15 September 2020
Tomorrow marks an important day for international dispute resolution as the Singapore Mediation Convention comes into force, just over a year after its signing ceremony on 7 August 2019. More formally known as the United Nations Convention on International Settlement Agreements Resulting from Mediation, the new Convention aims to establish a global enforcement regime for settlement agreements resulting from mediation of international commercial disputes, broadly akin to the 1958 New York Convention for the enforcement of arbitral awards.
To date, a total of 53 states have signed the Convention and 5 states have either ratified (Singapore, Fiji, Qatar and Saudi Arabia) or approved (Belarus). However, a key feature of the Convention that has not been widely appreciated is that it will apply to mediations conducted anywhere in the world, not just within jurisdictions that have ratified it. Any jurisdiction that ratifies/approves the Convention agrees to enforce any mediated settlement agreement covered by the Convention, regardless of where the mediation was conducted. Accordingly, the fact that it has not yet been signed by the UK or the EU does not mean that it cannot be relied on to enforce settlements resulting from mediations held in those jurisdictions.
Of course, at this early stage, the Convention can only be relied on to facilitate enforcement in the current member states. However, given that 48 other countries have already taken the first step of signing the Convention, it seems likely that this list could soon increase substantially. And the fact that those countries include the world’s three largest economies – China, the US and India – bodes well for the Convention becoming an important element of the global dispute resolution landscape.
By way of background, the Convention stems from a concern that the use of mediation to resolve international disputes has been impeded by the fact that, unless a settlement reached via mediation is in the context of a pending arbitration and can be converted into an arbitral award, parties could only enforce it in the same way as any other contract. That would usually involve bringing fresh proceedings for breach of contract. In an international context, this could involve potentially difficult (and usually lengthy) processes to obtain a court judgment and then enforce it in a foreign jurisdiction.
It is important to note that, in practice, enforcement of mediated settlements is in fact rarely an issue (at least compared to litigation and arbitration), given that both the decision to mediate and the agreed resolution are voluntary, rather than imposed upon the parties. Having negotiated and documented a resolution through a formal process, commercial parties do for the most part tend to stick to it. Nevertheless, it had become clear in recent years that the lack of a formal enforcement process could account for at least some of the patchiness with which mediation has been embraced across different jurisdictions globally. This is supported by our analysis of the data collected at the recent Global Pound Conference series. That project sought the views of thousands of dispute resolution stakeholders across the globe on various issues, including as to what would most improve commercial dispute resolution. Particularly in Asian jurisdictions, nearly two thirds of respondents said that what would be of most benefit would be legislation to aid enforcement of settlement agreements. In other regions, this was seen as less pressing than other factors but still received substantial support. The new Convention directly meets this call for regulation and certainty.
Further detail:
For detail on when and how the new Convention will operate, see our earlier post here.
For commentary on some practical issues for mediating parties to consider now, see an article by Jan O’Neill (Professional Support Lawyer, London ) published on the Practical Law Dispute Resolution Blog here. Also, click here to hear Jan more recently considering the implications of the Convention in a podcast discussion with the Managing Director of CEDR, James South.
For guidance more generally on incorporating mediation and other forms of ADR into your business, see our ADR Toolkit here.
For further information, please contact:
Natalie Curtis, Herbert Smith Freehills
natalie.curtis@hsf.com
