The United Nations Convention on International Settlement Agreements Resulting from Mediation (“Singapore Convention (on Mediation)”) came into force on 12 September 2020. It creates a harmonized framework for cost-effective and prompt enforcement of international mediated settlement agreements, aiming to render mediation more efficient and attractive to commercial parties globally, as an alternative to international arbitration and litigation.
The timing of its entry in force is quite convenient, considering the disruption caused by the COVID-19 pandemic on all fronts, including international commercial transactions and the increased need for expeditious resolution of disputes on a global scale.
Aim: The “New York Convention” for Mediation?
The Singapore Convention on Mediation fills a missing gap of enforcement options for mediation, as the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards successfully did for arbitration (the “New York Convention”) and the 2005 Hague Convention on Choice of Court Agreements (the “Hague Convention”) attempts to do for litigation.
The Singapore Convention unifies the framework for enforcing mediated settlement agreements related to international commercial matters. States that ratify the Singapore Convention are then obliged to enforce settlement agreements resulting from mediation under their own domestic rules, yet via a streamlined court procedure, as envisaged in the Convention. The Singapore Convention ultimately aims to facilitate international trade by rendering mediation an efficient and entrusted method for resolving disputes, alongside arbitration and litigation.
Prior to the Singapore Convention, an international mediated settlement agreement lacked enforceability in and of itself. This meant that if the losing party did not voluntarily comply with the outcome of a mediation, the innocent party had to initiate arbitration or court proceedings for breach of contract and subsequently seek to enforce the resulting arbitral award or court judgement in order to obtain the relief sought, which caused additional unnecessary expenses and wasted time. This was a major deterrent for parties to even consider mediation, as they could simply opt for arbitration and ensure enforceability.
Milestones – Current Status of Singapore Convention
At the time of writing (January 2021), the Singapore Convention has 53 signatories, including the U.S., China and India, but only six parties (States that have ratified it), i.e., Singapore, Fiji, Qatar, Belarus, Ecuador and Saudi Arabia (see Singapore Convention status as of January 2021).
Adoption: The Singapore Convention was adopted by the United Nations General Assembly on 20 December 2018.
Signature: On 7 August 2019, it opened for signature in Singapore (Article 11(1) of the Singapore Convention) and on the same date it was signed by 46 States, including key economies such as the U.S. and China, surpassing the 10 countries that initially signed the New York Convention when it opened for signature on 10 June 1958 in New York although it now has been ratified by 166 States (see New York Convention status as of January 2021). By January 2020, the signatories to the Singapore Convention rose to 53.
Ratification: On 25 February 2020, Singapore and Fiji were the first two countries that ratified the Singapore Convention, followed by Qatar on 12 March 2020.
Entry into Force: The Singapore Convention subsequently entered into force on 12 September 2020, i.e., six months after the deposit to the Secretary-General of the United Nations of the third ratification instrument by Qatar, in accordance with Articles 10, 11(4) and 14 of the Singapore Convention.
Signature versus Ratification: It shall be borne in mind that, by signing a treaty, a State merely expresses its intention to comply with the treaty, which is not binding in itself. Only once it is ratified, i.e., approved under the State’s internal procedure, does it formally becomes binding on that State.
That said, while the Singapore Convention has certainly got off to a good start, it still remains to be seen how many States will ratify it (and when they will do so), which will eventually dictate its success. The New York Convention, for instance, has currently 166 State parties and is, thus, justifiably hailed as the most successful, multilateral instrument in the field of international trade law, even though, when originally launched in 1958, it did not appear to be particularly attractive to States.
The initial appeal of the Singapore Convention amongst States could be explained by the exponential growth that alternative dispute resolution methods have evidenced during the past years, coupled with the emergence of several sophisticated administering institutions.
Notably, institutions offering mediation services are responding to the current developments in the mediation realm. For instance, the London Court of International Arbitration (LCIA) has recently updated its LCIA Mediation Rules, which became effective on 1 October 2020. On 18 May 2020, the Singapore International Mediation Centre (SIMC) also launched the SIMC COVID-19 Protocol, offering expedited mediation in response to the pressing need to resolve cross-border disputes in a swift and inexpensive manner, in light of the COVID-19 pandemic.
Scope of Application
The Singapore Convention on Mediation applies to settlement agreements “resulting from mediation and concluded in writing by parties to resolve a commercial dispute”, which are “international” in nature at the time of their conclusion (Article 1(1) of the Singapore Convention).
“International” for the purposes of the Singapore Convention means either that (a) at least two parties have their places of business in different States or (b) the State of the parties’ places of business is different from either (i) the State in which a substantial part of the obligations under the settlement agreement is performed or (ii) the State with which the subject matter of the settlement agreement is most closely connected (Article 1(1) of the Singapore Convention).
“Mediation” is defined under the Singapore Convention as “a process, irrespective of the expression used or the basis upon which the process is carried out, whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person or persons (‘the mediator’) lacking the authority to impose a solution upon the parties to the dispute” (Article 2(3) of the Singapore Convention).
