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
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.)
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:
- 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
- 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”
- The agreement does not fall within the excluded category of settlement agreements (which includes agreements relating to consumer disputes, family, inheritance or employment law)
- 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.
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.
- 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.
The Swiss Chambers’ Arbitration Institution has announced the release of revised Swiss Rules of Mediation, which entered into force on 1 July 2019.
The revised Rules replace the first harmonised Swiss Rules of Mediation, adopted in 2007.
The stated aim of the revisions is to further encourage their use by clarifying, shortening and simplifying their content. They also include revisions designed to make them compatible with the new enforcement opportunities offered by Singapore Convention on Mediated Settlements, which is anticipated to be signed by the first signatory countries at a ceremony in Singapore on 7 August 2019.
The launch of the new Swiss Mediation Rules will be held in Geneva on 27 September 2019 and in Zurich on 9 October 2019.
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.
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.
Following our report on the Global Pound Conference series, which brought together over 4000 stakeholders at 28 conferences worldwide, our analysis of the Asia Pacific results reveals different demands in Asia and Oceania.
Six Asia Pacific cities hosted conferences to assess how dispute resolution can be improved: Singapore; Hong Kong; Chandigarh, India; Bangkok, Thailand; Sydney, Australia and Auckland, New Zealand. Each conference addressed the demand side (commercial party perspectives on dispute resolution); the supply side (what advisers and providers are delivering to commercial parties); the key obstacles and challenges; and what needs to be addressed to effect change.
Region-wide, the data highlights that commercial parties want to use mediation and other ADR processes more, either alone or as an adjunct to adversarial proceedings. However, the data shows that the market is not responding adequately. As a result, mediation remains under-utilised, and actual use lags behind positive attitudes to it. Unless parties and their advisors actively take a different course (for example through inserting escalation clauses in contracts, actively proposing mediation at the point of dispute, or by following mandatory mediation protocols), there is likely to remain a perpetuation of the “same old processes” – litigation and arbitration.
Read more analysis of the Asia Pacific results on our Asia Disputes Notes blog here.
It has recently been announced that a new “Japan International Mediation Centre” (JIMC) is to open in Kyoto in early 2018.
While details on the new centre are still limited, it is known that it is being established in collaboration and with the assistance of the Singapore International Mediation Centre (SIMC), which may provide an indication of how the new centre is likely to operate.
The establishment of the centre is an interesting development in a jurisdiction which is known for its amenability to privately negotiated settlements of disputes but in which (along with many other Asian jurisdictions) the concept of mediation has failed to thrive and become institutionally embedded.
For more on the JIMC, read our Japan Dispute Avoidance Newsletter.
Herbert Smith Freehills also hosts a dedicated ADR Hub as a resource for our clients. This includes a spotlight series on ADR in Asia Pacific, Issue 2 of which specifically delves into ADR in Singapore including the features of the SIMC.
Further to our earlier posts (here and here) highlighting material from our recently updated Guide to Dispute Resolution in Asia Pacific, we now feature in part 3 the responses from New Zealand, Pakistan, Philippines, Singapore, Taiwan, Thailand and Vietnam to the question whether parties to litigation or arbitration are required to consider or submit to ADR procedures before or during proceedings.