Blaming the Unblameable? On the Liability of Mediators

Abstract

The purpose of the present article is to examine the legal basis for establishing claims for pure economic loss against persons acting as mediators in private (out-of-court) disputes.1 Mediation can be defined as a voluntary process in which a neutral third party (the mediator) helps conflicting parties find a satisfactory solution to a given problem. The role of the mediator, who will often be a professional such as a lawyer, an architect, a psychologist, an accountant, a consultant or a medical doctor, is to lead the dispute resolution process by supporting the parties in developing and examining their own proposals for a settlement. During the course of mediation, the mediator usually performs a variety of different services ranging from the overall structuring of the mediation to concrete services pertaining to the substance of the conflict. Inter alia this involves deciding how meetings should be set up, who should be present at meetings, what should be discussed, what advice should be given, and what experts (if any) should be consulted. By interfering with disputes regarding the rights and duties of other parties, the mediator, like any other negotiator or advisor, risks that his conduct in some way causes detriment to one or more of the parties to the mediation. Several damage scenarios can be imagined but most importantly perhaps, the mediator’s conduct may cause the parties to settle on unfavourable terms or not settle at all. Further, the mediator may cause damage to the parties by revealing their commercial secrets and he may also cause harm to their persons (e.g. emotional distress).2 Furthermore, damage to parties not even involved in the mediation may ensue. In Danish law there are no special rules applicable to the liability of mediators acting out of court.3 This means that the well known requirements of contract law and tort law need to be satisfied in order for the parties to recover against the mediator:4 First, the mediator must have acted in contravention of the liability standard applicable to the mediation. This standard is determined pursuant to the basic rule of culpa. Second, there must be a certain nexus between the negligent conduct of the mediator and the loss suffered by the aggrieved party. This requirement is traditionally split in a requirement for factual causation and a requirement for adequacy. The former requires that a factual causal nexus can be established, whereas the latter requires that certain normative criteria and policy considerations make it reasonable to award damages. For many good reasons said requirements have long standing in the law. Perhaps the most apparent one is their inherent flexibility, which enables them to adapt to developments and trends in society. The significant developments in the past 200 years evidence this very well and on that basis there are also goods reasons to believe that they are capable of dealing with mediation in a satisfactory way. However, this does not mean that the conduct of mediators is easily assessed according to above requirements. On the contrary each of them seems to pose serious difficulties to anyone contemplating suing a mediator. This should become apparent from the present examination. The article focuses on the liability of mediators under Danish law. Due to the lack of Danish case law (as well as other authoritative sources of law such as legislation) on the matter, also foreign law will be looked at in order to extrapolate pertinent arguments for and against imposing liability. This will make the article interesting to foreign lawyers also. Part 2 offers a global outlook on court cases concerning the liability of mediators and in part 3 it is discussed on what legal basis liability claims against mediators can be raised. In part 4 it is examined what it takes to establish that the mediator has acted wrongfully. This makes it necessary to do two things: First, it must be determined what standard of care is applicable to mediators and second, it must be examined what it takes for the mediators’ conduct to contravene this standard. In parts 5 and 6 respectively the feasibility of establishing factual causation and adequacy is examined and in part 7 it is discussed to what extent liability can be disclaimed by the mediator.