Mediation and Justice

In my previous article, I discussed the factors that influence whether parties perceive a mediation outcome as satisfactory or even fair. In this article, I would like to take the discussion one step further and examine a related question: whose responsibility is it to ensure that a mediated settlement complies with the law?

It is clear that the mediator bears responsibility for the process and for ensuring procedural fairness. But to what extent is the mediator also responsible for the legal compliance of the outcome itself? Is it problematic if parties agree to less than they might have obtained through legal proceedings? Where should the line be drawn? Can mediation be used to circumvent the legal system to such an extent that parties reach agreements that are not legally permissible and that no court could ever have awarded?

The Mediator as a Gatekeeper of Party Autonomy and Voluntariness

One of the mediator's responsibilities is to ensure that parties enter into agreements voluntarily, with self-determination and on the basis of sufficient information (see below). Where autonomy and personal responsibility are undermined by vulnerabilities, impaired judgement, manipulation, abuse of power or coercion, the mediator must take appropriate steps. If these concerns cannot be adequately addressed, the mediator must terminate the mediation.

Particular caution is required when assessing differences in bargaining strength. The desire to protect a seemingly weaker party must not turn into a form of influence in its own right. Not every imbalance of power, as perceived by the mediator, justifies intervention on behalf of the party regarded as weaker.

Mediation is built on the principle of party autonomy. Parties are therefore free to make concessions and to adjust or reduce their own claims. In many cases, this flexibility is what makes mediation possible in the first place. It is not the mediator's role to assess whether a party's decision is sensible or advisable, nor to assume that the mediator knows what is ultimately "best" for that party. An agreement that appears disadvantageous from the mediator's perspective does not, in itself, trigger a duty to intervene. The mediator may help parties identify and explore their options, but it is not the mediator's task to change their perspective. Irvine puts this point succinctly: "Mediation is not about legal settlement; it is about settlement that delivers justice as judged by the parties." (Irvine 2024, p. 275).

An example: During his lifetime, a father promised his eldest son, A, that he would inherit the family home. However, the father's will names B as the heir. In mediation, A and B may agree that B transfers half of the property to A, even though B would be legally entitled to keep the entire house. Whether this solution reflects the parties' strict legal entitlements is not the decisive point. What matters is that both parties understand the consequences of their decision and enter into the agreement voluntarily. That is precisely the space that mediation creates.

A Prerequisite: A Sufficient Information Base

Nevertheless, the foundation of any decision in mediation is a clear and complete understanding of one's own position and of the legal consequences that may arise from a potential settlement. The Austrian legislator has recognised this principle by requiring the mediator, where necessary, to draw attention to the need for external (legal) advice. At the same time, the legislator has drawn a clear line: the mediator must neither advise the parties nor make decisions on their behalf (see in more detail here). The mediator is, however, required to explain the legal significance and potential legal consequences of a settlement reached through mediation.

What does this mean in our example? Both A and B must understand the legal, tax and economic implications of their agreement. B must understand that he is free to retain the entire property if he wishes to do so. Both parties need to be aware of the tax consequences that such a transfer may entail, and both need to understand the practical implications of shared ownership. If the mediator recognises that there is a significant gap in the parties' understanding, the mediator must draw attention to the need for appropriate advice.

However, a mediated settlement must not violate mandatory law or amount to an unlawful circumvention of legal rules. This leads to a further question, one that Austrian law does not answer expressly and on which there is no settled case law: beyond the duty to identify the need for advice, does the mediator bear any responsibility for the substance of the outcome itself?

A Tension: Is the Mediator Also Responsible for the Outcome?

This question has been debated internationally for decades. Broadly speaking, three different approaches have emerged.

