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

Mixed-mode dispute resolution: China’s Belt and Road is driving change

A trend toward combining alternative dispute resolution processes (typically mediation and arbitration) is gaining traction internationally and is being particularly driven in Asia by the Belt and Road Initiative.

With China at the heart of the Belt and Road, a more consensus-driven approach to dispute resolution, reflecting Asian values and promoting mediation, looks set to thrive. Traditionally, international commercial disputes play out to Western values and norms and have been adversarial in nature.

For some time, mediation has been discussed as a dispute resolution process suitable for Belt and Road disputes. As an adjunct to adjudicative processes like litigation and arbitration, academicsend-users and China’s own court reforms have highlighted the integral role mediation is likely to play as part of a multi-tier process.

2019 developments

Singapore and China started 2019 with a pro-mediation statement of intent. A memorandum of understanding was signed between the Singapore International Mediation Centre (SIMC) and the China Council for the Promotion of International Trade (CCPIT) in Beijing on 24 January. This announced the establishment of an international panel of mediators to handle disputes that may arise from BRI projects. Mediators will be drawn from a pool of dispute resolution specialists in China, Singapore and other countries and regions along the Belt and Road. Both parties plan to develop rules for case management and enforcement for BRI disputes submitted to mediation. As with other institutions and proposed online platforms, negotiation, mediation and – as a last resort – arbitration will be the combination of processes championed by SIMC and CCPIT.

The ICC too has just published mediation guidance for Belt and Road disputes, alongside appropriate clauses from its existing suite. These promote the use of mediation as either a standalone or mixed-mode process with arbitration.

“Belt and Road presents a rare opportunity to rethink how complex multi-party, international disputes are resolved,” said Herbert Smith Freehills’ Justin D’Agostino, chair of the ICC Court’s Belt and Road Commission.

“For centuries, dispute resolution has been anchored to adversarial processes. With the Belt and Road’s Asian nexus, a more consensual, efficient approach may evolve to resolve disputes. ICC has long offered mediation and arbitration services and is well placed to offer mixed-mode dispute resolution along the Belt and Road.”

 

Justin D'Agostino
Justin D'Agostino
Global Head of Dispute Resolution, Hong Kong
+852 21014010
Anita Phillips
Anita Phillips
Professional Support Consultant, Hong Kong
+852 21014184
Briana Young
Briana Young
Professional Support Consultant, Hong Kong
+852 21014214

Belt and Road: Supporting the resolution of disputes

We have previously commented on how the sheer complexity and scale of China’s ambitious Belt and Road Initiative is prompting a welcome review of dispute resolution processes including efforts, led and supported by the Chinese government, to encourage mediation clauses in Belt and Road agreements.

In the following article, first published on http://arbitrationblog.kluwerarbitration.com on 16 April 2018, Mingchao Fan (ICC) and Briana Young and Anita Phillips (Herbert Smith Freehills) review the latest development in the efforts to support the resolution of Belt and Road disputes.


 

On 5 March 2018, the ICC Court announced the establishment of a commission to address dispute resolution in relation to China’s Belt and Road Initiative. The commission will drive the development of ICC’s existing dispute resolution procedures and infrastructure to support Belt and Road disputes.

The Belt and Road

The Belt and Road is China’s ambitious infrastructure project spanning more than 70 countries, with an increasing number of non-Chinese investors, contractors and developers – including sovereign states – involved. The project aims to build connectivity and cooperation between China across the land-based Silk Road Economic Belt and the 21st Century Maritime Silk Road. It spans large parts of Asia, the Middle East, Africa and Europe.

A construction and infrastructure initiative on this scale will inevitably generate disputes. With an estimated US$900bn in projects planned or already underway, the project gives rise to a multitude of actual and potential commercial disputes to consider. In response to this, Alexis Mourre, President of the ICC Court, announced the establishment of the commission during the ICC Court’s working session last fall.

It is a competitive field, with numerous existing institutions vying for a share of the Belt and Road disputes market, and new courts and institutions being established specifically for the purpose. It seems clear that parties who adopt the right dispute resolution model in their contracts today will be in a better position to resolve disputes as and when they may arise.

