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In Place of Strife

The Mediation Chambers

Just settle the dispute - or go for a true clean break?

Not surprisingly, once a deal in principle has been agreed, scope of settlement discussions tend to focus on the agreement giving rise to the dispute.  All and any claims etc.  Where there are other agreements between the parties, they may also agree to settle all claims arising out of those, too.  But, what about continuing obligations that have not (yet) given rise to any claim.  In a few cases I have mediated recently, one party wanted to go beyond the broad release of all claims, to formally terminating all agreements between the parties, not just those giving rise to the claim.  A true clean break! 

Obviously, the focus of attention on the way into a mediation will be on the agreement(s) giving rise to the dispute.  However, in a long term trading relationship, there may have been many agreements spanning several years.  A settlement agreement can be structured to take precedence over matters dealt with in earlier agreements e.g. restrictive covenants, confidentiality, use of each other’s know how etc.  But who can be sure, without actually checking, that there isn’t somewhere, buried deep in a weighty agreement from years back, with several equally weighty annexures, an obligation that would be advantageous for one or even both parties to keep alive?  Clients would prefer not to pay their lawyers to analyse agreements that are not in dispute.  But, if a true clean break might be on the cards once a settlement is reached, an analysis of all past agreements prior to the mediation day may be sensible.  It will certainly save hours during the drafting stage and possibly an adjournment of the mediation.  Then, if and when a true clean break comes up, parties will know if it is safe for all agreements to die with the dispute, whether particular obligations need to be preserved (perhaps by lifting them from the earlier agreements before they are killed off and baking them into the settlement agreement), or whether some or all past agreements need to remain in existence.

Mediator: Jon Lang



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