The United Nations Convention on International Settlement Agreements Resulting from Mediation (known as the “Singapore Convention”) is open today (7 August 2019) for signature by United Nation states with 46 states, including the US and China, signing on day one. The Convention seeks to create a framework for the enforcement of international mediation settlement agreements, avoiding the need for full court proceedings. This is a significant development, aiming to attract commercial parties to resolving their international disputes by mediation.
The Singapore Convention, adopted by the UN in 2018, applies to international settlement agreements resulting from mediation. The UN says that the Convention provides a “harmonised legal framework for the right to invoke such settlement agreements as well as their enforcement”. This is intended to short cut the process to enforce international mediation settlement agreements, avoiding the need for parties to resort to full court proceedings and the costs and time which go with that. The UN describes it as an instrument for the facilitation of international trade and the promotion of mediation as an alternative and effective method of resolving trade disputes. Others have described it as intending to do for mediation, what the 1958 New York Convention has done for arbitration.
International settlement agreements are defined by the Convention as agreements resulting from mediation and concluded in writing to resolve a commercial dispute which is international. Non-commercial disputes such as family and employment law disputes are excluded, as are agreements which are already enforceable as a court judgement or arbitral award. “International” is defined as being where at least two of the parties have their place of business in different States; or the State of the parties’ place of business is different from the State in which a substantial part of the obligations under the settlement agreement is performed / with which the subject matter is most closely related.
The Convention provides that each State shall enforce such a settlement agreement (or allow a party to invoke it, to prove that the matter has already been resolved by it), in accordance with its own rules of procedure and under the conditions of the Convention. A party seeking relief under the Convention will require to supply to the competent authority in the State (i.e. a court) evidence that the settlement agreement resulted from mediation (such as the mediator’s signature on the settlement agreement or other document indicating that the mediation was carried out). Any necessary document to verify that the requirements of the Convention have been complied with may also be required.
There are then limited grounds on which the court may refuse to grant the relief sought under the Convention. These include that the settlement agreement is “null and void, inoperative or incapable of being performed under the law to which the parties have validly subjected it”; it is not binding; the obligations in it have been performed or they are not clear or comprehensible; there is a serious breach by the mediator of the applicable standards without which a party would not have entered into the settlement agreement etc. The court itself may also refuse to grant relief if it finds that doing so would be contrary to public policy.
The Convention opened to signatures by United Nation States following a ceremony in Singapore on 7 August 2019 46 states signed the Convention at the ceremony, including the US and China. The Convention is due to come into force six months after ratification by at least three States and it will apply prospectively i.e. to international settlement agreements concluded after that coming into force. States can choose to sign up but exclude settlement agreements to which it (or any governmental agency as specified) is a party, or to apply the Convention only to the extent that the parties to the settlement agreement have agreed that it applies.
This is a step forward for mediation. Parallels have been drawn with the ability to enforce arbitral awards under the 1958 New York Convention, although settlement agreements are a somewhat different beast. How many United Nation States sign up and on what basis, remains to be seen. However, the potential benefits of having an internationally enforceable settlement agreement, without the need for full court proceedings, are significant. This could well attract more parties to using mediation on the international stage.
The perceived benefits of swift enforcement may prove unattractive to some parties, however. The exception for settlement agreements which are “null and void, inoperative or incapable of being performed” may not capture all of the defences available to resist enforcement under the applicable law. The doctrines of estoppel and rectification are two examples under English law which might be argued to fall outside the exception. A more limited set of defences will undoubtedly provide greater certainty as to enforcement, but some parties may be cautious about giving up in advance established protections afforded by the applicable law.