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United Nations adopts convention on mediation for the direct enforcement of mediated settlement agreements
 
  • On 20 December 2018, the United Nations General Assembly adopted the UN Convention on International Settlement Agreements Resulting from Mediation and resolved to refer to it as the “Singapore Convention on Mediation”.
  • The Singapore Convention on Mediation seeks to provide greater certainty to parties to international transactions who have reached a settlement of their dispute through mediation.
  • In time, if States sign up to and ratify it, a party will be able directly to enforce its rights under a mediated settlement agreement, as it might currently do with respect to an international arbitral award under the New York Convention.
  • As a consequence, in the future we may see an increase in the use of mediation to resolve international commercial disputes.
  • The Singapore Convention on Mediation will open for signature on 7 August 2019 at a signing ceremony to be held in Singapore. It will enter into force six months after it is ratified by at least three States.
  • One State, Singapore, has already indicated its intention to sign the Singapore Convention on Mediation.

The aim of the Singapore Convention on Mediation

One major concern in the use of mediation for the resolution of international disputes is the lack of an enforcement mechanism for the resulting settlement agreements. At present, if one party does not comply with its obligations under a mediated settlement, the other party is forced to: (a) initiate arbitration or court proceedings for a breach of the settlement agreement (usually, a breach of contract claim); (b) obtain a favourable award or judgment on that claim; and (c) if the opposing party does not voluntarily comply with the decision, seek the enforcement of the arbitral award or court judgment. This lengthy and costly process may put the non-breaching party in a worse position than it was before going through mediation, having spent time and money on the mediation process in addition to the arbitration or court proceedings.

The Singapore Convention on Mediation seeks to resolve this problem by creating a new framework for the enforcement of mediated settlement agreements. It allows the enforcing party to bypass the need first to obtain an arbitral award or court judgment by requiring the direct enforcement of a mediated settlement agreement. The hope is that removing the obstacles to enforcement will promote the use of mediation for the resolution of international disputes, especially considering that mediation also has the potential to be less expensive and faster than other dispute resolution mechanisms and to preserve the commercial relationship between the parties.

The ultimate goal is for the Singapore Convention on Mediation to become for mediation what the New York Convention is for arbitration. The enforceability of arbitration agreements and awards facilitated by the New York Convention is one of the key reasons for the success of international arbitration as the dominant mode of international dispute resolution, particularly in transnational commercial disputes. The Singapore Convention on Mediation seeks to put mediation on an equal footing with arbitration as a method of resolving international disputes.

The scope of the Singapore Convention on Mediation

The Singapore Convention on Mediation applies to written settlement agreements resulting from mediation and concluded to resolve an international commercial dispute. It excludes from its scope mediated settlement agreements seeking to resolve certain categories of disputes where there is a concern that the disputing parties may have unequal bargaining power such as those relating to consumer or employment matters.

It also expressly excludes from its scope mediated settlement agreements that have been approved by a court or are otherwise enforceable as a court judgment or an arbitral award. The rationale behind this exclusion is to avoid overlap with other enforcement regimes, such as the New York Convention on arbitral awards and the Hague Choice of Court Convention on court judgments.

Under the Singapore Convention on Mediation, a mediated settlement agreement can be used both as a sword and a shield. Contracting States are obliged both to enforce (a) the mediated settlement agreement itself, and (b) the right of a party to invoke the mediated settlement agreement as a defence against a claim.

In addition, the Singapore Convention on Mediation provides that a Contracting State may refuse to recognise and enforce a mediated settlement agreement only on certain limited grounds (such as if the settlement agreement is null and void, inoperative or incapable of being performed or if granting the relief would be contrary to public policy), mirroring the key concepts of the New York Convention.

Implications for Singapore

The decision to name the Singapore Convention on Mediation after Singapore underscores the City-State’s wide recognition as a neutral forum for the settlement of international disputes.

Singapore has announced its intention to sign the Singapore Convention on Mediation, which is part of its much larger effort to become a global disputes centre that provides a full suite of dispute resolution services, including arbitration, litigation and mediation. In recent years, Singapore has devoted considerable resources to developing the Singapore International Arbitration Centre (which has been a success story for some time now) and launching the Singapore International Commercial Court (to adjudicate international litigation cases). Singapore has also invested in developing international mediation, including by establishing the Singapore International Mediation Centre (to offer mediation service), the Singapore International Mediation Institute (to set professional standards for the sector) and enacting the Mediation Act (which allows parties to record their mediated settlement agreements as Singapore court orders in order to enjoy the benefits of enforcement).

Following the entry into force of the Singapore Convention on Mediation, the Singapore International Mediation Centre may also see an increase in the number of mediations it conducts. This is so because the Singapore Convention on Mediation not only seeks to promote mediation in general, but also requires that the enforcing party show the settlement agreement resulted from mediation (rather than general negotiations) by providing a confirmation from the mediator or the administering institution. Having an administering institution, such as the Singapore International Mediation Centre, may be considered more reliable in proving that the settlement was reached through mediation, especially in circumstance where the mediator is no longer available or is unwilling to sign the settlement agreement or a separate document attesting to that fact.

Watch this space

The ultimate success of the Singapore Convention on Mediation will depend on how many States ratify it. By analogy, the success of the New York Convention in popularising international arbitration is due largely to its widespread acceptance: as of January 2019, 159 countries are States parties to the New York Convention. It remains to be seen whether the Singapore Convention on Mediation will achieve the status of the New York Convention.

Importantly in that respect, the Singapore Convention on Mediation authorises a reservation by which States may decide that it would apply only on an “opt-in” basis, meaning only if the parties to a settlement agreement affirmatively agree that it applies. If this reservation is widely adopted, it may significantly limit the global application of the Singapore Convention on Mediation.

We will continue to monitor the Singapore Convention on Mediation and update you with further developments.









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