On August 7, 2019, forty-six nations signed the Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Convention”)[1] in Singapore. Negotiated and agreed under the auspices of the United Nations Commission on International Trade Law (“UNCITRAL”), this new treaty seeks to facilitate the global enforcement of international settlement agreements that have been reached through the use of mediation. Among the signatories to the Singapore Convention are China, India and the United States. Twenty other countries have also indicated their intention to sign the treaty. Notable absentees from the current list of signatories include the European Union and its Member States.[2] The Singapore Convention will enter into force six months after ratification by three countries.

Mediation is a form of dispute resolution involving discussions that are supervised and facilitated by an independent third-party mediator. The mediator’s role is to find compromises between the parties, with an emphasis on commercial, rather than legal, considerations. Mediation is generally a more amicable method of resolving disputes than litigation or arbitration. If mediation is successful and a settlement is reached, parties typically memorialize their mediated settlement in a written settlement agreement.

Mediation has generally been disfavored in cross-border disputes due to the absence of an international framework for direct enforcement of the resulting settlement agreement. If a party refused to pay or perform, the non-breaching party would generally be required to sue under the settlement agreement, obtain a judgment or award, and attempt to enforce that judgment or award in the foreign jurisdiction where the judgment debtor’s assets were located—often wholly negating the litigation/arbitration-avoidance impetus for mediation to begin with.

Some institutions have sought to ensure direct cross-border enforceability of mediated settlement agreements by combining mediation with features of arbitration. Such processes include “Arb‑Med-Arb” (as developed by the Singapore International Mediation Centre[3]) and “Med‑Arb” (as is common in China and some other Asian jurisdictions, including Japan). In these processes, the parties attempt to settle their dispute through mediation and, if successful, have an arbitral tribunal record the mediated settlement agreement as a consent award enforceable under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). Despite meeting this objective, “Arb-Med-Arb” and “Med-Arb” processes are seldom used in cross-border disputes, possibly due to the cost and process inefficiency of requiring both a mediator and an arbitrator.

The Singapore Convention addresses these concerns by obliging Convention States to enforce international settlement agreements reached through mediation directly, without requiring the non-breaching party to sue under the agreement (like arbitral awards). The enforcing party need only produce a copy of the settlement agreement together with evidence that the agreement was reached through the use of mediation. Convention States are only allowed to refuse enforcement on enumerated grounds including: (a) invalidity of the settlement agreement; (b) prior performance of the obligations in the settlement agreement; (c) unclear or incomprehensible obligations; (d) serious breach of (procedural) standards applicable to the mediation; (e) undisclosed partiality or lack of independence by the mediator; (f) public policy of the enforcing State; and (g) subject matter being incapable of mediation in the enforcing State.

It is unknown at present when the Singapore Convention will go into effect. Before ratifying the treaty, Convention States will need to take steps to ensure compliance with their treaty obligations at the national level, likely by adopting domestic legislation mirroring or approximating the treaty. In order to promote consistency of national laws, UNCITRAL has proposed a “Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation[4] for adoption by Convention States, which largely mirrors the treaty itself. It remains to be seen how national courts will react to applications for enforcement of international settlement agreements, particularly if those agreements are poorly drafted or inconsistent with domestic practices in the enforcement State. The grounds for non‑enforcement in Article 5(1)-(2) of the Singapore Convention are noticeably broader and more substantive than those found in Article V(1)-(2) of the New York Convention.

In conclusion, although arbitration remains the dispute resolution method of choice for international disputes, the Singapore Convention is a welcome addition to the alternative dispute resolution toolkit.