Settlement Authority in Commercial Mediation: Who Must Be in the Room and What Authority Must They Bring?

A commercial mediation can be well prepared in every other respect and still fail on one question: can the person at the table actually say yes?

It is a familiar scene. The parties have spent the day narrowing the issues. A proposal emerges that both sides can live with. Then one representative explains that the figure must go to the board, the insurer or a principal overseas, and that an answer may take a week. Momentum is lost, trust erodes, and a settlement that was within reach becomes uncertain.

This article explains what settlement authority means, why attendance is not the same as authority, and how attorneys can confirm authority before the mediation without revealing their client’s negotiating range.

Why authority decides whether the day works

Mediation is a voluntary, good-faith process. The mediator facilitates the negotiation but does not decide the dispute; any settlement is the parties’ own agreement, reduced to writing and signed. That makes the question of who can sign more than a formality. A settlement agreement signed by someone without the necessary authority may be open to challenge, and the party that relied on it may find itself back where it started, with the added cost of a failed process.

Attendance is not authority

It is easy to assume that a senior person in the room can bind the organisation. Often that assumption is correct. Sometimes it is not.

A useful way to think about authority is in layers:

1. Authority to attend: the person may participate on the party’s behalf.
2. Authority to negotiate: the person may discuss options and explore proposals.
3. Authority to make proposals: the person may put offers on the table within a mandate.
4. Authority to conclude: the person may accept terms and sign a binding settlement agreement.

A legal adviser or claims handler may hold the first three layers without the fourth. The aim of preparation is to know, before the day begins, which layers each participant holds and how any missing layer can be supplied.

Companies, boards and delegated mandates

A company acts through people. Under section 66(1) of the Companies Act 71 of 2008, the business and affairs of a company are managed by or under the direction of its board, which may in turn delegate authority within the limits of the company’s Memorandum of Incorporation. In practice, this means that the authority of a director, executive or employee to settle a dispute depends on the board’s decisions, the company’s internal delegations and the size and nature of the settlement.

For the representative attending a mediation, the usual evidence of authority is a board resolution or a written delegation that covers the dispute and the kind of settlement under discussion. Where a group structure is involved, it is worth confirming which entity is the party to the dispute and which entity’s approval is needed.

Insurers and layered approvals

Where a claim is insured, the practical approval path may involve both the insured party and the insurer. A claims handler may have authority up to a limit, with larger amounts requiring approval from a manager or committee. The insured party may still need to decide on matters outside the policy, such as an apology, future trading terms or a contribution above the excess.

None of this is unusual. It simply needs to be mapped and disclosed early, so that the right people are either present or reachable during the session.

What the Gauteng Mediation Protocol requires

In the Gauteng Division, court-annexed mediation follows the Mediation Protocol issued in April 2025. Under Rule 41A of the Uniform Rules of Court, parties in High Court proceedings must indicate at the outset whether they agree to or oppose mediation. Attempting mediation is not automatically compulsory nationally, but in Gauteng it has become a practical precondition to a civil trial date. On authority, the Protocol is direct:

• all participants must confirm their authority to settle disputes;
• a juristic person may be represented by a duly authorised representative, and a person attending in a representative capacity must be vested with full settlement authority;
• a matter is settled only once the settlement agreement is signed by all the parties, with all signatories duly authorised; and
• the mediator’s report may record that a representative did not hold, or could not evidence, a proper mandate or settlement authority.

In other words, authority is not only a matter of good practice in Gauteng. It is built into the process, and a lack of it can be placed on record.

In practice: Marissa Galloway-Bailey on testing authority

Marissa Galloway-Bailey has mediated since 2011 and holds NABFAM, DiSAC, Conflict Dynamics and CEDR accreditations. Her definition of settlement authority is precise:

“Settlement authority means the person who is participating in the mediation has the authority on behalf of the entity they are representing, in their assigned capacity at the entity, to make decisions on behalf of the entity in relation to the dispute being mediated that will bind the entity to those decisions.”

Marissa Galloway-Bailey

She distinguishes clearly between the person who can negotiate and the person who can sign:

“The legal officer of a company or organisation [may] have the authority to participate in the mediated issue … but they do not have capacity to make binding decisions on behalf of the company or organisation, like a Chief Executive Officer would be able to.”

