Singapore Convention on Mediated Settlement Agreements comes into force tomorrow, 12 September 2020

Tomorrow marks an important day for international dispute resolution as the Singapore Mediation Convention comes into force, just over a year after its signing ceremony on 7 August 2019.  More formally known as the United Nations Convention on International Settlement Agreements Resulting from Mediation, the new Convention aims to establish a global enforcement regime for settlement agreements resulting from mediation of international commercial disputes, broadly akin to the 1958 New York Convention for the enforcement of arbitral awards.

To date, a total of 53 states have signed the Convention and 5 states have either ratified (Singapore, Fiji, Qatar and Saudi Arabia) or approved (Belarus).  However, a key feature of the Convention that has not been widely appreciated is that it will apply to mediations conducted anywhere in the world, not just within jurisdictions that have ratified it. Any jurisdiction that ratifies/approves the Convention agrees to enforce any mediated settlement agreement covered by the Convention, regardless of where the mediation was conducted. Accordingly, the fact that it has not yet been signed by the UK or the EU does not mean that it cannot be relied on to enforce settlements resulting from mediations held in those jurisdictions.

Of course, at this early stage, the Convention can only be relied on to facilitate enforcement in the current member states. However, given that 48 other countries have already taken the first step of signing the Convention, it seems likely that this list could soon increase substantially. And the fact that those countries include the world’s three largest economies – China, the US and India – bodes well for the Convention becoming an important element of the global dispute resolution landscape.

By way of background, the Convention 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 could only enforce it in the same way as any other contract. That would usually involve bringing fresh proceedings for breach of contract. In an international context, this could involve potentially difficult (and usually lengthy) processes to obtain a court judgment and then enforce it in a foreign jurisdiction.

It is important to note that, in practice, enforcement of mediated settlements is in fact rarely an issue (at least compared to litigation and arbitration), given that both the decision to mediate and the agreed resolution are voluntary, rather than imposed upon the parties. Having negotiated and documented a resolution through a formal process, commercial parties do for the most part tend to stick to it. Nevertheless, it had become clear in recent years that the lack of a formal enforcement process could account for at least some of 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. Particularly in Asian jurisdictions, nearly two thirds of respondents said that what would be of most benefit would be  legislation to aid enforcement of settlement agreements.  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.

Further detail:

For detail on when and how the new Convention will operate, see our earlier post here.

For commentary on some practical issues for mediating parties to consider now,  see an article by Jan O’Neill (Professional Support Lawyer, London ) published on the Practical Law Dispute Resolution Blog here.  Also, click here to hear Jan more recently considering the implications of the Convention in a podcast discussion with the Managing Director of CEDR, James South.

For guidance more generally on incorporating mediation and other forms of ADR  into your business, see our ADR Toolkit here.

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Signatories as at 12 September 2020: Afghanistan, Armenia, Belarus, Benin, Brunei Darussalam, Chad, Chile, China, Colombia, Congo, Democratic Republic of the Congo, Ecuador, Kingdom of Eswatini, Fiji, Gabon, Georgia, Ghana, Grenada, Guinea-Bissau, Haiti, Honduras, India, Iran, Israel, Jamaica, Jordan, Kazakhstan, Laos, Malaysia, Maldives, Mauritius, Montenegro, Nigeria, North Macedonia, Palau, Paraguay, Philippines, Qatar, Rwanda, South Korea, Samoa, Saudi Arabia, Serbia, Sierra Leone, Singapore, Sri Lanka, Timor Leste, Turkey, Uganda, Ukraine, the US, Uruguay, Venezuela.

Ratified/approved by:  Singapore, Fiji, Saudi Arabia, Belarus (approved with reservations), Qatar

Alexander Oddy
Alexander Oddy
Partner, London
+44 20 7466 2407
Jan O'Neill
Jan O'Neill
Professional Support Lawyer, London
+44 20 7466 2202
Priya Aswani
Priya Aswani
Professional Support Lawyer, Singapore
+65 68688077

 

Singapore Convention on Mediated Settlement Agreements to enter into force on 12 September 2020

From 12 September 2020, all international settlement agreements resulting from mediation will potentially be able to be enforced under the new Singapore Convention, regardless of where in the world the mediation took place.

Article 14 of the Singapore Convention provides that it will enter into force six months after three signatory states have ratified it into their domestic law. We have previously reported that Fiji and Singapore deposited their instruments of ratification on 25 February 2020. On 12 March 2020, Qatar became the third state to ratify the Convention, meaning that the Convention will enter into force on 12 September 2020 – just over a year after its signing ceremony on 7 August 2019. Continue reading

Singapore and Fiji ratify the Singapore Convention on Mediated Settlement Agreements taking a significant step towards its entry into force

Yesterday, on 25 February 2020, Singapore and Fiji became the first two countries to deposit at the United Nations Headquarters their instruments of ratification of the Singapore Convention, more formally known as the United Nations Convention on International Settlement Agreements Resulting from Mediation. Singapore and Fiji have taken an important step towards bringing the Singapore Convention closer to coming into force. Continue reading

The new Singapore Convention: Some practical issues to consider now

As has been well publicised, the new Singapore Convention seeks to establish a global enforcement regime for settlement agreements resulting from mediation in cross-border commercial disputes. Signed on 7 August 2019 by 46 countries, the Convention could feasibly be in operation as early as the first half of next year (it will enter into force six months after ratification by at least three signatory states).

One feature of the Convention that has not been widely highlighted is the fact that, once it enters into force, it will apply to mediations conducted anywhere in the world, not just within jurisdictions that have ratified it. This is because, unlike most other enforcement treaties, it does not operate on the basis of reciprocity between contracting states.  It will therefore be advisable for all mediating parties, regardless of whether their home state ever ratifies the Convention, to factor into their mediation procedures the potential to rely on the Convention should enforcement become necessary.

