A mediation clause is the contract term by which the parties agree in advance that a dispute between them, existing or future, will be resolved through a mediator rather than immediately litigated. Georgian law on mediation attaches specific legal effects to this agreement: it is a precondition for starting mediation, it deflects the dispute away from court and arbitration for the agreed period, and it protects information disclosed during the process. This page explains Articles 7, 10 and 12 of the Law on Mediation.
Start of Mediation and the Confirmation Document
Under Article 7, mediation may be started on the basis of an agreement on mediation, or on another basis provided by law, namely the transfer of the case to a mediator by a court or another authorised body at the parties' request. Mediation begins when the parties, or one of them, apply to the mediator, or as a result of such transfer. Mediation is deemed started from the moment of the application to the mediator or the transfer of the case, and at a party's request the mediator issues a document confirming the start of mediation.
Deferral of Court and Arbitral Proceedings
The strongest effect of a mediation clause arises where the parties agree not to apply to a court or arbitration until a defined period expires or a defined circumstance occurs. Where such an agreement exists, the court or arbitration tribunal will not hear the dispute until the conditions stipulated in the mediation agreement are fulfilled — except where the claimant confirms that it will suffer irreparable harm without court or arbitral review. The respondent must raise the mediation agreement before the expiry of the time limit for submitting its statement of defense. A party's application to a court is not regarded as a refusal of the mediation agreement or as termination of the mediation that has begun.
Confidentiality and Its Exceptions
Article 10 provides that the mediation process is confidential. Information that became known during the mediation process, or derives essentially from it, is likewise confidential, unless the person providing the information and the party or parties agree otherwise in writing or so provided by law. Participants in the mediation may not use such information during court or arbitral proceedings, or in the examination of the dispute by any other means. The mediator may not pass to a party information disclosed by the other party during individual communication without explicit consent. The obligation continues to operate after the completion of mediation.
The law also defines closed exceptions. Confidentiality does not apply where protection of a person's life or health, securing of liberty, or protection of the best interests of a minor so requires; where information is submitted to prove the fact that a mediated settlement was concluded; where a party must perform a legal obligation that arose before the start of mediation; where disclosure is provided for by a court decision or another decision of mandatory legal force; where the information is necessary for the investigation of a particularly grave crime; where disclosure of the content of the settlement is necessary for its performance; or where a legal or disciplinary dispute is directed against the person providing the information. In each case the disclosure must be minimal.
Suspension of the Limitation Period
Article 12 gives the mediation clause an additional guarantee: from the moment private mediation starts, the running of the limitation period provided by the Civil Code is suspended. During the negotiations a party therefore does not lose its claim to the passage of time. The running of the period remains suspended until the private mediation is completed, but for no more than 2 years from its start. Where the private mediation ends without result, the suspended time is not counted within that period.
The Right to Leave Mediation at Any Stage
Mediation is a voluntary process and the clause does not lock a party inside it. Under Article 7, a party is entitled to refuse to participate in the mediation at any stage of its progress, unless otherwise provided by law or by the agreement on mediation. By withdrawing from the negotiations a party can always return the dispute to adjudication. An application to a court is not considered termination of the mediation, so the effect of the clause continues until the defined period or circumstance occurs.
Frequently Asked Questions
Clients most often raise the following questions about a clause.
May a party leave mediation at any moment?
Yes. Under Article 7 a party may refuse to participate in mediation at any stage, unless law or the mediation agreement provides otherwise.
Can the parties still file the dispute in court despite the clause?
Filing is possible, but the court or arbitration tribunal will not examine the dispute until the conditions of the mediation agreement are fulfilled — except where the claimant confirms irreparable harm. The application is not treated as a refusal of the agreement or as termination of the mediation.
What happens to information disclosed in mediation?
The information is confidential, and participants may not use it in court or arbitral proceedings or when the dispute is examined by any other means. The obligation survives the completion of mediation, and where a statutory exception applies the disclosure must be minimal.
How does mediation affect limitation periods?
From the moment private mediation starts, the running of the limitation period is suspended until the mediation is completed, but for no more than 2 years from its start. If the mediation ends without result, the suspended time is not counted.
How We Help on Legal.ge
The legal team of Legal.ge will help you draft a mediation clause so that every effect contemplated by law — deferral of proceedings, confidentiality and suspension of limitation — actually works in your case. We prepare the wording of the clause and assess its effect on your contract. Contact us on Legal.ge for a consultation.