5. Private meetings with the mediator
The mediator will often meet each party separately in private meetings, commonly called caucuses.
The purpose of private sessions is to explore the issues, the parties’ underlying interests, and possible options for settlement in greater depth. Parties may sometimes feel uncomfortable expressing their real concerns, priorities or possible concessions in front of the other side because they may fear that this will be seen as a sign of weakness. A private session allows a party to speak more freely with the mediator.
In a private meeting, the mediator may help a party:
- explore the reasons behind its position;
- identify its broader interests and needs;
- consider what the other side’s interests and needs may be;
- decide which issues are most important and which are secondary;
- consider the strengths and weaknesses of its case;
- assess the risks, costs and uncertainty of litigation or arbitration;
- discuss the gap between the parties’ positions;
- consider possible settlement options; and
- formulate proposals which may be put to the other side.
The mediator may encourage the parties to generate options for settlement. These options may go beyond what a court could order. For example, a settlement may include:
- payment by instalments;
- revised contract terms;
- future business arrangements;
- repair or replacement of goods;
- an apology or expression of regret;
- confidentiality undertakings;
- return of documents or property;
- withdrawal of complaints;
- costs arrangements; or
- agreed steps to prevent similar disputes arising again.
Information given to the mediator in a private meeting should not be disclosed to the other side unless the party gives express permission. This confidentiality is important because it allows the parties to speak openly with the mediator and to explore possible ideas without necessarily committing themselves to a formal offer.
Even if the mediator is not given permission to disclose particular information, that information may still assist the mediator in understanding the dispute, identifying possible settlement options, and helping the parties move towards resolution. However, subject to any applicable legal obligations or statutory exceptions, the mediator must not reveal the information to the other party without consent.
Where permission is given, the mediator should clarify exactly what may be disclosed, to whom, and whether the source of the information may be identified. The mediator should also choose an appropriate time and manner to disclose the information. It may not always be appropriate to disclose the information immediately in the other party’s private session, because the other party may have different concerns or may not yet be ready to consider that information constructively. When disclosing information with permission, the mediator should make clear that consent to disclose has been given, so that the receiving party understands that confidentiality has been waived for that information.
In Hong Kong, mediation communications are generally protected by confidentiality under the Mediation Ordinance (Cap. 620), subject to statutory exceptions. This statutory confidentiality is separate from, and may be supplemented by, the ground rules agreed for private caucuses, under which the mediator will usually not disclose information from one party’s private session to the other party without permission.
These private meetings are commonly used for “reality testing”. This means that the mediator may ask questions to help a party assess whether its assumptions are realistic, what may happen if the dispute continues, and whether a proposed settlement is better than the risks of going to trial or arbitration.
A private session may also be used to explore each party’s BATNA, meaning the “best alternative to a negotiated agreement”. In simple terms, this means what a party can realistically do if no settlement is reached at mediation. For example, a party’s BATNA may be to continue litigation, proceed to arbitration, negotiate directly later, look for another commercial solution, or take no further action.
The mediator may also help a party consider its WATNA, meaning the “worst alternative to a negotiated agreement”. This involves considering what could happen if the dispute does not settle and matters go badly, such as losing at trial, paying the other side’s costs, suffering delay, damaging a commercial relationship, or facing enforcement difficulties.
If a proposed settlement option is better than a party’s realistic BATNA, settlement may become more attractive. Conversely, if a proposed settlement appears worse than the party’s BATNA, the party may decide that it is better to walk away from the mediation. By helping the parties examine their BATNA, WATNA, risks, costs and practical consequences, the mediator can assist them to evaluate settlement options more realistically.
When settlement options are suggested, the mediator may help the parties test whether each option is viable. This may include considering:
- whether the option is practical;
- whether it can be implemented easily;
- whether the parties have the resources to perform it;
- whether it addresses the parties’ underlying interests;
- whether the timetable is realistic;
- whether the terms are sufficiently clear;
- what will happen if there is default; and
- whether the proposal may create further disputes in the future.
Reality testing is important because a settlement should not only resolve the present dispute in principle, but should also be workable in practice.
There is no fixed limit on the number of private sessions that may be held during a mediation. The mediator may move between the parties several times if this helps the negotiation. However, the underlying principle is that each party should be given a fair opportunity to speak privately with the mediator. This does not always mean that each party must receive exactly the same amount of time, but the mediator should manage the process in a way that is fair and balanced.
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