The Singapore Convention, more formally known as the United Nations Convention on International Settlement Agreements Resulting from Mediation, was signed today in Singapore by 46 countries – a record number of first-day signatories for a UN trade convention.

While not including the UK or any EU countries, the signatories do include the world’s two largest economies, China and the US.  (A full list of signatories is at the end of this post).

The aim of the Convention is to implement an international regime for the enforcement of settlement agreements reached through mediation, broadly akin to the 1958 New York Convention for the enforcement of arbitral awards.

The new Convention clearly has the potential to increase the attraction of mediation for international parties and to solidify its role as a reliable option for resolving cross-border commercial disputes, which courts around the world will recognise.   Many hope that it will achieve for mediation what the New York Convention has done for international arbitration.

Mediation and enforcement

The initiative stems from a concern that the use of mediation to resolve international disputes has been impeded by the fact that, unless a settlement reached via mediation is in the context of a pending arbitration and can be converted into an arbitral award,  parties can only enforce it in the same way as any other contract. That will usually involve bringing fresh proceedings for breach of contract.  In an international context, this can involve potentially difficult (and usually lengthy) processes to obtain a court judgment and then enforce it in a foreign jurisdiction.

In practice, enforcement of mediated settlements is rarely an issue (at least compared to litigation and arbitration) given that the terms are the result of a negotiated resolution reached through a voluntary process.  Having negotiated and documented a resolution through a formal process, commercial parties do for the most part tend to stick to it. Nevertheless, it does appear that the potential for difficulty if enforcement is required may account for at least some for the patchiness with which mediation has been embraced across different jurisdictions globally.

This is supported by our analysis of the data collected at the recent Global Pound Conference series. That project sought the views of thousands of dispute resolution stakeholders across the globe on various issues, including as to what would most improve commercial dispute resolution. In Asian jurisdictions, nearly two thirds of respondents said that the development that would be of most benefit would be  legislation to aid enforcement of settlement agreements, including those reached through mediation.  In other regions, this was seen as less pressing than other factors but still received substantial support.  The new Convention directly meets this call for regulation and certainty.

Accordingly, regardless of how many mediated settlements actually need to enforced under the Convention, simply the existence of such a global enforcement regime may provide the long-awaited boost to the global adoption of mediation by assuaging parties’ reservations in this regard – particularly in jurisdictions where commercial parties are currently less familiar with the process.

Considering the overall dispute resolution landscape, the Hague Convention on Choice of Court Agreements and the new Hague Judgments Convention are designed to assist enforcement of court judgments internationally (although their practical impact to date has been limited). The New York Convention has of course hugely benefited international arbitration, with enforcement regarded as arbitration’s trump card.  In many ways, the Singapore Convention is the missing piece in the enforcement jigsaw.

When will the Singapore Convention apply?

The Convention applies to settlement agreements resulting from mediations resolving international commercial disputes. It seeks to give mediated settlement agreements bite by requiring member states to enforce such agreements if they meet the following criteria:

  1. The settlement agreement is “international” – meaning either: (i) at least two parties have their place of business in different countries or (ii) the country where the settlement agreement is to be performed, or the country with which the agreement is most closely connected, is different to the parties’ place of business
  2. The agreement is signed by the parties and “resulted from mediation”. Mediation is defined broadly as “a process, irrespective of the expression used or the basis upon which the process was carried out, whereby the parties attempt to reach an amicable settlement of their dispute with the assistance of a third person or persons (the “mediator”) lacking the authority to impose a solution upon the parties to the dispute”
  3. The agreement does not fall within the excluded category of settlement agreements (which includes agreements relating to consumer disputes, family, inheritance or employment law)
  4. None of the (limited) listed grounds to refuse enforcement applies

If a settlement agreement meets these criteria, each signatory state to the Convention (and its courts) must recognise and enforce the agreement in accordance with its own rules, without substantive review or fresh litigation.

This will aid enforcement against assets located in the signatory state and also the discharge of other remedies like specific performance or injunctions.  Conversely, if a dispute arises in a signatory state and a party claims it was already resolved by the agreement, the settlement agreement can be invoked to prove that the matter has already been resolved on those terms. That is, the Convention can be relied on as either a sword or a shield.

Next steps

It is understood that further states are planning to sign the Convention in the near future.  It will formally come into effect once the second formal step of ratification has been completed by at least three signatory states.

Its full impact, and in particular whether it will be as significant as the New York Convention, remains to be seen.  But the strong early uptake is a very promising indicator.    .

You can find our guidance on incorporating mediation into dispute resolution clauses, dispute avoidance and improving conflict management here.   And for guidance on preparing for and conducting mediations, see our series of ADR Practical Guides, here.

 

UPDATES:

  • For commentary on some of the Convention’s more interesting features,  see also the article by Jan O’Neill (Professional Support Lawyer, London)  published on the Practical Law Dispute Resolution Blog here.  This includes discussion of the ‘Article 8 reservation‘ which allows a state to join the Convention on the more limited basis that it will only enforce settlement agreements where the settling parties have specifically agreed that the Convention will apply. We understand (informally) that 2 of the 46 initial signatory states intend to exercise this reservation, although it can be exercised at any time by existing signatories.
  • Full list of signatories as at 7 August 2019: Afghanistan, Belarus, Benin, Brunei, Chile, China, Colombia, Congo, Democratic Republic of Congo, Eswatini, Fiji, Georgia, Grenada, Haiti, Honduras, India, Iran, Israel, Jamaica, Jordan, Kazakhstan, Laos, Malaysia, Maldives, Mauritius, Montenegro, Nigeria, North Macedonia, Palau, Paraguay, Philippines, Qatar, Republic of Korea, Samoa, Saudi Arabia, Serbia, Sierra Leone, Singapore, Sri Lanka, Timor-Leste, Turkey, Uganda, Ukraine, USA, Uruguay, Venezuela.

 

Jan O'Neill
Jan O'Neill
Professional Support Lawyer, London
+44 20 7466 2202