The United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention) opened for signature in Singapore on 7 August 2019. It will come into force six months after being ratified by at least three state parties. At present, 46 states have signed, including China, India and the United States. The Singapore Convention responds to the demand from a growing body of mediation users for an enforcement mechanism applicable to mediated settlement agreements in cross-border disputes.
At present, in the absence of an international regime, mediated settlement agreements are generally only as enforceable as any other contract. The exception is where mediation is undertaken within arbitration or litigation proceedings and the settlement agreement is recorded within – and is therefore enforceable as – an arbitral award or court judgment.(1) However, this requires parties to participate in formal dispute resolution processes in parallel to mediation, which some argue undermines the consensual nature of mediation and adds additional layers of time and cost. The Singapore Convention and corresponding Model Law aim to provide a solution – a legal framework within which settlement agreements resulting from the mediation of international commercial disputes may be enforced. In this respect, the convention purports to play a role similar to that of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention), and the influence of the New York Convention is apparent in the structure and language of the Singapore Convention.
The Singapore Convention applies only to mediated settlements of international commercial disputes – namely, where:
- at least two parties to the settlement agreement have their places of business in different states; or
- the state in which the parties have their places of business is different from either the state in which a substantial part of the obligations under the settlement agreement is performed or the state with which the subject matter of the settlement agreement is most closely connected.
The following types of settlement agreement are excluded from the scope of the Singapore Convention:
- agreements that have been approved by a court or concluded in court proceedings;
- agreements that are enforceable as a judgment in the state of such a court; or
- agreements that have been recorded and are enforceable as part of an arbitral award.
Settlement agreements pertaining to certain subject matters are also excluded – including family, inheritance or employment law and disputes arising from transactions engaged in by a consumer for personal, family or household purposes.
State parties to the Singapore Convention must enforce applicable settlement agreements in accordance with their national rules of procedure and the conditions set out in the convention. In addition, if a dispute arises concerning a matter alleged to have already been resolved by a settlement agreement, state parties must allow the parties to invoke the settlement agreement to prove that the matter has already been resolved – that is, allowing parties to invoke a settlement agreement as a defence against a claim. Again, this must be done in accordance with national rules of procedure and the conditions set out in the convention. Parties seeking relief must produce the signed settlement agreement along with evidence that the agreement resulted from mediation. Such evidence may include:
- a mediator's signature on the settlement agreement;
- a separate signed confirmation document from the mediator;
- an attestation by the institution administering the mediation; or
- any other evidence acceptable to the state's competent authority.
Requests for relief must be handled expeditiously by the state's competent authorities.
Grounds for refusing to grant relief
Similar to the New York Convention, there are limited grounds under the Singapore Convention on which a state party may refuse to grant relief requested by a party to a settlement agreement. Article 5(1) of the Singapore Convention provides that relief may be refused if the party opposing relief furnishes proof that:
- a party to the settlement agreement was incapacitated in some way;
- the settlement agreement is null and void, inoperative or incapable of being performed under the applicable law;
- the settlement agreement is not binding or final according to its terms, it has been subsequently modified, the obligations in the settlement agreement have either already been performed or are unclear or incomprehensible, or granting relief would be contrary to the terms of the agreement;
- 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 agreement; or
- there was a failure by the mediator 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 agreement.
Further, Article 5(2) provides that relief may be refused if the competent authority where relief is sought finds that:
- granting relief would be contrary to public policy; or
- the subject matter of the dispute is not capable of settlement by mediation under the law where the relief is sought.
Will the Singapore Convention provide greater certainty of enforcement?
The Singapore Convention is a positive development for mediation of cross-border disputes and one which should enable easier enforcement of international mediated settlement agreements globally.
However, the Singapore Convention's language creates some uncertainties, which should be clarified in domestic implementing legislation or procedural rules or in practice by national courts or convention users. For example:
- Article 3(1) provides that "each Party to the Convention shall enforce a settlement agreement"; and
- Article 5(1)(e) provides that relief may be refused if there "was a serious breach by the mediator of standards applicable to the mediator or the mediation".
Each of these provisions leave open important questions. First, what does it mean for mediated settlement agreements to be enforced? Second, what standards apply to mediators and mediation?
With respect to the first question, while arbitral awards define the remedies available to the parties on the basis of which enforcement is sought, in practice, mediated settlements generally do not. Therefore, what relief would be available to a party seeking enforcement of a settlement agreement under the Singapore Convention? The answer is uncertain. In many common law jurisdictions, the enforcement of a contractual right normally takes the form of an order for damages reflecting the value of the right to the aggrieved party. In exceptional cases, the enforcement of a contractual right may take the form of an order requiring that the breaching party perform the contractual obligation. Such an order is often reserved for circumstances where damages would be unsuitable to compensate the aggrieved party for the breach. It is unclear under the Singapore Convention whether the enforcement of a mediated settlement agreement would take the form of damages, specific performance or another remedy called for under the law of the jurisdiction in which enforcement is sought.
Parties contemplating the enforcement of an international mediated settlement agreement through the Singapore Convention would be wise to define the remedies for breach of the settlement agreement in the agreement itself. In so doing, parties must be aware that certain remedies may be unenforceable under the laws of some jurisdictions. Therefore, when defining remedies, parties should be mindful of the most likely enforcement jurisdictions and what remedies are available in each jurisdiction. These steps – taken at the outset – will provide greater certainty that the remedy a party is seeking will be attainable should it prove necessary to pursue enforcement.
Turning to the second question, it is unclear what standards are contemplated to apply to mediators or mediation, let alone what might constitute a breach of such standards for purposes of grounding a refusal to enforce a mediated settlement agreement. While international standards have been developed to guide certain aspects of international arbitrations (eg, the International Bar Association (IBA) Rules on the Taking of Evidence in International Arbitration and the IBA Guidelines on Conflicts of Interest in International Arbitration), there are no equivalent international standards to guide international mediation. The International Mediation Institute's Code of Professional Conduct is perhaps the closest to a global standard on mediator conduct, although it is unknown how widely it is used. Local standards in enforcement jurisdictions differ across the globe and may be applied to assess mediator conduct with varying enforcement outcomes across multiple jurisdictions.
The role of mediators in hybrid dispute processes (eg, mediation-arbitration, arbitration-mediation, arbitration-mediation-arbitration or mediation followed by last offer arbitration) may also complicate matters. In hybrid dispute processes, parties may shift between dispute phases and the same person may conduct the different phases of the dispute, potentially raising procedural integrity concerns. Proponents of hybrid processes argue that such concerns are offset by efficiencies gained in such processes as compared with traditional dispute processes which proceed sequentially through escalating procedures with separate persons serving as mediator and arbitrator. In many instances, where a dispute process concludes in arbitration or with a mediated settlement agreement recorded in a consent award, the Singapore Convention will not apply. Therefore, any procedural integrity issues are likely to be dealt with within the framework of the New York Convention. However, for those cases concluding in a settlement agreement to which the Singapore Convention applies, there may be uncertainty around the standards applicable to those involved in hybrid processes.
Forward planning is essential to achieving enforceable results. Parties should understand the requirements of jurisdictions where enforcement is sought and expressly agree to the approach to be adopted and implemented by the mediator.
Endnotes
(1) "The med-arb Q&A: The Hong Kong take on this PRC phenomenon", May 2016.
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