• Party Responsibility: Scholars such as Stulberg take the view that responsibility for the outcome rests exclusively with the parties. It is for them to develop a solution that they regard as satisfactory and fair. If the mediator were to intervene substantively, this would influence or even undermine the parties' self-determination. Mediation derives much of its value from the fact that the parties retain control over both the process and the outcome. Stulberg, however, recognises the importance of informed decision-making by the parties (see below).
• Mediator Responsibility: At the other end of the spectrum, authors such as Waldman and Susskind argue that the mediator bears some responsibility for ensuring that the outcome remains consistent with the law. Waldman, for example, regards legal rules as a useful—albeit imperfect—safeguard for the protection of weaker parties. The rationale is straightforward: unlawful settlement agreements are not only detrimental to the parties involved; they also risk undermining confidence in mediation as a dispute resolution process. From this perspective, if the mediator is in a position to prevent such outcomes, there is an obligation to do so.
• Informed Decision-Making: Between these positions lies a middle ground. According to this approach, the mediator neither determines the outcome nor assumes responsibility for it. The mediator's responsibility is instead to ensure that the parties possess a sufficient understanding of the legal context and appreciate the implications of the agreement they are considering, thereby enabling a genuinely self-determined decision.

Those who follow the first approach would argue that once the mediator has identified the need for legal advice, the obligation has been fulfilled, even if the parties decide not to act on it. Under the second approach, additional obligations arise. These may include actively following up on the advised need for counsel rather than treating a single recommendation as sufficient, implementing procedural safeguards such as adjournments or staged agreements, and considering whether a proposed settlement could adversely affect third parties or undermine confidence in mediation as a process. Those who adopt the middle position would argue that the answer depends on the extent to which the parties lack an understanding of their own legal position and of the applicable legal framework.

As mentioned above, Austrian law provides little guidance beyond the wording of § 16(3) Austrian Civil Mediation Act (ZivMediatG) and the underlying legislative materials. German legal commentary on the German Mediation Act offers a somewhat clearer picture:

• A mediator may provide general legal information, for example by drawing attention to statutory provisions or established case law, and may discuss legal options when exploring possible solutions. Any such information must not only be accurate but must also be presented in a manner that does not compromise the mediator's neutrality.
• Where a mediator recommends legal advice and the parties choose not to seek it, this does not in itself prevent the mediation from continuing, provided that the contemplated settlement does not violate the law. If the proposed agreement would be unlawful, the mediator must discontinue the mediation.
• The mediator should seek to ensure that parties enter into a settlement with a sufficient understanding of both the facts and the content of the agreement. The mediator should identify the need for advice and point out obvious deficiencies, such as provisions that are clearly impracticable or incomplete. At the same time, the mediator must not influence the parties' decision-making. If a proposed agreement would violate the law, the mediator may not participate in its creation.

Not Every Mediator Is the Right Fit for Every Conflict Situation

The above considerations highlight two reasons why the choice of mediator assumes particular importance in this context.

First, the mediator's understanding of their role and responsibilities. In Austria, there is no clear guidance on the extent to which a mediator's responsibility extends beyond the statutory duty to identify the need for advice. As a result, approaches and interpretations may differ in practice. If this is an important consideration for the parties, it is worth discussing the issue with the mediator before the mediation begins.

Second, subject-matter expertise. In light of the mediator's gatekeeper function, it is worth considering whether the mediator possesses the necessary expertise. Can the mediator recognise gaps in the understanding of one or both parties? Can the mediator identify situations in which a party may be at risk of agreeing to something without fully appreciating its implications and would therefore benefit from professional advice? Or is the mediator only in a position to flag the need for advice in general terms?

In any event, these are matters worth discussing in advance. Not every mediator with legal training has the specialist knowledge required to identify every legal issue at an early stage. A commercial mediator, for example, may not necessarily be familiar with the legal considerations that arise in an apprenticeship dispute or a family mediation. Much like the selection of legal counsel, a mediator's professional background and areas of expertise are relevant factors in the selection process. Where, for example, parties are primarily focused on relational or interpersonal issues, it may be less important whether the mediator has a legal background. A preliminary conversation gives both sides an opportunity to assess whether the engagement is the right fit (see in more detail here).

Conclusion

One of the key strengths of mediation is that responsibility for the outcome remains with the parties. At the same time, the greater the legal complexity of the dispute, the more important it becomes for the mediator to recognise when additional advice may be required and to enable the parties to make an informed decision.