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Singapore Convention on Mediation

posted 5 years ago

THE SINGAPORE CONVENTION ON
MEDIATION

The
United Nations (UN) Convention on International Settlement Agreements
Resulting from Mediation (The Singapore Convention on Mediation)1
was finally signed by 46 States on 7 August 20192,
following its approval by the United Nations Commission on
International Trade Law (UNCITRAL) in June 20183
and adoption by the UN General Assembly in December 20184.
The signatories of the Singapore Convention include the two largest
economies, the US and China and many of the largest economies in
Asia, such as India and South Korea, as well as Turkey5.

Recognizing
mediation’s rising profile as a method for settling international
commercial disputes and the significant benefits that mediation
provides6,
the Singapore Convention on Mediation establishes a framework for the
enforcement of international settlement agreements resulting from
mediation, akin to the international regime implemented by the 1958
United Nations Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (New York Convention)7.
The high number and calibre of signatories is deemed to be very
promising for the Convention’s future success, as it surpasses the
10 countries who had initially signed the New York Convention when it
was opened for signature in 19588.

A
BIG BOOST FOR MEDIATION

Mediation
provides significant benefits in comparison to arbitration and
litigation in resolving commercial disputes. It is cheaper, provides
workable solutions in a less adversarial setting and thereby helps
preserve on-going commercial relationships. As a result, enforcement
issues normally do not arise. Indeed, voluntarily negotiated
settlement agreements reached through the help of a neutral mediator
are usually honoured by their parties. They also tend to last longer
as the parties are likely to comply more easily with solutions, they
themselves have developed9.

Significant
benefits aside, the caveat that is often put forward as a barrier to
the use of mediation in cross-border commercial disputes is the lack
of an efficient and harmonized framework for the enforcement of
settlement agreements in the event that one party to the agreement
fails to honour its terms10.
The risk is that, unless the settlement agreement is enshrined in a
court decision or an arbitral decision in the form of a consent
order, the party wishing to enforce the terms of the settlement
against the breaching party has to rely on the breach of contract
provisions before national courts, only to have the ensuing court
decision recognized and enforced usually before the counterparty’s
national court. This involves costly and lengthy proceedings, which
defeats the purpose of resorting to mediation in the first place.

The
Singapore Convention, already hailed as “the New York Convention
for mediation”11
and a “game-changer”12
for cross-border mediation, significantly reduces this off-putting
risk and renders the amicable resolution of cross-border disputes by
way of mediation a viable alternative to litigation and arbitration.

SCOPE
OF APPLICATION AND KEY PROVISIONS

Once
ratified by three countries13,
the Singapore Convention on Mediation will apply to international
settlement agreements resulting from mediation and concluded in
writing to
resolve
disputes of a commercial nature14
and
oblige States that are parties to the Convention to enforce them
under the conditions laid down in the Convention15.
The Convention also allows reliance on such settlement agreements in
the event that a dispute arises concerning a matter that a party
claims was already resolved by the settlement agreement in question16.
In short, the Convention can be relied on both as a sword and a
shield17.

According
to the Convention, the “competent authorities” of the State
parties (i.e. the national courts) are barred from conducting
substantive review of the settlement agreements before them. In a
language reminiscent of the New York Convention, Article 5 of the
Singapore Convention provides that national courts can only refuse to
enforce them based on narrowly set out grounds. The grounds for
refusal that can be invoked by the parties to the agreement are:

  • the
    parties’ incapacity18;

  • the
    settlement agreement’s being null and void, incapable of being
    performed under the law it is subjected to19,
    or not final or binding20,

  • the
    settlement agreement’s subsequent modification21,

  • the
    prior performance of the obligations in the settlement agreement22,

  • the
    obligations being unclear or incomprehensible23,

  • the
    parties’ having opted-out of the application of the Convention24

  • the
    mediator’s serious breach of standards applicable to the mediator
    or the mediation25,
    or the mediator’s failure to disclose circumstances touching upon
    the mediator’s impartiality or independence, without which a party
    would not have entered into the settlement agreement26.

