On September 12, 2020, the United Nations Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Convention” or the “Convention”) will enter into force. The Singapore Convention obliges contracting States to recognize and directly enforce mediated international settlement agreements. By freeing entities from the need to litigate breaches of mediated settlement agreements, the Convention is potentially a powerful tool for the resolution of cross-border disputes.
Introduction to the Singapore Convention
The Singapore Convention is a multilateral convention that requires contracting States to ensure that their national courts recognize and enforce international (i.e., cross-border) settlement agreements reached through the use of mediation. It adopts a format similar to the highly popular and near universally adopted United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). The Singapore Convention opened for signatures on August 7, 2019. The signing ceremony took place in Singapore on the same day, hence the name “Singapore Convention.” We previously covered the opening of the Singapore Convention for signature here. At the signing ceremony, 46 countries signed the Singapore Convention, including economic heavyweights China, India, and the United States.
Under the Singapore Convention, contracting States agree that, if a party to a mediated settlement agreement seeking enforcement in a contracting State’s jurisdiction produces a copy of the settlement agreement and evidence that the agreement was reached through the use of mediation, each contracting State must recognize and enforce that agreement in accordance with its own rules (subject to the contracting State’s ratification, acceptance, or approval of the Singapore Convention). The other requirements for recognition and enforcement are that, at the time of conclusion, the mediated settlement agreement must be international in that: (i) at least two parties to the agreement have their places of business in different States; or (ii) the State in which the parties to the agreement have their places of business is different from either the State in which a substantial part of the obligations under the agreement is performed or the State with the closest connection to the subject matter of the agreement.
The Singapore Convention permits contracting States to refuse enforcement only on limited grounds. As such, the Singapore Convention potentially enables parties in cross-border commercial transactions who have settled their dispute through mediation to enforce their settlements directly. Prior to the Singapore Convention, if an uncooperative counterparty to a mediated settlement agreement refused to comply with the terms of the agreement, the party seeking enforcement would often have to bring fresh litigation proceedings before the courts to sue on the settlement agreement, obtain a court judgment, and then attempt to enforce that court judgment. The Singapore Convention obviates the need to litigate the breach of contract; the obligations contained in international settlement agreements are directly enforceable in contracting States simply by virtue of resulting from a mediation.
Entry into Force of the Singapore Convention
The Singapore Convention provides for its entry into force six months after deposit of the third instrument of ratification, acceptance, approval, or accession at the UN Headquarters in New York. As a result of the deposit of the third instrument of ratification, acceptance, approval, or accession on March 12, 2020, the Singapore Convention will enter into force on September 12, 2020. As of September 9, 2020, six contracting States (Belarus, Ecuador, Fiji, Qatar, Saudi Arabia, and Singapore) have ratified, accepted, approved, or acceded to the Convention.
The success of the Singapore Convention depends on its widespread ratification, acceptance, approval, or accession. Although only six contracting States have ratified/approved the Convention as of September 9, 2020, it has been signed by 53 contracting States, including some major world players such as China, India, and the United States. Notably, neither the European Union nor the United Kingdom has signed the Singapore Convention.
Many contracting States will require domestic legislation to ensure their compliance with the Singapore Convention. Singapore has already taken steps to implement the Convention domestically, passing the Singapore Convention on Mediation Act on February 4, 2020, prior to depositing its instrument of ratification at the UN Headquarters on February 25, 2020.
Position of Economic Heavyweights on the Singapore Convention
As noted above, economic heavyweights China, India, and the United States have all signed (but not yet ratified) the Singapore Convention; the European Union and the United Kingdom have not.
In the United States, several trade groups have written to U.S. Secretary of State Michael Pompeo urging the United States to ratify the Singapore Convention. The groups’ position was that the enforcement of settlements would help mitigate risk when entering into a commercial relationship with foreign entities and would raise the standards of fair trade globally. The U.S. Secretary of State has not responded to the trade groups and has not made any statements on the United States’ position on the Singapore Convention. In July 2020, the U.S. Department of State’s Advisory Committee on Private International Law included “finalization” of the Singapore Convention in its annual meeting agenda. However, meeting minutes have yet to be released. For the time being, the United States has not cemented its position as to whether, or when, it will ratify the Singapore Convention.
Meanwhile, in China, officials have not publicly commented on the ratification of the Singapore Convention.
The European Union is not a signatory and made clear from the outset during sessions of the Singapore Convention Working Group that it had doubts about the project. The European Union led discussions on behalf of its Member States. It made clear that the Singapore Convention should not overlap with other instruments covering similar subject matters, including the European Mediation Directive of May 21, 2008, the Hague Convention on Choice of Court Agreements of June 30, 2005, the Hague Convention on the Enforcement of Foreign Judgments, and the New York Convention. The European Union appears to still be considering whether to sign the Singapore Convention in light of these concerns, and the question still remains whether its Member States will be permitted to sign and ratify the Singapore Convention should the European Union decide not to do so. Indeed, there were some early doubts as to whether the European Union had the competence to sign on behalf of its Member States. As of today, neither the European Parliament nor the European Council has indicated its position on the matter. The governmental bodies of the Member States have also remained silent as to whether they will sign, suggesting that this issue remains under discussion.
The Singapore Convention is a welcome addition to the suite of tools available for the resolution of cross-border disputes. Where mediations result in a further settlement, the Convention will enable parties to enforce the terms of the settlement directly and increase the likelihood that parties will receive the negotiated benefits of their bargain.