The significance of the Singapore Convention for mediation on international agreements
The Singapore Convention came into force on 12th September 2020. This article will provide a brief overview of the Singapore Convention and the impact on international commercial agreements, the ease to enforce mediated settlement agreements across borders for trade disputes due to the Convention.
To date 53 UN member States have signed the Convention to include the world’s four largest economies the USA, China, India and South Korea. Around 6 States have ratified the Convention with the most recent being Ecuador on 9th September 2020.
The United Kingdom and EU have yet to sign the Convention. The lack of uptake on the Singapore Convention in the EU may be because of the European Mediation Directive as it attempts a similar outcome to the Convention within the EU. The requirements of the European Mediation Directive were implemented in the UK via the Cross Border Mediation (EU Directive) Regulations 2011 (SI 2011/1133), however post Brexit the directive will no longer apply or the reciprocity rules, the UK government have published the Cross-Border Mediation (EU Directive) (EU Exit) Regulations 2018 to ensure UK jurisdiction law will continue to apply for EU cross border mediations that started before Brexit.
When the UK do sign and ratify the Singapore Convention, it will be of interest to businesses to use the mediation procedure for disputes who are involved in cross border trade or international contractors involved in infrastructure contracts such as China’s Belt and Road Initiative.
In December 2018, the United Nations General Assembly adopted by consensus the United Nations Convention on International Settlement Agreements resulting from Mediation, which is more commonly known as the Singapore Convention on Mediation.
The Singapore Convention is a multilateral convention that requires contracting States national courts to recognise and enforce international cross-border settlement agreements that were reached through the use of mediation.
Prior to the Singapore Convention a party who had agreed a cross border settlement agreement through mediation would have to commence an action against the party in breach through either litigation or arbitration to enforce the mediated settlement agreement. This process would result in increased costs and potentially lengthy process with the concern of bias in trying to enforce the settlement agreement by court order through the national courts.
As a consequence, mediation would not be considered by all commercial parties as a viable alternative procedure than litigation or arbitration for cross border disputes. The UN Convention encourages mediation as an alternative and effective method of resolving trade disputes.
The Singapore Convention has provided a process and procedure whereby contracting States would recognise and enforce the mediated settlement agreement without the need to enter into litigation or arbitration.
The impact of the Singapore Convention
Prior to the Convention, mediated settlement agreements were generally only enforceable as any other contract, with the exception of mediation undertaken within an arbitration or litigation proceedings.
The Singapore Convention provides confidence in the mediation procedure to businesses in international agreements, by providing a uniform international framework to enforce mediated settlement agreements in cross border disputes.
The impact of the Convention allows mediated settlement agreements to be enforced between its signatories. Countries that have ratified the Singapore Convention will be obliged to enforce mediated settlement agreements. The Convention offers a new legal framework for cross-border disputes and keep international disagreements out of the local courts.
The scope and applicability are set out in Articles 1 and 4 of the Singapore Convention. Article 1 provides that the Convention applies to international settlement agreements resulting from mediation, concluded in writing by parties to resolve a commercial dispute. The settlement agreement is enforceable as a court judgement or arbitral award.
Are there any grounds for a court to refuse to enforce a Mediated Settlement Agreement?
Article 5 of the Singapore Convention defines the grounds upon which a court may refuse to grant relief at the request of the disputing party against whom it is invoked.
The grounds for refusal are listed under Article 5 as;
1. Party’s incapacity (Art 5 (1)(a));
2. The settlement agreement being null and void or inoperative/incapable of being performed (Art 5 (1)(b)(i), not binding, or not final (Art 5(1)(b)(ii), or subsequently modified (Art 5(1)(b)(iii);
3. The obligations in the settlement agreement not being performed (Art 5 (1)(c)(i), or not being clear (Art 5(1)(c)(ii));
4. Granting relief contrary to the settlement agreement (Art 5(1)(d));
5. Serious breach by the mediator (Art 5 (1)(e));
6. The mediator’ failure to disclose any circumstances that doubt impartiality or independence (Art 5(1)(f));
7. Granting relief contrary to public policy of the State where enforcement is sought (Art 5(2)(a)); and,
8. The disputing matter not being capable of settlement by mediation under the law of the State where enforcement is sought (Art 5(2)(b))
As mentioned above, the grounds for refusal are limited in scope similar to the New York Convention on which a State may refuse to grant relief as set out under article 5 of the Convention.
Will the Singapore Convention provide greater certainty for international mediation?
The Singapore Convention is a positive development for the mediation of cross border disputes and provides a defined procedure and process for the enforcement of international mediated settlement agreements internationally.
The Convention is a positive step towards the promotion of mediation in commercial disputes as an alternative dispute resolution mechanism. However, there are some parts of the Convention where there are uncertainties open to interpretation such as standards applicable to mediators or mediation as mentioned in Article 5(1)(e) where there is the ground to refuse a settlement agreement where there was a serious breach by the mediator of standards applicable to the mediator or the mediation…” until clarified in domestic legislation or procedural rules.
Parties should also be mindful when looking to enforce an international mediated settlement agreement to define the remedies for breach in the settlement agreement and be aware of what the law permits in the State where enforcement is sought, in particular differences in civil and common law remedies for commercial disputes. Ensuring these steps are recorded in the settlement agreement will provide greater certainty in pursuing a successful enforcement should it prove necessary to pursue enforcement.
This article is provided for general information only and is not intended to be nor should it be relied upon as legal advice in relation to any particular matter. If you require specific legal advice on any issue relating to mediation, you can book a free 15 minute consultation with Avinder Laroya, a CMC accredited Mediator by clicking here