Following the UK government’s announcement last week that it will sign and ratify the Singapore Convention, many UK and foreign businesses are now turning their minds to what that means for international commercial disputes with a UK connection.
The UN Convention on International Settlement Agreements Resulting from Mediation establishes a global framework for the direct enforcement of mediated settlements of cross-border commercial disputes. Its key provisions and scope are summarised in our earlier posts here.
Although the UK’s announcement has been some time coming, it is not unexpected given the government’s current policy drive to support mediation of civil disputes. It will sign the Convention “as soon as possible” and will work to ratify it once the necessary implementing legislation and rules are in place. Given that the Convention will come into force in the UK six months after ratification, that is most likely to be during 2024.
Legal impact
The technical legal effect when the Convention comes into force for the UK will be:
- Enforcement of UK settlements abroad: No change. Settlements resulting from UK mediations are already enforceable under the Convention (if within scope) in its member states1. That is because, unusually, the Convention is not reciprocal – it requires member states to enforce settlements arising from mediations conducted anywhere in the world, not just within other member states.
- Enforcement in the UK: Once the UK is a member state, the High Court will directly enforce settlement agreements (if within scope) resulting from mediations globally, without the enforcing party needing to commence proceedings for breach of contract. That should include mediations held within the UK itself if the dispute qualifies as ‘international’ under the Convention2.
The government’s announcement confirmed that the UK will not rely on either of the Convention’s two permissible reservations. That means that the UK courts (i) will not limit it to cases where the parties have ‘opted in’ by expressly agreeing it will apply and (ii) will not exclude disputes involving UK government entities.
We have previously commented that the Convention’s direct legal impact in the UK is likely to be relatively modest, both because it is quite uncommon for settlements reached through mediation to need enforcement action at all and because the mediation-friendly UK courts are already amenable to enforcing such settlements, albeit via a contractual claim.
Rather, as the government announcement acknowledges, key drivers of the UK joining are the wider benefits to be gained from reassuring foreign parties of the benefits and reliability of commercial mediation, and encouraging other jurisdictions to join (given the potential benefits that holds for UK parties).
The devil in the detail
While the decision to join the Convention is welcome, the hard work arguably starts now in devising the domestic framework to implement it. For a number of reasons, that should not be treated as straightforward.
We have previously highlighted (including here and in our response to the government’s consultation last year) several areas where the Convention’s provisions are either ambiguous or intentionally leave flexibility for enforcing courts to adopt different approaches. That includes some areas where there is potential for a court to diverge from principles that are fundamental to English mediation law and practice and are relied on by parties choosing to mediate here.
Some level of unpredictability and inconsistent application is inherent in any international enforcement treaty. However, the position under the Singapore Convention is unusual in that the court will be enforcing directly the terms of a settlement agreement drawn up by the parties, rather than a court order or arbitral award. There is therefore arguably an enhanced degree of unpredictability, including the risk of a result that would be contrary to the expectations of parties who mediate their disputes in the UK. If that resulted in unexpected negative outcomes for commercial parties, it would not be helpful in building confidence in mediation as a reliable method for resolving international disputes.
Amongst the issues on which there is some unpredictability are:
- To what extent an enforcing court will engage with a dispute over the interpretation of the settlement agreement. The Convention provides for agreements to be enforced without substantive review, but should not be able to be easily sidestepped by a party putting forward a spurious interpretation.
- To what extent the veil of confidentiality will be lifted to enquire into what was said and done in a mediation (eg. where there are allegations of mediator or party misconduct, or to interpret the agreement)
- Could enforcement be refused on the grounds that the settlement did not “result from mediation” if (as is common in the UK) it was only concluded some time after the mediation day? If so, what degree of causal link will be required?
- Could evidence from the mediator be admitted, either in relation to their attestation that the settlement resulted from a mediation or on other issues?
- How would a court deal with the existence of competing proceedings elsewhere regarding the settlement?
The task ahead
The government’s response acknowledges some (but not all) of those issues and indicates that they will be considered in the implementation process.
It is imperative that the drafters of the implementing framework give very careful thought to any aspects of the Convention on which it might be appropriate to seek to articulate the English position in the implementing legislation/rules. The alternative is of course to leave that to the High Court in individual enforcement decisions, bearing in mind that those are likely be few and far between.
On the one hand, given the UK’s status as a leading mediation jurisdiction, formally articulating the UK’s approach to a particular issue has the potential to influence other jurisdictions in formulating their domestic implementing rules, as well as in case-specific enforcement decisions. In that way, the UK could take an active lead in the global development of law and practice around the Convention, aligning with the government’s vision that the UK should “build upon its long history of leadership in international law-making fora”.
However, it is also very important to consider the potential domestic impact. Unlike in some jurisdictions which have enacted dedicated mediation legislation, the law and rules applicable to English mediations are not only decentralised but largely not codified anywhere, being governed by common law principles. As with any regulatory framework, the decision whether or not to codify rules involves balancing the aims of consistency and predictability against flexibility. The English system has prioritised the latter in the sphere of mediation, perhaps unsurprisingly given its common law tradition. Any proposed codification of the English law position in the context of the Convention would be a departure from that position and would need to be assessed carefully against that backdrop.
It would also need to take into account the potential for any law or guidance put in place for the purposes of the Convention to have a wider impact on English mediation law and practice outside that context, either by express adoption or by ‘creep’. That could be the case whether the developments are in the form of High Court caselaw or codified rules, but arguably more so for the latter.
The above highlights the need for the implementation process to include more granular input from practitioners with expertise in the existing English law and practice around commercial mediation. Opinions may well differ as to what is necessary and appropriate, but it is important that those views be obtained if the Convention is to achieve the aims sought by the government.
- Currently, 10 jurisdictions (out of 55 signatories) have ratified the Convention, being: Fiji, Qatar, Saudi Arabia, Belarus, Ecuador, Honduras, Turkey, Georgia, Kazakhstan and Singapore. Several have ratified subject to reservations.
- See Article 1. In summary, either (i) at least two parties have their place of business in different countries or (ii) the country where the settlement is to be performed, or with which it is most closely connected, is different to the parties’ place of business.
For further information, please contact:
Jan O’Neill, Herbert Smith Freehills
jan.oneill@hsf.com
