19 August, 2019
Introduction
The Singapore Convention on Mediation is a United Nations treaty intended to facilitate international trade by providing a framework where international mediated settlement agreements may be enforced in signatory countries.
On 7 August 2019, 46 countries signed the Singapore Convention including the United States of America, China, India, South Korea and Singapore. The signing was the culmination of a journey that took place over the last three years.
After negotiations, final drafts of the Convention on International Settlement Agreements Resulting from Mediation and the Model Law on International Commercial Conciliation were produced. Both were approved by the U.N. Commission on International Trade Law (UNCITRAL) on 26 June 2018. The U.N. General Assembly subsequently passed a resolution to approve the convention on 20 December 2018, and authorized a signing ceremony to be held in Singapore.
The merits of mediation are well known. It is a cost-effective, private and flexible process intended to help the parties achieve a win-win solution, which may preserve the commercial relationship of the parties. The parties have control over the process in terms of deciding whether a settlement is concluded, and if so, on what terms.
The Singapore Convention will set in place a mechanism for the enforcement of settlement agreements reached through mediation, in the same way the New York Convention does for the enforcement of arbitral awards.
The Scope
The Singapore Convention (which consists of a total of 16 articles or sections) applies to international settlement agreements resulting from mediation, concluded in writing by parties to resolve a commercial dispute.
Mediation is defined as a process whereby parties attempt to reach an amicable settlement of the dispute with the assistance of a third person, the mediator, who lacks the authority to impose a solution upon the parties.
The Singapore Convention does not prescribe a specific mode of enforcement, but does provide guidance on the conditions to be fulfilled. There are also limited grounds for a refusal to grant relief, specifically where:
- The party to the settlement agreement was under some incapacity [Article 5(1)(a)];
- The settlement agreement sought to be relied upon is
- null and void;
- is not binding or final or
- has been subsequently modified;
- The obligations in the settlement agreement have been performed or are not clear or comprehensible;
- Granting relief would be contrary to the terms of the settlement agreement;
- There was a serious breach by the mediator of the applicable standards, without which that party would not have entered into the settlement agreement; or
- There was a failure by the mediator to disclose circumstances that raise justifiable doubts as to the mediator’s impartiality or independence, and such failure to disclose had a material impact or undue influence on a party, without which the party would not have entered into the settlement agreement.
What’s Next
Now the process for ratification begins. Article 14 of the Singapore Convention provides that it shall come into force six months after three countries have ratified it. The Ministry of Law in Singapore has indicated that Singapore will be submitting a bill to Parliament and working toward ratification by early 2020.
It is possible that the Singapore Convention will be ratified by next year following the strong support shown by countries. Forty-six countries have already signed the Singapore Convention, namely: Afghanistan, Belarus, Belize, Brunei, Chile, China, Colombia, Republic of the Congo, Democratic Republic of the Congo, Eswatini, Fiji, Georgia, Grenada, Haiti, Honduras, India, Iran, Israel, Jamaica, Jordan, Kazakhstan, Laos, Malaysia, Maldives, Mauritius, Montenegro, Nigeria, North Macedonia, Palau, Paraguay, the Philippines, Qatar, South Korea, Samoa, Saudi Arabia, Serbia, Sierra Leone, Singapore, Sri Lanka, Timor Leste, Turkey, Uganda, Ukraine, the United States of America, Uruguay and Venezuela.
This is a very high number, and more countries are expected to sign up in the near future. By way of comparison, the New York Convention for the enforcement of arbitration awards had only 10 signatories at the first signing in 1958, but now has a total of 160 signatories.
It is interesting to note that the results of an international survey released by the Singapore International Dispute Resolution Academy (SIDRA) on 8 August 2019 showed that the ability to enforce outcomes was the top consideration for companies and legal counsel when a decision had to be made on how to resolve cross-border commercial conflicts. In this regard, it is now clear that the three main modes of dispute resolution―litigation, arbitration and mediation―will each have their own enforcement mechanism. Although some time will necessarily be needed in the coming months for the Singapore Convention to come into force, and for the implementation of enforcement mechanisms in the respective signatory countries, this is a game-changer indeed and the corporate world should utilize this time to consider how mediation can best work to preserve, protect and promote their international commercial interests.
For further information, please contact:
Leon Yee, Managing Director, Duane Morris & Selvam
lyee@duanemorrisselvam.com
