Approx. three weeks ago, with much fanfare and after years of preparation, the formal signing ceremony for the United Nations Convention on International Settlement Agreements Resulting from Mediation took place at the Shangri-La Hotel in Singapore. The Singapore Convention on Mediation, as it will be known, is as another step in further encouraging and simplifying international commerce and popularizing mediation as an instrument of alternative dispute resolution by streamlining the procedure for the enforcement of mediated settlements. The Singapore Convention can also be seen in a larger context of other conventions, for instance the Hague Convention from 2 July 2019 designed for the recognition and enforcement of foreign judgments in civil or commercial matters and the ever more popular New York Convention from 1958 developed for the enforcement of arbitral awards.
The Singapore Convention aims at facilitating the enforcement of settlements resulting from mediation. It defines “Mediation” very broadly, meaning “a process, irrespective of the expression used or the basis upon which the process is carried out, whereby parties aim to reach an amicable settlement of their dispute with the assistance of a third person or persons (“the mediator”) lacking the authority to impose a solution upon the parties to the dispute” (Art. 1 para. 3).
As of today, despite the overall increase in alternative dispute resolution, mediation, especially the use of mediation in cross-border disputes, is not as popular as might be expected. One of the main reasons for that is that outside the EU legal framework, there is no international legal framework for the enforcement of settlements. So far, if one party does not comply with the mediated settlement, one would usually have to sue for breach of contract, either in arbitral or court proceedings. The subsequent court judgement or arbitral award would then still have to be recognised and enforced, possibly in another jurisdiction. This rather lengthy process is usually tied to considerable costs and may be one of the reasons mediation is not as popular as might have the potential to be. It stands in stark contrast to the simplified mechanism for the enforcement of arbitral awards under the New York Convention from 1958.
This Convention, finally signed after three years of negotiations between some 85 potential future member States and clearly aimed at repeating the success of the similarly structured New York Convention certainly has the potential to change that.
In short, the Singapore Convention enables a mediated settlement to be directly enforced by the courts of a Member State. With regard to the scope of application, the Convention will apply to settlements that are in writing, result from a mediation and constitute a settlement agreement between two or more parties, that have their place of business in different States. Naturally, yet perhaps most importantly, the place of business of each of the parties to the agreement must be in a state that has acceded to or has ratified the Convention (Art. 1 para.1). The Convention expressly excludes some areas from its scope of application, namely settlement agreements concluded to resolve a dispute arising from transactions engaged in by one of the parties (a consumer) for personal, family or household purposes (Art. 1 para. 2(a)) and settlements relating to family, inheritance or employment law (Art. 1 para. 2(b)). Furthermore, the Convention does not apply to settlement agreements that have been approved by a court or been concluded in the course of proceedings before a court as well as settlement agreements that are enforceable as a judgment in the state of that court (Art. 1 para. 3(a))). Lastly, the Singapore Convention also excludes settlement agreements that have been recorded and are enforceable as an arbitral award (Art. 1 para. 3(b)).
The next few years will show whether the Singapore Convention manages to fulfil the expectations currently attached to it after this fulminant start. It will only come into force six months after three countries have ratified, accepted, approved or acceded to the Convention. Given that so far 46 countries have signed, that seems to be guaranteed. Further adding to the attractiveness of the Convention is the fact that it comes equipped with a model statute for implementation.
The list of signatories so far is particularly remarkable because it includes economic and political heavyweights such as the United States, China as well as India and South Korea in an unusual display of agreement. While the Singapore Convention was greeted with enthusiasm across much of the world, some remained conspicuously quiet. Neither the European Union, nor the United Kingdom or Australia have signed, yet. Whether the European Union’s rather frosty attitude towards the new Convention stems from fear it might interfere with intra-EU efforts on the same topic or rather disagreement with the content of the Convention, it will be worthwhile to keep a close eye on the Union’s next steps in this regard. Yet, given that the European Union already has Mediation Directive 2008/52/EC dealing with much the same regulatory content as the Singapore Convention - albeit with some more deficits-, it would be surprising if they would not come to accept the Convention. Particularly given that Mediation Directive 2006/52/EC already shows that the EU should have the necessary competence to sign for its member States.
It also remains to be seen how many States will make use of the possibility of “Reservations” as outlined in Art. 8 of the Convention. A widespread use of such reservations, which are still possible after signing, may curtail the extent to which the Convention will apply globally.
But, if early interest is any indication for future success, the Convention is all set for a bright one. What it has already done, is to renew the interest in mediation as an alternative dispute resolution mechanism in general. Moreover, it will serve Singapore well in its ambition to cement its standing as a hub for international dispute resolution, be it only because its name is now inextricably linked to this new milestone for cross-border mediation.
Dr. Richard Happ
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