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

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). 

Continue reading

Superstorm Sandy litigation ruling on hold pending parallel mediation

By way of update to our previous report on 8 May 2013 , on 12 August 2014 the New York federal court managing the consolidated Superstorm Sandy insurance litigation deferred ruling on a crucial insurance issue pending the outcome of mediation by the Federal Emergency Management Agency (FEMA), the US agency generally tasked with coordinating disaster response at the federal level.

The more than US$50 billion in property devastation wreaked by Superstorm Sandy in October 2012 has been the subject of both litigation and mediation. An important issue in the insurance litigation is the validity of “placeholder” proofs of loss, which essentially are policyholders’ generalized estimates of loss based on an average of flood-related damage across all properties affected by the storm. FEMA considers such placeholder proofs of loss as incompatible with the Standard Flood Insurance Policy, which requires specific proof of the actual damage sustained that would permit an insurer to resolve a claim without court intervention. FEMA thus requested that the court dismiss all of the claims of plaintiffs who have not submitted actual proof of their loss.

Running parallel with the litigation, FEMA also has elected to permit private insurers that administer flood policies to request waivers of the strict requirements of the Standard Flood Insurance Policy in appropriate case-specific circumstances, and to participate in mediation of these cases. Recognizing FEMA’s and the insurers’ commitment to engage in good faith negotiations to resolve the claims through mediation, a federal magistrate judge overseeing the litigation deferred issuing a ruling on the validity of placeholder proofs of loss until the mediations conclude.

New York state court green-lights mandatory mediation pilot programme

As we previously reported (here), the New York Supreme Court Commercial Division (a Manhattan-based division of the state court of first instance that exclusively hears complex commercial cases) has been considering a proposal for mandatory mediation.

The proposal has now been adopted and the 18 month pilot programme becomes effective on 28 July 2014, at which time one in every five cases filed in the Commercial Division will be subject to mandatory mediation. Continue reading

Mandatory mediation pilot proposed for New York state court

An advisory committee has recommended that the New York Supreme Court (the state court of first instance located in Manhattan) adopt a pilot programme for mandatory mediation in its Commercial Division, which exclusively hears complex commercial cases.

While other New York courts have instituted limited mandatory mediation programmes (such as the Brooklyn programme about which we previously reported, which only applies to transit cases), this proposed programme is the most expansive to be considered to date.   Part of the rationale for proposing mandatory mediation in the Commercial Division is that mediation is underutilised there, and highly congested courts detract from New York’s stature as a desirable place to conduct business in an increasingly competitive global economy.  Continue reading

Brooklyn test program requires mediation in certain civil cases

The first instance state court in Brooklyn (Kings County) recently initiated a test program requiring civil cases to be mediated before proceeding to trial. The goal of the program is to alleviate some of the time and financial costs that civil litigation places on Brooklyn’s court system, which is burdened by over 50,000 cases at the trial court level.  The program will initially only apply to cases involving the Metropolitan Transit Authority of the State of New York, a provider of public transportation.   The mediators will be selected from a group of volunteers who will not be compensated.  Mediation in these test cases will commence after discovery is complete and prior to the calendaring of a trial date.  The court intends to extend this program, if successful, to a wide variety of civil cases. For further information please contact Allison Alcasabas or Annemarie Jones in our New York office.

Super Storm Sandy: New York’s Mediation Program Commences

In the wake of Super Storm Sandy, which caused devastation to parts of New York and surrounding areas on 29 October 2012, the New York Department of Financial Services has established a voluntary mediation process to resolve denied, disputed, or delayed insurance claims.  The first mediation sessions took place on 10 April 2013.  The program handles disputed real and personal property claims (excluding damage to motor vehicles) that arose between 26 October 2012 and 15 November 2012 in various New York State counties, including those in New York City, Long Island and Westchester.  (Claims made under the National Flood Insurance Program, which is administered by the US government, are not eligible.)   The Superintendent of Financial Services has designated the American Arbitration Association (AAA) to administer the mediation program.  The insurer will bear the AAA’s administration costs and the mediator’s compensation for the two-hour mediation session.  Both the claimant and the insurer are required to sign a confidentiality statement.  The parties may agree that the mediation be conducted in person, by video conference, or by telephone conference.

Allison Alcasabas
Allison Alcasabas
Partner, dispute resolution, New York
+1 212 519 9861
Annemarie Jones
Annemarie Jones
Associate, dispute resolution, New York
+1 212 519 9870

Rhode Island Pension Law referred to the Federal Mediation and Conciliation Service

A new law in the state of Rhode Island overhauling its pension plan is the focus of a dispute between the State and five public sector unions representing police, firefighters, teachers, and other government employees.  The mediation will be handled by the Federal Mediation and Conciliation Service. Allison Alcasabas (partner) and Annemarie Jones (associate) from our New York office report on this development. Continue reading

Federal Mediation and Conciliation Service Deputy Director Instrumental in National Hockey League Deal

The Federal Mediation and Conciliation Service (“FMCS”) and its Deputy Director, Scot L. Beckenbaugh, were instrumental in resolving the recent dispute between the National Hockey League (“NHL”) and the National Hockey League Players’ Association (“NHLPA”). The dispute arose in July 2012 when the NHL and NHLPA began discussing a new collective bargaining agreement.  The dispute hinged, amongst other things, on setting the players’ 2013-2014 salary cap, determining the maximum length of players’ contracts, amending free agency rules, and resolving issues relating to the pension plan.  FMCS became involved in the dispute in November 2012. Allison Alcasabas (partner) and Annemarie Jones (associate) from our New York office report on this development. Continue reading