Make-up of the Commission

Justin D’Agostino, Global Head of Disputes at Herbert Smith Freehills and Hong Kong’s alternate member of the ICC Court, has been appointed commission chair. Dr Mingchao Fan, ICC Director for North Asia, will act as secretary. Other commission members are drawn from a range of sectors, representing jurisdictions including the PRC, Hong Kong and Singapore. A broader advisory board, representing other countries along the Belt and Road, is being considered.

ICC recognises the importance of engaging key stakeholders within both corporates and governments all along the Belt and Road, to ensure that it is offering the best possible service to parties on all sides.

Although the ICC Belt and Road Commission’s main objective is to raise awareness of the ICC as a “go-to” institution for disputes arising out of China’s Belt and Road Initiative, the commission has additional relevant aims:

 leveraging ICC’s unparalleled international coverage with secretariats and/or national committees in over 100 jurisdictions to attract Belt and Road disputes;
•  engaging with corporates, state-owned enterprises and governments across all Belt and Road territories; and
 highlighting Belt and Road dispute resolution at a series of events throughout the region, with the aim of promoting ICC’s capabilities widely. Events are planned in locations as diverse as China, Paris, Kazakhstan, Kyrgyzstan, Nigeria, Southeast Asia, Japan and Hong Kong, with more to come.

In the Commission’s view, the combination of the ICC’s tried-and-tested, multi-process services, its unrivalled geographical footprint, and its established credibility and independence, place it in a strong position to resolve Belt and Road disputes.

Sector expertise

On average, construction and engineering disputes account for close to a quarter of all ICC arbitration cases, while the finance and insurance sector accounts for approximately 20%. As the world’s leading arbitral institution, ICC is adept at handling complex multiparty cases as well as high-value, complex multi-party and multi-contract disputes (approximately half of all cases filed involve three or more parties). The introduction in 2017 of an expedited procedure also enables lower-value cases to be handled with greater time- and cost-efficiency.

Mediation matters too

There is no ‘one-size-fits-all’ method of resolving Belt and Road disputes. But there is a concerted effort, led and supported by the Chinese government, to encourage mediation clauses in Belt and Road agreements, with provision for arbitration if mediation fails. ICC is a world-leading arbitration and mediation provider, with tried and tested mechanisms and a strong pool of arbitrators and mediators. It is therefore well placed to provide appropriate, effective dispute resolution services to parties all along the New Silk Road. ICC’s stated objective is to ensure that where disputes arise, they are resolved efficiently and with minimal damage to the parties’ commercial relationships.

The role of mediation in the resolution of Belt and Road Initiative disputes

China’s Belt and Road Initiative (BRI) has gained huge momentum of late, with governments, companies and lawyers keen to maximise the many opportunities it presents. The resolution of disputes arising from the BRI is no exception. The sheer complexity and scale of BRI projects is prompting a welcome review of dispute resolution processes, with a view to resolving BRI disputes more quickly and amicably, ideally in a confidential and enforcement-friendly environment.
Recent developments suggest that the BRI presents an opportunity for less formal procedures, like mediation, to flourish and enter the mainstream. Indeed, three key BRI jurisdictions – China, Singapore and Hong Kong – have recently promoted mediation in the context of BRI disputes.

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Herbert Smith Freehills launches latest Guide to Dispute Resolution in Asia Pacific

Dispute Resolution in AP

Please click here to preview this publication.  To request a copy of the guide, please email asia.publications@hsf.com.


Our updated Guide to Dispute Resolution in Asia Pacific aims to provide answers to some of the basic questions a party unfamiliar with a particular jurisdiction will wish to ask when facing the prospect of having to engage in a dispute resolution process in that jurisdiction (including at the stage of negotiating contracts, when deciding on the choice of law and whether to include jurisdiction or arbitration clauses in favour of a particular jurisdiction).

Amongst the range of topics addressed in the Guide, we asked local counsel whether parties to litigation or arbitration are required to consider or submit to ADR procedures before or during proceedings. We will feature the responses of the various jurisdictions in upcoming posts and cover our first five jurisdictions (Australia, Bangladesh, China, Hong Kong and India) below. 

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Launch of landmark global conference series on the future of dispute resolution

Herbert Smith Freehills is pleased to announce the launch of The Global Pound Conference (GPC) Series 2016-17.

The aim of this ambitious worldwide conference series is to build a global conversation about the current landscape of civil and commercial dispute resolution and how dispute resolution tools and institutions should respond to the needs of 21st century business.  In particular, it aims to gather standardised and actionable data on what users of dispute resolution mechanisms need and want and whether those needs are being met.

