Mediation agreement clauses every Australian business should know

A supplier dispute is escalating. A business partner has sent a letter saying they want to "talk it through without going to court". Someone — probably their lawyer — has sent across a short document headed "Mediation Agreement" and asked you to sign before anything starts. Or you're the one proposing mediation and you need to put the process agreement together.

That document is not the settlement. It is the rulebook for the conversation that may produce a settlement. It binds the participants to a process — how the day runs, who can be in the room, what stays confidential, who pays the mediator, and how any deal reached will be recorded. It does not resolve the underlying dispute; a separately signed deed does that. Getting the process agreement right makes the mediation more likely to succeed and protects your business if it doesn't.

Who is in the room and who can actually say yes

This clause sounds administrative. In practice it is one of the most commercially significant.

Named parties and representatives. List every attending party by full legal name (not trading name) and identify each person attending on their behalf — lawyers, support persons, and technical experts.
Authority to settle. Each representative should be confirmed as having full authority to agree terms on the day, or the limits on that authority should be stated explicitly. If a board resolution, trustee approval, or insurer sign-off is needed, organise it before the day.
Decision-maker availability. If the person with final authority cannot attend in person, the agreement should name them and confirm they will be reachable by phone or video during the session.

The trap: a representative who lacks authority cannot bind the business. The other side invests a full day, reaches in-principle terms, and then discovers the deal has to go back to the board. That destroys momentum and goodwill. If you cannot get the right person in the room, get a written delegation signed before the mediation starts.

Confidentiality and without prejudice protection

This is the clause that makes frank negotiation possible. Without it, anything said in the session could be tendered in later court proceedings.

Under s 131 of the Evidence Act 1995 (Cth) — and the equivalent provisions in state uniform Evidence Acts — evidence of communications made in connection with an attempt to negotiate the settlement of a dispute is generally not admissible. The mediation agreement reinforces and extends this statutory protection by:

Stating expressly that all communications during the mediation are confidential and made on a without prejudice basis.
Restricting each party's use of documents produced solely for the mediation — they cannot be produced in litigation unless the disclosing party consents.
Confirming that the mediator cannot be called as a witness and may not produce their notes or working papers in any subsequent proceeding.
Identifying the narrow exceptions: disclosure to legal or financial advisers who are themselves bound by confidentiality, disclosure required by law or a court order, or material that was already in the public domain independently.

Drafting minimum: the clause should state that the protection is joint — neither party can waive it without the consent of the other. This mirrors the position under s 131, where the exclusion applies unless all persons in dispute consent to the evidence being adduced.

If commercially sensitive information must be exchanged before the mediation starts — pricing data, technical specifications, customer lists — consider executing a separate non-disclosure agreement at the same time as the process agreement. The NDA can impose destruction or return obligations that go further than the mediation agreement's confidentiality clause.

The mediator's role and how the day runs

A mediator facilitates; they do not adjudicate, advise either party, or draft binding legal terms. The agreement should make this clear to manage expectations and protect the mediator's neutrality.

Key things to specify:

The mediator is independent and impartial, and has no conflict with either party (attach any disclosure statement).
The session structure: typically an opening joint session, private caucuses (where the mediator meets each side separately), and a reconvening joint session if heads of terms are reached.
The mediator has discretion to manage the process — including the order of sessions, the timing of offers, and whether to terminate the mediation if it becomes unproductive.
The mediator does not provide legal advice to either party. Each party relies on their own lawyers for legal assessment.

The variant the other side sometimes pushes for: giving the mediator a power to make a non-binding recommendation if the parties reach an impasse. Whether to include this depends on the mediator's background and the nature of the dispute. Evaluative mediators with relevant industry knowledge can add value this way; facilitative mediators typically resist it. If you include it, make clear the recommendation is advisory only.

Pre-mediation exchange of materials

Surprises on the day derail settlements. The agreement should require each side to provide a position paper and a bundle of key documents by a specified deadline — typically five to ten business days before the session.

Contents. A short factual summary of the dispute, the legal and commercial issues in contention, the outcome sought, and a damages or quantum calculation if money is in dispute.
Sharing arrangements. Specify whether papers go to the other side (open exchange) or only to the mediator (confidential submission). Many practitioners use a hybrid: an open summary and a confidential note to the mediator identifying bottom-line positions.
Late materials. The agreement should give the mediator discretion to refuse to consider documents filed after the deadline or to adjourn if a late document is genuinely significant.

Overlooking this clause produces the most common cause of wasted mediation days: a party arrives with a new expert report, the other side has not seen it, and the session gets bogged down in reaction rather than negotiation.

Costs and venue

Who pays, and what for, should be agreed before the day — not argued about afterwards.

Mediator's fees. Usually shared equally between the parties unless the dispute resolution clause in the underlying contract allocates them differently. Confirm the hourly or day rate, the minimum fee, and the cancellation policy in writing.
Venue and facilities. Identify who books and who pays for the room, catering, video conferencing facilities, and any interpreter or transcription services.
Each party's own costs. Each party bears its own legal costs for attending mediation unless the agreement provides otherwise. Note that costs of the mediation itself are distinct from legal fees incurred preparing for it.
Cancellation and rescheduling. Include a notice period (often five to ten business days) after which a cancellation fee applies. This protects the mediator and the other party from late withdrawal.

Recording and enforcing the outcome

This is where the process agreement intersects most directly with legal enforceability.

The mediation agreement itself binds the parties to process obligations — confidentiality, attendance, conduct, costs. It does not resolve the underlying dispute. If the mediation produces a deal, the deal needs its own document.

