties and the dispute (brief description without prejudicing positions); state the mutual desire to attempt mediation before other proceedings

2. Mediator selection and appointment

   • Named individual mediator: name, credentials, contact
   • Institutional process: which institution's rules govern appointment (DIAC, DIFC Centre for Amicable Dispute Resolution, ADGM IDRC, JAMS, CEDR, ICC ADR, Singapore Mediation Centre)
   • Backup: if named mediator is unavailable or unacceptable, fallback appointment mechanism

3. Rules governing the mediation

   • Institutional rules (by reference) or agreed bespoke rules
   • Language of mediation
   • Seat / location of mediation sessions (or virtual)
   • Each party's right to be represented by counsel

4. Confidentiality

   • Absolute confidentiality: everything said, disclosed, produced, or communicated in the mediation is confidential; no party may introduce mediation communications as evidence in any subsequent proceeding
   • Scope: covers the mediator, parties, counsel, any experts or observers
   • Exceptions: a) court order requiring disclosure; b) with all parties' written consent
   • Consider: whether even the existence of the mediation and its outcome (if settlement not reached) are confidential

5. Without-prejudice nature

   • All statements, proposals, and offers made during mediation are without prejudice to the parties' legal rights and positions
   • Not admissible in any court or arbitral proceeding

6. Timeline

   • Mediation to commence within X days of signing
   • Sessions: typically 1-3 days; right to extend by agreement
   • If no settlement within X weeks, mediation concluded (parties free to proceed to arbitration/litigation)

7. Costs

   • Mediator's fees: split equally (most common) or otherwise
   • Institutional administration fees: split equally
   • Each party bears its own legal costs
   • Deposit and payment mechanics

8. No binding settlement unless in writing

   • Mediation produces no binding obligation unless and until the parties sign a written settlement agreement
   • Mediator's proposals are non-binding suggestions, not arbitral awards

9. Carve-out for protective measures

   • Either party may seek interim or emergency relief from a court or arbitral tribunal without prejudicing the mediation
   • Such proceedings do not constitute a breach of the mediation agreement

10. Governing law and jurisdiction

    • Law applicable to the mediation agreement itself
    • Jurisdiction for any disputes about the mediation agreement (not the underlying dispute)

Institutional frameworks in MENA

Part II — Settlement Agreement

When to draft this

Draft a settlement agreement when the parties have reached agreement — whether through mediation, direct negotiation, or during litigation — and wish to document, formalize, and make enforceable their agreed resolution.

Required inputs

Structure of the settlement agreement

1. Recitals

   • Background: the parties, their commercial relationship, the genesis of the dispute
   • Dispute summary: what the dispute is about (without admitting fault)
   • Mutual desire to resolve: the parties wish to settle "to avoid the uncertainty and expense of further proceedings"

2. Payment terms and non-monetary obligations

   • Monetary settlement: amount, currency, payment schedule, account details
   • Non-monetary: transfer of assets, provision of services, referral of business, correction of records, public statement
   • Mechanics: exact payment dates; what triggers each obligation
   • Late payment: interest on late payments; right to re-open dispute if payment default persists beyond X days

3. Release and discharge

   • Full and final mutual release: each party releases the other from all claims, known and unknown, arising from the dispute description
   • Be precise about scope: is it limited to the specific dispute? Does it extend to all claims between the parties up to the date of the agreement?
   • Unknown claims release: in most jurisdictions, a general release covers unknown claims — state this expressly; California requires specific language for unknown claims (Civil Code § 1542 waiver)
   • Carve-outs: obligations under the settlement agreement itself are not released; obligations under surviving contracts not in dispute are not released
   • Limitations on release in KSA: Sharia-based settlements (sulh) are recognized; but releases purporting to waive Sharia rights may be challenged — verify with local counsel

4. Confidentiality

   • Both parties agree to keep the existence and terms of the settlement confidential
   • Exceptions: required disclosure to tax authorities, auditors, legal counsel, courts; disclosure required by law or regulation
   • Non-disparagement: neither party makes disparaging public statements about the other in connection with the settled dispute

5. Dismissal of proceedings

   • If litigation or arbitration is pending: parties agree to file for dismissal with prejudice (or equivalent) within X days of receiving the settlement payment
   • If DIFC Courts: consent order; if arbitration: consent award or withdrawal notice

6. Tax allocation

   • Specify how the settlement payment is to be treated for tax purposes (particularly relevant if the payment has an income, VAT, or withholding tax dimension)
   • Parties acknowledge they have obtained their own tax advice
   • Gross-up clause: if withholding tax is applicable, does the paying party gross up?

7. Breach and remedies

   • If either party fails to comply with settlement terms: the other party may re-open the underlying dispute and use the settlement agreement as evidence of the other's default
   • Alternatively: specific penalty for non-compliance (pre-agreed amount); applicable in civil-law jurisdictions

8. Confidentiality of underlying proceedings (if applicable)

   • If mediation was used, reference back to the mediation agreement's confidentiality provisions
   • Confirm that no mediation communications are admissible in any future proceedings

9. Governing law and enforcement

   • Law applicable to the settlement agreement
   • Forum for disputes about the settlement agreement

10. Singapore Convention on International Settlement Agreements (2019) The United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention) allows cross-border enforcement of settlement agreements reached through mediation — analogous to how the New York Convention works for arbitral awards.

    • Applies where parties are from different contracting states
    • Signatory MENA states as of 2025: Saudi Arabia (signatory but check ratification status), UAE (signatory but check ratification status); LB not a signatory
    • To qualify: the agreement must have been reached through mediation; must state this expressly; mediator must have signed or institution must be identified
    • Include: express reference to mediation process; statement that it resulted from mediation; mediator's acknowledgment (or institutional certificate) if Singapore Convention enforcement is desired

Common mistakes

• Not stating "without prejudice" expressly in the mediation agreement — mediation communications may be disclosed in subsequent proceedings
• Settling individual claims but not the underlying contract relationship (parties resume dealing and re-create the same dispute)
• Inadequate definition of release scope — one party discovers an unknown claim later and argues it was not released
• Omitting the carve-out for protective proceedings during mediation — a party seeking an urgent injunction from a court while mediation is pending should not breach the mediation agreement
• Settlement agreement not converting to a consent order / consent award — paper settlement; not directly enforceable without re-litigating the settlement breach

Related skills

• [[draft-notice-of-arbitration]]
• [[draft-litigation-complaint]]
• [[review-dispute-resolution-clause]]
• [[draft-boilerplate-clauses]]