UNCITRAL has approved the wording of the Convention on the Enforcement of International Settlement Agreements Resulting from Mediation and has resolved to name it the Singapore Mediation Convention. It will be signed in Singapore in August next year and will come into force after it is ratified by at least three countries. In this update we consider what the Singapore Mediation Convention will mean for international dispute resolution.
What is the Singapore Mediation Convention?
A settlement achieved through mediation is typically recorded in an agreement between the parties. The parties very often comply with the terms of that agreement voluntarily. Sometimes, however, one party may fail to comply. The other party will then need to enforce the settlement agreement. This is typically done by claiming breach of contract in the relevant courts or arbitration, and enforcing the subsequent judgment or award; and enforcement may be in a different country from where the breach of contract claim was brought. That can be a lengthy and costly process.
The Singapore Mediation Convention – which only applies to settlements resulting from mediation of international commercial disputes – will make enforcement easier. Instead of first obtaining a judgment or award for breach of contract, the Singapore Mediation Convention will allow the enforcing party to go directly to a court in the country where enforcement is sought. That court will then enforce the settlement agreement, unless one of the limited grounds for refusing enforcement set out in the Singapore Mediation Convention applies. The Singapore Mediation Convention is modelled on the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards, and in effect will give mediation settlements the same currency and status as the New York Convention gives to arbitration awards.
Is it needed?
Not as much as in arbitration. In arbitration, by definition, the losing party will be unhappy with the outcome and may try to avoid complying with the award: an efficient enforcement mechanism is therefore needed. In mediation, a settlement agreement is signed by both parties and, once they have signed, the parties usually comply with it. Occasionally, however, one party has "buyer's remorse" after the mediation has concluded and is reluctant to comply with the settlement. More rarely, a party may sign a settlement agreement purely as a delaying tactic without ever intending to comply. In such circumstances a streamlined enforcement procedure would be helpful.
What impact will it have?
The main effects of the Singapore Mediation Convention are likely to be:
- More mediation laws
Depending on its constitutional arrangements, a state that signs the Singapore Mediation Convention will probably have to pass legislation to incorporate it into national law. This will mean that more countries will have mediation laws; and those laws may go further than simply enacting the Singapore Mediation Convention, and cover other aspects of mediation such as the appointment of the mediator, confidentiality, conduct of the proceedings, etc. To assist countries with this, UNCITRAL has revised its 2002 Model Law on Conciliation (renaming it the Model Law on Mediation in the process) to include the Singapore Mediation Convention. Countries will be able to bring the Singapore Mediation Convention into effect by adopting the revised Model Law.
- Greater focus on the conduct of mediation
Parties resisting enforcement will have to refer to the limited grounds specified in the Singapore Mediation Convention. These include a breach by the mediator of applicable standards in the conduct of the mediation and a lack of impartiality on the part of the mediator. Just as losing parties may argue that arbitrators have mishandled the arbitration, therefore, parties that are unhappy after mediation and resist enforcement may complain about the behaviour of the mediator. There may not be many such cases, and successful complaints about a mediator are likely to be even rarer, but any such allegations will throw a spotlight on mediators and encourage best practice.
- More institutional mediation
The Singapore Mediation Convention requires an enforcing party to show that the settlement agreement resulted from mediation. This may be done by providing a confirmation from the mediator or from the administering institution. Since parties may not be confident in advance that a mediator will provide the required confirmation personally, they may prefer institutional mediation in order to ensure that there is a body that will certify any settlement. Some mediators might also prefer to accept institutional appointments in order to benefit from the reputation of the mediation institution and reduce the potential for criticism of them in later enforcement proceedings. There may be more mediations administered by institutions as a result.
- More mediation
UNCITRAL has issued the Singapore Mediation Convention for the express purpose of promoting mediation of international commercial disputes. It is likely to be successful in this aim. This is partly because the Singapore Mediation Convention only applies to mediation, and not to settlement discussions without the involvement of a mediator, so parties may prefer to bring in a mediator in order to gain the protection that is provided by the Convention.
But the Singapore Mediation Convention should also raise the profile for mediation within international disputes. The New York Convention has long been the touchstone for international arbitration, with 159 countries signing it to date. The hope is that the Singapore Mediation Convention will be just as popular. As more countries sign, and as more countries adopt mediation laws, more commercial parties will be aware of the benefits of resolving their disputes via mediation rather than through litigation or arbitration. The Singapore Mediation Convention will most likely change the language of international dispute resolution and make mediation a default option for commercial parties in international disputes.