Marissa Galloway-Bailey

On the common misconception that seniority equals authority:

“Mediation is a good faith process and the parties tacitly assume that they are coming to the table in the proper way. However, a prudent attorney or party will always seek to confirm authority.”

Marissa Galloway-Bailey

Testing authority without revealing the ceiling

Parties are often wary that a question about authority is really a question about their bottom line. Marissa addresses this by explaining the purpose of the question to everyone at the same time:

“I always speak to the parties to explain that should a settlement be reached in mediation, it would be reduced to writing and signed by the parties. Therefore it is imperative that the participants to the mediation have the requisite authority to participate and make binding decisions.”

Marissa Galloway-Bailey

She then invites the parties to request documents confirming each other’s authority, presenting the request as protection for both sides: each can be confident that time is not being wasted and that offers are real. The question is about who may decide, never about how far they may go.

In her pre-mediation meetings, she works through the agreement to mediate and asks each party to confirm who will sign it, who will attend and in what capacity. Where that conversation reveals that the attending representative cannot sign a settlement, the party can add an authorised signatory before the day. At the start of the mediation, she takes attendance and confirms each participant’s authority again.

Warning signs that the decision-maker is absent

Marissa identifies two signals that should prompt a fresh conversation about authority:

• a participant suddenly asks for another person from the organisation to attend after preparation has been finalised; and
• no genuine offers are being made, and each side’s only proposal is that the parties simply walk away.

On the first, her view is that the mediator should establish who the person is and why they are needed, and address authority with the parties again. As she puts it, “no-one has ever suffered from an over-abundance of caution in correct process.”

What attorneys should confirm before the mediation date

Attorneys usually draft the settlement terms, which places them at the centre of the authority question. Before the mediation, they should:

• explain to the client the consequences of an agreement reached in mediation and reduced to writing;
• identify who will attend, in what capacity, and the extent of their mandate;
• obtain written confirmation that the participant has authority to participate and to sign a settlement agreement, and that they warrant that authority;
• establish whether any approval (board, insurer, principal or funder) is required, and whether it can be obtained on the day;
• decide what confirmation of authority they need from the other side; and
• raise any authority concern with the mediator before the agreement to mediate is signed.

Marissa also stresses the relationship cost of getting this wrong. Where the parties have an ongoing relationship, a mediation that collapses because a party reneges on the basis that its signatory lacked authority can damage that relationship well beyond the dispute itself.

Remote decision-makers and conditional approval

Not every decision-maker can attend the whole mediation. That need not be a problem if it is planned. The parties should agree in advance whether the decision-maker will be available by video or telephone, what information they will receive during the day, and who will communicate with them. Where a settlement must be approved after the session, the parties can agree on conditional terms, a short approval period and what happens if approval is refused. These arrangements work best when they are disclosed at the start rather than produced at the end.

When to pause

In Marissa’s view, the mediation should pause “when there are questions as to whether the participant has the authority to represent the party and participate in the mediation and to make binding decisions”. It is better to adjourn and return with the right people than to sign an agreement whose validity is in doubt.

Settlement authority checklist

• Who is the party to the dispute, and which entity must approve a settlement?
• Who will attend, and in what capacity?
• Who may negotiate, propose, accept and sign?
• Is there a board resolution, delegation or written mandate, and does it cover this kind of settlement?
• Is insurer, funder or principal approval needed, and can it be obtained on the day?
• What confirmation of authority do we need from the other side?
• Has the mediator been told about any authority limitation before the agreement to mediate is signed?

Frequently asked questions

Bringing the right authority to the table

Settlement authority is one of the simplest things to confirm and one of the most damaging to overlook. Attorneys who map authority early protect their clients, respect the other side’s time and give the mediation its best chance of producing an agreement that holds.

MV Inc. offers structured pre-mediation planning and facilitation for commercial and Rule 41A matters. Refer a matter or read more about our civil and commercial mediation and Rule 41A mediation services. Marissa co-presents Episode 6 of our free webinar series, Commercial Mediation for Legal Representatives: Rule 41A and the Deal Behind the Claim, on Monday 23 November 2026. Register through the webinars page.

This article is general information about commercial and Rule 41A mediation practice in South Africa and is not legal advice. It does not create an attorney and client relationship. Court rules, directives and protocols are amended from time to time and differ between divisions, so you should confirm the current position before acting.

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