The
grounds that focus on the conduct of the mediator raise questions as
to how they will be applied in practice. The concern is that, given
the absence of any universally accepted mediation process, these
grounds may easily open the door to resisting enforcement by the
parties27.
This concern may be countered by the fact that the standard of proof
is kept fairly high28.
The party invoking these grounds not only has to prove the mediator’s
serious egregious behaviour under the rules and codes of conduct
applicable to the mediator and the mediation, but also that it would
not enter into the settlement agreement absent that behaviour, i.e.
establish the causal link between the two. In view of this
provision’s importance in the implementation of the Convention, it
is also safe to assume that the standards applicable to mediators and
mediation will be increasingly clarified by mediation institutions
around the world, in the form of guidelines, in order to provide more
certainty to their users.

The
Convention includes two additional grounds upon which the court may,
on its own motion, refuse enforcement:

  • Granting
    relief would be contrary to the public policy of that country29;

  • The
    subject matter of the dispute is not capable of settlement by
    mediation under the laws of that State party
    30,

thereby
following in the footsteps of the New York Convention.

One
issue that may potentially hinder the Convention’s comprehensive
application are the reservations that are permitted under the
Convention. Article 8(1)(a) of the Singapore Convention allows for
ratifying States to make a reservation that the Convention will apply
only to the extent that the parties to the settlement agreement have
specifically agreed to apply it (opt-in). It is foreseeable that this
might give rise to disagreements between the parties whether to
opt-in to the Convention or not, in cases where one party belongs to
a State that has made the reservation and the other to one that has
not. More generally, giving such discretion to the parties of the
settlement agreements might risk that the Convention will not be
applied in a harmonized and uniform fashion, contrary to its declared
objective to “
contribute
significantly to the establishment of a harmonized legal framework
for the fair and efficient settlement of disputes arising in
international commercial relations31
.
In view of this, it is important to be mindful of which countries
will make use of this opt-in reservation and draft settlement terms
accordingly32.


Under
the second reservation allowed under the Convention, a State party
may also declare that the Convention does not apply to itself or any
government agencies33.
This may discourage investor-State disputes’ amicable resolution by
way of mediation, depriving both investors and States of the
opportunity of an
early
and mutually beneficial resolution of commercial matters without
escalating to an investment dispute34
.
Still, as things currently stand, only two out of forty-six
signatories, Belarus and Iran, made use of this provision

under Article 835
.
Provided that more States do not exclude themselves from the
application of the Convention, one can expect to increasingly see the
commercial aspects of investor-State disputes being brought under the
Singapore Convention.

CONCLUSION

The
Singapore Convention on Mediation is a significant contribution to
the development of the international commercial dispute resolution
system. It certainly gives one more reason to parties to a
cross-border relationship to consider mediation in resolving their
differences. The ultimate success of the Singapore Convention will
naturally depend on its endorsement by States, but given the
record-breaking number of first day signatories and the enthusiasm
with which the Convention is received by the dispute resolution
community, the future of mediation seems bright.

As
for Turkey, one of the first-day signatories, the Singapore
Convention is no doubt a very welcome development, in view of her
experience and impressive success in the mediation of commercial
matters. As a very dynamic Turkish mediation community is ready to
share its competence with the world, Turkey must seize the
opportunity and establish Turkey’s role as a mediation hub.

2
Cara Wong, “46
countries sign international mediation treaty named after
Singapore”, Straits Times, August 7, 2019,
https://www.straitstimes.com/singapore/key-facts-about-the-singapore-convention-on-mediation,
accessed: 22.8.2019.

3
Report of the United Nations Commission on International Trade Law,
Fifty-first session (25 June-13 July 2018),
https://www.uncitral.org/pdf/english/commissionsessions/51st-session/Final_Edited_version_in_English_28-8-2018.pdf,
accessed: 23.8.2019.