On the day: it is common practice to record in-principle terms in a short heads of agreement before the parties leave the room. This captures the commercial deal — payment amounts, timelines, key obligations — while acknowledging that a full deed will follow. A heads of agreement can be binding if it is sufficiently certain and signed by authorised representatives, but it typically does not include the releases, default mechanics, and tax provisions needed for a complete settlement.

After the day: the binding instrument is usually a Deed of Release and Settlement. In Australia, a deed executed under seal can bind parties to perform obligations even without the exchange of consideration — unlike a standard contract. This matters when, for example, the settlement involves a party releasing a claim in exchange for a variation to an ongoing contract rather than a cash payment.

A well-drafted settlement deed will include:

A description of the dispute being settled and the date from which claims are released.
Payment obligations: amounts, due dates, method of payment, and whether GST applies.
Conditional obligations: product rectification, return of documents or equipment, IP assignment, or contract variations.
Mutual releases in agreed terms, with any necessary carve-outs (for example, preserving claims that arise after the deed date, or claims under a related contract that is not being settled).
A no-admission clause confirming the settlement is commercial and not an acknowledgement of liability.
Default consequences: interest on late payments, reinstatement of released claims on material breach, or consent to judgment.
Each party to bear their own legal costs unless otherwise agreed.

The mediation agreement should include a short clause stating that any settlement reached will be recorded in a signed written document before the session closes — and that the mediator will facilitate but not draft that document.

Legal privilege and admissibility

Separate from confidentiality (which is a contractual obligation between the parties), legal professional privilege may independently protect communications between a party and their lawyer made in preparation for or during mediation. The agreement does not create or waive that privilege.

The clause to include:

The parties confirm that the mediation is conducted on a without prejudice basis and that no communication or document disclosed in the mediation may be used as evidence of an admission or concession in any court, tribunal, or arbitration.
Neither party will call the mediator as a witness or seek production of the mediator's notes in any subsequent proceeding.
Any settlement terms agreed in a signed written document are not affected by the without prejudice protection — the settlement itself is not "without prejudice"; it is binding.

Practical conduct rules

Brief but important — these prevent the session derailing over avoidable issues.

Set a start time, a schedule for joint and private sessions, short breaks, and an agreed finish time (with a mechanism to extend by mutual agreement).
No audio or video recording of the mediation without express written consent of all parties and the mediator.
Rules for respectful conduct and how the mediator will manage conduct that is abusive or unproductive.
Language and interpreter arrangements where parties do not share a common language.

Optional and situational clauses

Some clauses only belong in specific situations:

Multi-party joinder. If the dispute involves more than two parties (for example, a head contractor, subcontractor, and owner), specify the process for joining parties and how costs and decision-making authority are allocated across the group.
Cross-border or cross-jurisdictional disputes. If parties are in different states or one is offshore, specify governing law, the jurisdiction of any court enforcing the settlement deed, and whether video attendance is permitted.
Sector-specific carve-outs. Franchise disputes may need clauses preserving audit rights or confirming compliance with applicable industry codes. Software or data disputes may need stricter document handling and destruction obligations.
Expert or valuation reference. If the dispute turns on a technical or financial figure that the parties cannot agree on, the agreement can provide for a jointly appointed expert to determine that figure as a condition of settlement.
Staged settlement. Where a single-day session is unlikely to resolve everything, include a mechanism for adjourning and reconvening within a fixed period, with interim obligations (for example, a partial payment or exchange of further documents) in the interim.

How Artificer Legal can help you prepare and protect your position

The mediation agreement looks short. The clauses discussed above frequently generate disputes of their own — about whether a settlement was actually reached on the day, whether a document was truly confidential, or whether the person who signed had authority to bind the company. These are not academic risks; they are the disputes that end up in court after a mediation was supposed to have resolved everything.

At Artificer Legal, we work with the clauses that matter most before any session starts. That means reviewing your dispute resolution clause to understand what the mediation agreement must accommodate, pushing back on authority provisions where the other side has not confirmed their representative's mandate, insisting on a heads of agreement clause so that nothing leaves the room without a written record, and drafting or reviewing the settlement deed so the releases are appropriately scoped and the default mechanics are actually enforceable.

Where a deed is needed — and for most commercial settlements it is — we draft it to accurately reflect the commercial terms agreed at mediation, not a generic template. We also advise on whether a related contract needs a deed of variation alongside the settlement deed, so the underlying transaction reflects the new arrangement.

If you are about to receive or sign a mediation agreement, or if you are preparing for a mediation and want to understand your legal position first, contact Artificer Legal before the session date.

The clause that decides whether your settlement sticks

Of all the provisions in a mediation agreement, the one most likely to cause problems is not the confidentiality clause or the costs clause — it is the absence of any requirement to record the outcome in writing before the parties leave the room. Verbal settlements made at the end of an exhausting day are fragile. One party remembers the terms differently. A director who was "available by phone" later disputes what was authorised. The mediator cannot be called to give evidence of what was agreed. Without a signed written record — even a short heads of agreement on a single page — the work of the day can unravel entirely.

The mediation agreement is the document that makes a mediation productive rather than just expensive. It sets the confidentiality framework that lets parties speak frankly, confirms that the right people are in the room with authority to commit, establishes the process the mediator will follow, and — if it includes a settlement recording clause — ensures that any deal reached becomes a document rather than a memory. Used well, it is the foundation on which a binding, lasting resolution is built.