The Situation: On August 7, 2019, the United Nations Convention on International Settlement Agreements resulting from Mediation ("Mediation Convention") was signed by 46 states. Notably, the European Union and the United Kingdom have not signed, suggesting that the Mediation Convention will likely influence approaches to international commercial dispute resolution between the largest trading states in Asia and the Pacific, including the United States. However, this impact will not be global, at least in the short term.
The Result: The Mediation Convention will now enter into force six months after it is ratified by at least three member states. This is likely to occur in early 2020 given the number of states that have signed.
Looking Ahead: Once implemented the Mediation Convention will require courts of contracting states to enforce (i) mediated settlement agreements; and (ii) the right of a party to invoke a settlement agreement against any attempt to "relitigate" matters covered by the settlement. Parties will need to carefully consider whether and when to mediate and how any resulting settlement is recorded. Our previous briefings on the Mediation Convention set out more detail on its precise terms are set out here and here.
The Mediation Convention is intended to promote mediation as an effective way of resolving cross-border disputes and, as a consequence, to facilitate efficiencies in international trade through the more amicable and speedy resolution of disputes. The events of August 7, 2019, are a significant step forward in realizing this goal. However, there remain a number of further steps which must be taken by a reasonable number of states in order for it to be realized fully, including:
Step One: Ratification and the Making of Reservations. Contracting states must now take steps to ratify the Mediation Convention. For most contracting states this step will be largely administrative. However, for others, including notably the United States, ratification requires consent by the legislative arm of government. This process can be lengthy and convoluted.
Significantly, the Mediation Convention permits states to make two prescribed reservations at the time that they ratify. Specifically, a contracting state may declare that:
- It will not apply the Convention to settlement agreements to which it is a party. A state's reservation, subject to the specific terms of its declaration, may extend this reservation to settlement agreements entered into by government agencies or agents of government agencies; and/or
- The Convention will only apply to the extent that parties to the settlement agreement have agreed to the application of the Convention.
The United Nations Commission on International Trade Law ("UNCITRAL") is yet to publish any instruments of ratification or reservations by contracting states. However, this should be monitored closely by parties looking to take advantage of the protections offered under the Mediation Convention in the future, particularly where one of the parties to an international commercial agreement is a government-related entity.
Step Two: Local Implementing Legislation. Under the laws of many states, implementing legislation must be enacted before an international treaty will have practical effect and bind local courts. The corresponding UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation adopted by the United Nations General Assembly in 2018 (amending the UNCITRAL Model Law on International Commercial Conciliation, 2002) sets out a proposed legal framework and procedures for implementing the Convention. It is not yet clear whether many states will take steps to implement the Model Law.
States That Signed the Mediation Convention on August 7, 2019
Afghanistan, Belarus, Benin, Brunei Darussalam, Chile, China, Colombia, Republic of the 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, the Philippines, Qatar, Republic of Korea, Samoa, Saudi Arabia, Serbia, Sierra Leone, Singapore, Sri Lanka, Timor-Leste, Turkey, Uganda, Ukraine, United States, Uruguay, and Venezuela.
Two Key Takeaways
- Following a signing ceremony in Singapore on August 7, 2019, at which 46 States signed, the Mediation Convention is likely to enter into force in early 2020.
- Implementation by a sufficient number of states to create an international system for the enforcement of mediated settlement agreement remains a way off. However, in the longer term the Mediation Convention will reduce the risk of international commercial disputes which are settled through mediation being relitigated.