Thanks to google translate (daily destroying God's work on the Tower of Babel) I can bring you this mediation war story (loosely and imperfectly translated from a German mediation blog that I'm sorry I've lost the link to).

Before the trial of a wrongful termination case, the parties meet to mediate.  In separate caucus, the employee tells the mediator that he is working for a competitor.  The employee shares his concern that the revelation of his new employment could make him liable to his former employer for breach of the employee's non-compete obligation.  In a separate caucus with the CEO, the chief executive reveals that the  true reason for his failure to provide the contractually required advance warning of discharge was his fear that the discharged employee would learn of the CEO's on-going affair with his secretary, threatening the destruction of that valued relationship.  Back in joint session, the mediator adds "non-compete waiver" and "immediate departure" to the brainstorming white board.  The litigation promptly settles.

These are the party "interests" we're always talking about  -- one -- the affair -- that is strictly "irrelevant" to the legal proceeding and one whose revelation (working for a competitor) could result in a counter-claim for breach of contract and fiduciary duty against the employee and a cross-action against his new employer for tortious interference with contract and prospective economic advantage, as well as potential causes of action against both of them for the theft of trade secrets. 

If the mediator urges the CEO to exchange a waiver of the non-compete clause for the continued secrecy of his affair, has the mediator crossed the line from neutrality to advocacy?  If and when the company learns the former employee was working for its competitor at the time the case was settled, will it attempt to rescind that agreement on the ground that it was procured by fraud (the concealment of facts material to the waiver)?  And what are the duties of the company-attorney?  Doesn't the affair create a conflict of interest between the company and the CEO?  Does the attorney have the duty to inform the Board of Directors that its Chief Executive is waiving a valuable right in order to keep a relationship that is surely toxic to the conduct of the company's business a secret?

And what of the reputation of the mediation process itself?  Is there something unsavory going on here - something that is both "outside the law" and outside the principled reason communications in mediation proceedings are protected by the law as confidential, i.e., to encourage party openness rather than to permit party deception?

These questions should interest everyone involved in the mediation process and should trouble the sleep of mediators everywhere.  Because our process is conducted in secret, it is prone to abuse unless we - its practitioners - guard against deception and continually ask ourselves whether our interventions are in keeping with our obligation to be impartial.

Here are questions that we should ask ourselves whenever something in the back of our mind or a corner of our heart is telling us we might be doing more harm than good.

• If I were permitted to, could I share my decision with everyone?
• Is it legal?
• How does the decision make me feel about myself?
• Who does this decision negatively impact?
• Why am I making this particular decision?
• Have I clearly defined the problem requiring a decision to be sure I'm addressing the correct issue?
• Does this decision serve the company or me personally?
• Is the decision based upon facts consistent with fair play?
• Is the decision consistent with organizational values and culture or my own personal system of ethics?
• Is the decision fair and balanced to those it impacts?

from Ethics:  the Conscience of Decision Making