It is therefore timely to consider a number of practical issues emerging from the Convention, which litigants and their representatives should be turning their minds to now with a view to putting themselves in the best position to take advantage of the Convention in the future should the need arise.

Jan O’Neill in our London disputes team has published a post on the Practical Law Dispute Resolution Blog discussing a number of such practical issues. Click here to read the post.

(For more commentary on the Singapore Convention, see also Jan’s earlier blog post here.)

 

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

 

46 countries sign the new Singapore Convention on mediated settlements

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

Singapore Convention on enforcement of mediated settlement agreements published

Further to our earlier post, the Singapore Convention has now been published. It will be signed in Singapore on 7 August 2019 and will come into effect six months after at least three states have ratified it.

The drafters’ goal is for the Singapore Convention to be for mediation what the New York Convention is for arbitration.  That the Convention is potentially significant in terms of enforcement is clear. But it is also important in terms of elevating the status of international commercial mediation and lending greater credibility to the process. Much will depend on uptake, but with the New York Convention as a blueprint, the goal is to secure numerous signatory states at the outset.

The Convention will aid enforcement of mediated settlement agreements relating to international commercial disputes, being those where:

  • at least two parties to the settlement agreement operate in different contracting states; or
  • the state where the substantial part of the settlement agreement is to be performed is different to where the parties to the settlement conduct business; or
  • the state where the settlement agreement is most closely connected is different to where the parties to the settlement conduct business.

The Convention carves out consumer, personal, household, family, inheritance and employment disputes from its jurisdiction.

There are various procedural requirements for the underlying settlement agreement to qualify for enforcement under the Convention. There are also grounds for refusing to grant relief listed in the Convention. These include the incapacity of the parties, invalidity of the settlement agreement, serious breach of mediator standards, mediator bias and public policy.

 

UPDATE:  For more detail on the Convention, and commentary on some of its more interesting features, see the article by Jan O’Neill (Professional Support Lawyer, London) published on the Practical Law Dispute Resolution Blog, here.

 

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

 

All-Party Parliamentary Group for Alternative Dispute Resolution publishes report on best practice lessons between Singapore and the UK

The All-Party Parliamentary Group for Alternative Dispute Resolution (the “APPG”) has recently published a report titled ‘Securing the UK’s position as a global disputes hub: Best practice lessons between Singapore and the UK’ (the “Report). The Report follows from the APPG’s fact-finding visit to Singapore, in which it aimed to learn how Singapore has established itself as a leading global disputes hub in order to apply some of these lessons to ensure that the UK can continue to “consolidate and thrive as a disputes hub”. Continue reading

A new international Convention for the enforcement of mediated settlements

We are soon to have a new international regime for the enforcement of mediated settlement agreements.

The UN Convention on International Settlement Agreements Resulting from Mediation, which will be known as the Singapore Convention, was approved in June 2018 by UNCITRAL (the United Nations Commission on International Trade Law).  It is expected to be open for signature from 1 August 2019 and will come into force upon ratification by at least three contracting States.

The Convention will oblige contracting States (except in specified limited circumstances) to recognise international settlement agreements resulting from mediation in commercial disputes, either to enforce the agreement or allow it to be invoked as a defence to a claim (that is, either as a sword or a shield).

It is hoped that the Singapore Convention will achieve for mediation what the New York Convention has for international arbitration, encouraging a greater global acceptance of mediation as a credible and reliable dispute resolution mechanism in international commerce.

For more detail on the Convention, and commentary on how likely it is to achieve that aim, see the article by Jan O’Neill (Professional Support Lawyer, London) recently published on the Practical Law Dispute Resolution Blog, here.

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

 

New convention on the enforcement of mediation settlement agreements approved

On 26 June, at the 51st session of UNCITRAL, final drafts for a Convention on the Enforcement of Mediation Settlements and corresponding Model Law were approved. This paves the way for adoption by UNCITRAL’s Commission later this year. It is understood that the Convention will be called the Singapore Mediation Convention and will be signed at a ceremony in Singapore in 2019. The Convention must then be ratified by at least three member states to come into force.

Approval of the drafts represents the culmination of several years’ work by UNCITRAL Working Group II. Its aim has been to implement an international regime for the enforcement of mediated settlements broadly akin to the 1958 New York Convention for the enforcement of arbitral awards. This will increase the attraction of mediation for international parties, with all its well-known cost efficiencies and other potential benefits.

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. 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.

Whilst problems of enforcement of mediated settlements have been sparse in practice (certainly compared to court judgments or arbitral awards), the Convention will no doubt add credibility to mediation as an international dispute resolution process. It will also make mediation particularly well suited to cross-border disputes.  At the Global Pound Conference series, delegates in Asia, Africa, the Middle East and Latin America all revealed a desire for legislation or conventions to promote the recognition and enforcement of settlements. This may reflect the varied and complex legal and political frameworks in these regions. Many of those surveyed manage businesses and disputes across several borders, where legal regimes can vary from stable, tested and familiar to those that are only a decade old. The call for regulation and certainty is even more critical as the pace of development intensifies through new trade treaties and investment, and massive initiatives such as the Belt and Road. The Convention and Model Law look set to respond well to this demand and may hail an inflection point for the use of mediation in these developing regions.

Materials approved on 26 June have not yet been made available on the relevant UNCITRAL webpage.  However they will in due course be posted on this page, which currently contains the most recent drafts (from February 2018) together with other details of the initiative.