Over 25 countries worldwide have already committed to holding a GPC event, with more being added. The launch will take place at a two-day conference in Singapore on 17-18 March 2016 and the last event is scheduled to be held in London in July 2017.  Other cities will include Hong Kong, Paris, Dubai, Madrid, Sydney, New York and Frankfurt/Berlin.

The Series, which is being led by the International Mediation Institute (IMI), is being sponsored by Herbert Smith Freehills as well as other global partners: Shell,  AkzoNobel, the Beijing Arbitration Commission (BAC),  JAMS, and the International Centre for Dispute Resolution (ICDR). 

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ADR in Asia – overview of key ADR processes

We previously reported the publication of our ADR in Asia Guide.  As well as distilling the results of our client survey on the use of mediation in Hong Kong, the Guide contains a summary of the main ADR processes used across Asia and includes our Dispute Resolution Wheel, explaining at a glance the characteristics of the various dispute resolution processes you may encounter in Asia.

That summary and Dispute Resolution Wheel can now be downloaded separately, here. If you would like a copy of our full Guide, please email asia.publications@hsf.com.

 

Herbert Smith Freehills publishes ADR in Asia Guide

Herbert Smith Freehills’ Hong Kong dispute resolution team has launched its first ADR in Asia Guide, featuring a spotlight on mediation in Hong Kong. In particular, the Guide includes the results of our recent client research on how international corporates use mediation in Hong Kong.

ADR in Asia

If you would like an electronic copy of our Guide, please email asia.publications@hsf.com.

The Guide:

  • summarises seven ADR processes and their use in Asia
  • contains a practical guide to help you get the most out of mediation (with an emphasis on the procedures in Hong Kong)
  • summarises the outputs of our recent client research to enable organisations to benchmark themselves against their peers when assessing their dispute resolution options

Our research involved around 100 clients and contacts being surveyed through direct interviews and through voting via a bespoke iPad app at an interactive event convened on 29 January 2015.  The research comes 5 years exactly since mediation was put at the heart of Hong Kong’s litigation landscape by Practice Direction 31 (PD 31), which effectively introduces a ‘mediation step’ into civil litigation proceedings in Hong Kong.

The research indicates that mediation remains under-utilised in practice, despite being widely supported and recognised as having the potential to resolve disputes in a quick, cheap and confidential way. Many clients see mediation undertaken without any real intention to settle, simply to comply with PD 31 and move on with the litigation. This is a missed opportunity to front-end the settlement of disputes. Whether you litigate, arbitrate, or have never yet been embroiled in a formal dispute, our commercially-focused Guide will assist you to deploy mediation more effectively in the resolution of your disputes.

Read more about our client research in our Hong Kong Dispute Resolution e-bulletin.

 

Herbert Smith Freehills to publish survey on the use of ADR in Asia

To mark the fifth anniversary of the introduction of the Mediation Practice Direction in Hong Kong, Herbert Smith Freehills has recently conducted a client survey on the use of ADR in Asia generally, and specifically on mediation in Hong Kong. The results will be presented in a publication to be launched at an interactive client seminar on 29 January 2015 in Hong Kong.

The initiative follows our previous leading research on how blue-chips are using ADR and our lead role in a recent landmark convention in London on “Shaping the Future of International Dispute Resolution“, looking at what corporate users need from ADR.

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Selling Mediation in the East

It is generally accepted that, while the use of mediation is on the rise globally, this trend is significantly more pronounced in the West than in Asia.   While the modern concept of formal mediation has of course been around for longer in the West, and has had more time to take hold, can this alone explain the disparity?  Or does the explanation lie at least partly in how mediation is ‘sold’ ?

Sean Izor, an associate in our Beijing and Hong Kong offices, examines this issue in an article recently published in the Asian Journal on Mediation.   In particular, he seeks to identify a number of broad cultural differences in the way individuals approach disputes generally and suggests that practitioners and proponents of mediation would do well to bear these in mind when seeking to communicate the benefits of mediation to Asian parties.

Read the article ‘Selling Mediation in the East – Is there an Asian Way?’ (© Singapore Mediation Centre. Originally published in [2013]  Asian Journal on Mediation, 1.  Reprinted with permission.)