Mediation Update: The Singapore Convention
On 26 June 2018, UNCITRAL approved the final draft of the United Nation’s Convention on International Settlement Agreements resulting from Mediation, and known as the Singapore Convention (Singapore Convention). The Singapore Convention will be open for signature on 7 August 2019 and will come into force six months after three countries have signed with Singapore expected be the first State to do so. Other countries that have, to date, been supportive of the Singapore Convention include Canada, China, Columbia, Israel, Kuwait, Mexico, Thailand, Turkey, and the United States of America. It is presently unclear whether Australia will sign the Singapore Convention or, if so, when.
The intent of the Singapore Convention is to bring certainty to the international framework on mediation and facilitate the promotion of mediation as an alternative and effective method of resolving international trade disputes. It proposes to do so by enabling parties to the settlement of an international dispute by mediation the ability to enforce the settlement in the same manner that international arbitral awards are recognised and enforceable under the United Nation’s Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).
Under the New York Convention, international arbitral awards, including consent awards, are recognised and enforceable in any of the 157 member States which are presently signatories to that convention in the same manner as any judgment of the domestic courts of those member States. The Singapore Convention seeks to replicate the relative ease of recognition and enforceability of international arbitral awards to settlement agreements reached at mediation. It is a response to the growing use of mediation both domestically and internationally for the resolution of disputes. A recent survey by the International Mediation Institute disclosed that 80% of respondents would be more likely to include mediation clauses in contracts if there was a global mechanism in place to enforce mediated settlements.
Settlement agreements are international where at least two parties to the settlement agreement have their places of business in different States, or where the State in which the parties have their places of business is different to the State in which the substantial part of the obligations under the settlement agreement is performed or the State with which the subject matter of the settlement agreement is most closely connected. The Singapore Convention will accordingly not apply to domestic mediations, nor will it apply to settlement agreements that have been approved by a court, are enforceable as a judgment or are recorded and enforceable as an arbitral award, including consent awards. It will also not apply to negotiated settlements that did not have the involvement of a third party mediator.
The Singapore Convention:
- can be used both to enforce a mediated settlement agreement and to invoke that agreement against any claim made by a party inconsistent with it; and
- like the New York Convention, describes limited circumstances in which a domestic court may refuse to enforce a settlement agreement (see Article 5).
There is an expectation that the Singapore Convention will further encourage parties involved in cross-border transactions to provide for mediation as a means of dispute resolution either as a stand-alone dispute resolution mechanism or, as is more likley to be the case, in combination with so-called hybrid dispute resolution mechanisms such as “med-arb”, “arb-med” or “arb-med-arb”.