The “in writing” requirement is satisfied if the content of a settlement agreement “is recorded in any form”, including “by an electronic communication if the information contained therein is accessible so as to be useable for subsequent reference” (Article 2(2) of the Singapore Convention).
The Convention does not apply to settlement agreements concluded for “personal, family or household purposes” or those related to “family, inheritance or employment law” (Article 1(2) of the Singapore Convention). Nor does it apply to settlement agreements that are enforceable as a court judgement or as an arbitral award (Article 1(3) of the Singapore Convention), since enforcement in those two scenarios would normally fall under the scope of the Hague Convention (for a court judgement) or the New York Convention (for an arbitral award).
Reservations Open to States
Pursuant to Article 8 of the Singapore Convention, States have the option to make two reservations, i.e., that a State:
(a) “shall not apply this Convention to settlement agreements to which it is a party, or to which any governmental agencies or any person acting on behalf of a governmental agency is a party, to the extent specified in the declaration;” and/or
(b) “shall apply this Convention only to the extent that the parties to the settlement agreement have agreed to the application of the Convention.”
No other reservations are permitted except the two specified above (Article 8(2) of the Singapore Convention).
States are allowed to make reservations at any time, i.e., upon the signature, the ratification or after the ratification of the Singapore Convention. In the first case (signature stage), any reservation is subject to confirmation upon ratification. In the second case (ratification stage) any reservation shall take effect simultaneously with the entry into force of the Singapore Convention for that State, whereas in the latter scenario (post-ratification stage), it becomes effective six months after the date of the deposit of the reservation (Article 8(3) of the Singapore Convention).
So far, Belarus, Iran and Saudi Arabia have made reservations under Article 8 of the Singapore Convention (see Singapore Convention status as of January 2021).
Unlike the New York Convention, the Singapore Convention does not have a reciprocity reservation, which means that a mediation situated anywhere in the world could be recognized and enforced in a ratifying State.
Formalities – Enforcement Requirements
Under Article 4(1) of the Singapore Convention, a party may apply to the competent authority, i.e., national courts, of a State-party to the Convention to request the relief sought under a settlement agreement so long as:
(a) the settlement agreement is properly signed by the parties; and
(b) there is sufficient evidence that the settlement agreement resulted from mediation, such as the mediator’s signature or the administering institution’s attestation.
A translation of the settlement agreement or “any necessary document in order to verify that the requirements of the Convention have been complied with” may be requested by the competent national court (Article 4(3) and (4) of the Singapore Convention).
Also, all national enforcement courts “shall act expeditiously” when considering the request for relief (Article 4(5) of the Singapore Convention).
Grounds for Refusing Enforcement
There are limited grounds based on which national courts “may” refuse to enforce international mediated settlement agreements, as envisaged in Article 5 of the Singapore Convention. Such grounds are divided into two categories, i.e., those that must be invoked and proved by a party (Article 5(1)(a)-(f)) and those that may be taken into account by the competent court on its own motion (Article 5(2)(a)-(b)).
In particular, enforcement may be refused under Article 5(1) of the Singapore Convention if:
(a) A party “was under some incapacity”;
(b) The mediated settlement agreement:
(i) “Is null and void, inoperative or incapable of being performed under the law to which the parties have validly subjected it or, failing any indication thereon, under the law deemed applicable by the competent authority”; or
(ii) “Is not binding, or is not final, according to its terms”; or
(iii) “Has been subsequently modified”;
(c) The obligations in the settlement agreement have been performed or are unclear;
(d) “Granting relief would be contrary to the terms of the settlement agreement”;
(e) “There was a serious breach by the mediator of standards applicable to the mediator or the mediation without which breach that party would not have entered into the settlement agreement”; or
(f) The mediator failed to disclose “to the parties 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 failure that party would not have entered into the settlement agreement.”
Under Article 5(2) of the Singapore Convention, courts may also sua sponte refuse to grant the requested relief if they find that:
(a) Doing so “would be contrary to the public policy” of that State; or
(b) “The subject matter of the dispute is not capable of settlement by mediation” under the lex fori.
Inspiration was apparently drawn from the grounds for refusing recognition and enforcement of an arbitral award, as set forth in Article V of the New York Convention. Unlike the latter, it is interesting that Article 5(1)(d) of the Singapore Convention (“Granting relief would be contrary to the terms of the settlement agreement”) allows commercial parties to expressly opt-out of the Singapore Convention. Overall, the grounds of Article 5 of the Singapore Convention seem prima facie limited in scope. It remains to be seen how they will be interpreted by national courts in practice, however.
In sum, the Singapore Convention on Mediation is a promising new international instrument aimed to facilitate the resolution of international commercial disputes by rendering international mediated settlement agreements enforceable, a significant feature previously awarded only to arbitral awards and some court judgements. With an encouraging initial appeal (53 signatory States and 6 ratifying States), the Singapore Convention is a momentous step forward for promoting mediation on a global scale. Its actual impact remains to be seen, however.