A new international convention has been launched that aims to help enforce settlement agreements which have arisen out of commercial mediation.
The UN Singapore Convention on Mediation recognises the value of mediation as a method of amicably settling disputes arising in the context of international commercial relations.
The Convention should encourage businesses to mediate cross-border disputes instead of going straight to the courts or tribunals, as it will give the parties greater certainty that the agreements will be enforceable. This may be why some of the large economic powers in the world, including the United States and China, have signed the Convention.
Of course, as with the New York Convention, which recognises the enforcement of foreign arbitration awards, it will take time for the Convention to build up support.
Also, only time will tell how the Convention will work in practice. It will depend on the local laws where the settlement agreement is to be enforced. For example, the evidence that is needed and what the parties may need to produce to enforce an arbitration award under the New York Convention in one country may not be the same in another. Likewise, what a party needs to produce to show the settlement agreement resulted from a mediation within the terms of the Singapore Convention may, in practice, differ from one country to the next.
Don’t wait until enforcement
It also seems necessary for the parties who wish to rely on the Convention to address this at the mediation and settlement agreement stage. They must not wait until the need for enforcement. The Convention states that:
“A Party to the Convention may declare that…it shall apply…only to the extent that the parties to the settlement agreement have agreed the application of [the] Convention”.
Therefore, it may be wise for the parties to expressly refer to their agreement to the application of the Convention within the terms of the settlement agreement. In addition, as evidence that the settlement agreement arose from a mediation, a paragraph could be included in the mediation agreement, which should be signed by the parties and the mediator, that the parties agree it is a mediation for the purpose of the Convention.
Of course, as noted above, whether this would constitute sufficient evidence for the purpose of enforcing the settlement agreement under the Convention in all participating countries remains to be seen.
Importance of impartiality
It is also worth noting, in the same way that countries may be reluctant to enforce an arbitration award under the New York Convention where they consider the arbitrator was not impartial, the Singapore Convention on Mediation stipulates that a ground for refusing to enforce a settlement agreement is where they consider the mediator was not impartial. What gives reason to doubt a mediator’s impartiality in one country may be different in another.
How the Convention will work in practice remains to be seen, however, there seems to be no reason in theory why it should not be successful like the New York Convention. Also, as per its aim, the hope is that it will encourage commercial parties to mediate disputes where appropriate.
The full text of the Convention can be read here.