Over recent years mediation is slowly becoming recognised as a viable alternative to the resolution of disputes in the commercial world. This is undoubtedly a corollary of the steadily increasing costs and formalities associated with litigation and one of the most common forms of alterative dispute resolution; arbitration.
The Centre for Effective Dispute Resolution (CEDR) defines mediation as a “flexible process conducted confidentially in which a neutral person actively assists parties in working towards a negotiation agreement of a dispute or difference, with the parties in ultimate control of the decision to settle and the terms of resolution”. [Emphasis added]. Contrast this with arbitration, in which the parties agree to be bound by the decision of a neutral third party, the arbitrator, whose award is usually legally enforceable as a court judgement. [Emphasis added].
Whilst mediation offers a myriad of benefits, its growth has been hindered by one main issue: parties’ are often concerned about their ability to ensure that the other party complies with any mediated settlement agreement. This is because unlike court judgments and arbitration awards, mediated settlement agreements are only binding contractually. This means that if a party to the settlement agreement did not abide by its terms, the only remedy the other party would have was to issue proceedings for breach of contract in the national courts.
The Convention on the Enforcement of International settlement Agreements Resulting from Mediation, informally named the “Singapore Convention,” has been welcomed as a long-sought mechanism to give cross-border disputants the confidence that, if they engage in mediation of international commercial disputes, any resulting agreement will be enforceable by its terms. Its approval follows three years of intense deliberation among 85 member states and 35 international governmental and nongovernmental entities. The Singapore Convention takes effect once three member states ratify it. Crucially, its ratification and effect on mediation shall be similar to that of the New York Convention on arbitration. The Singapore Convention will be open for signature at the signing ceremony on 7 August 2019, and over 20 countries, including the US, China and India have indicated that they will be signing it.
Key Points of the Singapore Convention
- The Singapore Convention’s main purpose is to remedy the concerns regarding lack of enforcement, and promote the use of mediation in international commercial disputes. Those contemplating mediation to resolve international commercial disputes will have greater assurance that any mediated settlement agreements can be enforced by the courts of jurisdictions that are signatory to the Singapore Convention and may also be invoked by a party as a defence against a claim.
- The Singapore Convention will only apply to settlement agreements resolved via mediation for international commercial disputes. It will not apply to international settlement agreements that are concluded in the course of judicial or arbitral proceedings nor personal, family or household purposes between the parties.
- The national courts of a signatory jurisdiction will be expected to consider and rule on applications to (a) enforce an international settlement agreement which falls within the scope of the Singapore Convention, and (b) to allow a party to invoke the terms of any settlement agreement in order to prove that the matter has already been resolved, in accordance with its rules of procedure, and under the conditions laid down in the Convention. Thus, signatories should put in place their own rules of procedure to give effect to the Singapore Convention’s expedited enforcement mechanism. This mechanism is akin to private international law recognition of foreign court judgments and arbitral awards.
- The national courts of a signatory jurisdiction may refuse to grant relief on the grounds laid out in the Singapore Convention including:
- If a party to the settlement agreement was under incapacity;
- If the settlement agreement is not binding, null and void, inoperative or incapable of being performed under the law which it is subjected to;
- If there was a serious breach by the mediator of standards applicable to the mediator, without the breach that party would not enter into the settlement agreement; and/or
- If granting relief would be contrary to the public policy of the signatory jurisdiction.