The Supreme Court of Canada recently rendered a decision of
interest to parties engaging in, or contemplating, mediation of a
dispute. In Union Carbide Canada Inc v Bombardier
Inc1 (Union Carbide), the court
considered whether a confidentiality clause found in a mediation
agreement could displace the common law evidentiary rule of
settlement privilege, which provides an exception to privilege
where necessary to prove the existence or scope of a settlement.
The court held that parties are free to contract out of the usual
rule, but only where there is evidence of their express intent to
do so.
Background
This litigation involved a decades-long, multi-million dollar
dispute commenced in the Quebec Superior Court regarding allegedly
defective gas tanks manufactured by the appellant, Dow Chemical. In
an attempt to resolve the dispute, the parties agreed to a private
mediation and signed a standard mediation contract to this effect.
The contract contained a
