In recent years, mediation has been rising in popularity as a means to resolve commercial disputes. Despite this, until the Singapore Convention came into existence, the use of mediation was generally limited to the resolution of domestic disputes, due to the lack of an efficient and harmonised international framework for the enforcement of mediated settlement agreements.

Main features of Mediation

Mediation often forms part of multi-tiered dispute resolution provisions. It may be used as a preliminary step, or in conjunction with arbitration or litigation. It has so far been seldom used in isolation for resolving disputes in the international arena.

Mediation is not adversarial but collaborative in nature. Instead of arguing about their respective rights and piling blame onto each other, the parties are encouraged to focus on their mutual interests and seek a solution they can agree upon, in order to preserve the continuity of their commercial relationship.

The role of the neutral mediator is to facilitate the communication between the parties and to submit practical ways for them to resolve their differences so as to agree upon a settlement agreement. The mediator will never make a ruling. The parties may, however, ask the mediator to give an informal and non-binding opinion on the respective merits of the parties’ positions, should they decide to escalate the dispute to arbitration or litigation.
Consequently, mediation is generally more cost-effective, time-efficient and flexible than any other dispute resolution process. Formalism is kept to a minimum and there is no obligation for the parties to reach agreement on anything. The parties remain in control of the process and may choose to end it at any time. Failure to reach a mediated settlement has no adverse consequences and even a ‘failed’ mediation will usually assist the parties in defining their respective strategies and ultimate aims.

To date, when parties had entered into a mediated settlement agreement and one of them failed to comply, enforcement had to be sought by the other party through the relevant contractual dispute resolution provisions. Such enforcement was generally adequate for domestic disputes but where the settlement agreement had to be enforced internationally, the legal procedure could become challenging, costly and time-consuming. This uncertainty has acted as a deterrent for using mediation in cross-border disputes.

The Advent of the Singapore Convention

The Singapore Convention (“the Convention”), also known as the “United Nation (UN) Convention on International Settlement Agreements Resulting from Mediation”, entered into force on 12 September 2020, marking a significant development in international commercial dispute resolution.

At the signing ceremony on 7 August 2019 in Singapore, 46 countries signed the Convention. The number of first-day signatories was among the highest for any UN Trade convention, which bodes well for international recognition and support.

As of 12 September 2020, the Convention had 53 signatories, including the United States, China and India, some of the largest economic powers of the world. It has been ratified by 6 countries, namely Singapore, Fiji, Qatar, Saudi Arabia, Belarus and Ecuador.

The text of the Convention is drafted in simple terms and consists only of a short preamble and 16 articles. This framework treaty is meant to facilitate its implementation across various jurisdictions, without the need of enacting complex domestic rules for its application.

The Convention’s Application

The Convention applies to international commercial settlement agreements resulting from mediation.

Pursuant to Article 1.1. “This Convention applies to an agreement resulting from mediation and concluded in writing by parties to resolve a commercial dispute (a “settlement agreement”, which at the time of its conclusion is international”.

“International” means that parties have their place of business in different states or that their settlement agreement relates to other states.

Article 2.2 provides that a settlement agreement has to be in writing and results from mediation. The most common proof of this remains the signature of the mediator on the settlement agreement.

Article 2.3 defines “Mediation” as a process 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.

The parties normally choose a mediator either by mutual agreement or by appointment through a mediation centre. There is no requirement in the Convention regarding accreditation or any other condition for the appointment of the mediator. However, the mediator must be impartial and independent from the parties. In substantial commercial disputes, mediators are generally lawyers by training, with expertise in the field of the dispute.

Article 5 sets out the list of exhaustive grounds upon which a court can refuse to enforce or acknowledge a settlement agreement. The grounds laid down to resist enforcement are discretionary rather than mandatory and include incapacity of a party, invalidity of the agreement, serious breach of the mediation process, or any consideration that granting the relief would be contrary to public policy.

To avoid possible overlaps, the Convention excludes settlement agreements that could be covered by other treaties, such as those qualifying as arbitration awards under the New York Convention, or any other court-approved settlements.

Comparison between the Singapore Convention and the New York Convention

The New York Convention, also known as the “United Nation Convention on the Recognition and Enforcement of Foreign Arbitral Awards”, was signed on 10 June 1958. It is considered to be the most successful treaty in private international law and it has led to international arbitration becoming a primary means of international dispute resolution. It currently provides an effective framework for enforcing arbitral awards in more than 150 countries.

The Singapore Convention is a treaty with similar ambitions for international mediation, and it could one day overshadow the New York Convention.
Arbitral awards are tribunal decisions that are imposed on the Parties. At least one of them is likely to be dissatisfied with the outcome and may therefore be tempted to ignore it or challenge its implementation before the competent jurisdictions.

Mediated settlement agreements by contrast come into existence by the express written consent of the parties. Their voluntary nature avoids most of the risks of challenge that are encountered by arbitration awards. As with any contracts, though, the parties may disagree on the scope of their respective obligations, and argue on the lack of clarity of the terms of the mediated settlement agreement. Great care is therefore to be placed on the quality of the drafting of the settlement agreement.

The International Reach of the Singapore Convention

As yet, the European Union member states, Australia, Canada, Russia and Japan have not signed the Singapore Convention. Given Brexit the UK however will probably be tempted to become a member, since London will remain one of the most prominent international ADR hubs.

The current signatories and ratifying members of the Singapore Convention comprise states located around the world:

• Asia including Singapore, China, India, Sri Lanka, South Korea, Malaysia, Brunei, Timor-Leste and the Philippines,
• The Middle-East including Saudi Arabia, Afghanistan, Iran, Jordan, Qatar and Israel,
• Americas including Chile, Colombia, Ecuador, Paraguay, Uruguay, USA and Venezuela, and
• Africa including Benin, Chad, Congo, the Democratic Republic of Congo, Gabon, Mauritius, Nigeria, Rwanda, Ghana, Guinea-Bissau, Sierra Leone and Uganda.

Although, the Singapore Convention is still in its infancy, its use is likely to spread widely. Mediation settlements are consensual by nature, so their international enforcement should not be as politically contentious, or sensitive to international legal differences, as arbitration awards or court orders.

Parties seeking direct enforcement of a mediated settlement agreement across borders can finally do so by applying directly to the courts of any of the states that have signed and ratified the Singapore Convention. A mediated settlement agreement becomes enforceable by a foreign court in the same way as an arbitration award under the New York Convention.

Unusually, and in contrast to most international treaties, the Convention’s application is not based on reciprocity, and it may therefore be invoked before the courts of signatory states, where the settlement agreement has to be performed, by parties originating in states that have not signed it.

The Singapore Convention is truly a rising star in the private international law of contracts and alternative dispute resolution.