5
For the full list of signatories, see:
https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=XXII-4&chapter=22&clang=_en,
accessed: 23.8.2019.

6
Preamble to the Singapore Convention on Mediation.

8
Sapna Jhangiani, Bryan Looy, “The
Singapore Convention on Mediation – A Commitment to
Multilateralism”, August 20, 2019,
https://www.clydeco.com/insight/article/the-singapore-convention-on-mediation,
accessed: 22.8.2019.

9
Christian Bühring-Uhle, Lars Kirchoff, Matthias Scherer,
Arbitration and Mediation in International Business, Second Revised
Edition, Kluwer Law International [2006], p. 166.

11
Singapore International Mediation Centre, “The Singapore
Convention: A Milestone in Mediation”, July 25, 2018,
http://simc.com.sg/blog/2018/07/25/singapore-convention-milestone-mediation/,
accessed: 22.8.2019; Jan O’Neill, “The new Singapore Convention:
will it be the New York Convention for Mediation?”, 19 November
2018,
http://disputeresolutionblog.practicallaw.com/the-new-singapore-convention-will-it-be-the-new-york-convention-for-mediation/,
accessed: 22.8.2019.

12
Michael Cross, “Singapore Convention a ‘game changer’ for
cross-border mediation”, 5 August 2019,
https://www.lawgazette.co.uk/news/singapore-convention-a-game-changer-for-cross-border-mediation/5071243.article,
accessed: 23.8.2019.

13
Article 14 of the Singapore Convention on Mediation.

14
Article 1 of the Singapore Convention on Mediation.

15
Article 3(1) of the Singapore Convention on Mediation.

16
Article 3(2) of the Singapore Convention on Mediation.

17
Jan O’Neill, “46 countries sign the new Singapore Convention on
mediated settlements”, 7 August 2019,
https://hsfnotes.com/adr/2019/08/07/46-countries-sign-the-new-singapore-convention-on-mediated-settlements/,
accessed: 22.8.2019.

18
Article 5(1)(a) of the Singapore Convention on Mediation.

19
Article 5(1)(b)(i) of the Singapore Convention on Mediation.

20
Article 5(1)(b)(ii) of the Singapore Convention on Mediation.

21
Article 5(1)(b)(iii) of the Singapore Convention on Mediation.

22
Article 5(1)(c)(i) of the Singapore Convention on Mediation.

23
Article 5(1)(c)(ii) of the Singapore Convention on Mediation.

24
Article 5(1)(d) of the Singapore Convention on Mediation.

25
Article 5(1)(e) of the Singapore Convention on Mediation.

26
Article 5(1)(f) of the Singapore Convention on Mediation.

27
Jhangiani, Looy, “The
Singapore Convention on Mediation – A Commitment to
Multilateralism”.

28
Rob Palmer, Georgia Quick, Cathryn Neo, Ed Davies, “The Singapore
Convention on Mediation: Doing for Mediation What the New York
Convention Has Done for Arbitration?”, Ashurst Dispute Resolution
Update, 7 August 2019,
https://www.ashurst.com/en/news-and-insights/legal-updates/the-singapore-convention-on-mediation/,
accessed: 23.8.2019.

29
Article 5(2)(a) of the Singapore Convention on Mediation.

30
Article 5(2)(b) of the Singapore Convention on Mediation.

32
Jhangiani, Looy, “The
Singapore Convention on Mediation – A Commitment to
Multilateralism”.

33
Article 8(1)(b) of the Singapore Convention on Mediation.

34
Mushegh Manukyan, “Singpore Convention Series: A Call for a Broad
Interpretation of the Singapore Mediation Convention in the context
of Investor-State Disputes”, June 10,2019,
http://mediationblog.kluwerarbitration.com/2019/06/10/singapore-convention-series-a-call-for-a-broad-interpretation-of-the-singapore-mediation-convention-in-the-context-of-investor-state-disputes/,
accessed: 23.8.2019.

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