SINGAPORE CONVENTION ON MEDIATION USHERING IN A NEW AGE FOR MEDIATION? "The Singapore Convention seeks to enable settlement agreements to be easily recognized and enforced internationally. In this article, Lijun Chui of Bird & Bird ATMD LLP breaks down what mediation settlements are covered, the conditions for recognition, grounds for refusing relief and insights for...
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SINGAPORE CONVENTION ON MEDIATION USHERING IN A NEW AGE FOR MEDIATION?
"The Singapore Convention seeks to enable settlement agreements to be easily recognized and enforced internationally. In this article, Lijun Chui of Bird & Bird ATMD LLP breaks down what mediation settlements are covered, the conditions for recognition, grounds for refusing relief and insights for practical enforcement."
What is the Singapore Convention about?
In a nutshell, the Singapore Convention, formally known as the United Nations Convention on International Settlement Agreements Resulting from Mediation, makes it easier for mediated agreements to be enforced in acceding countries.
Prior to the Singapore Convention, there was no harmonized enforcement mechanism for negotiated settlements. This meant that a party who has a concluded settlement but faced with a counterparty that refused to comply with those terms would be forced to bring an action for breach of contract and seek to have the subsequent judgment enforced. This resulted in many parties commencing mediation in parallel with or after starting arbitration or litigation proceedings to ensure that any settlement agreement could be recorded within an arbitral award or court judgment and enforced accordingly.
With the Singapore Convention, parties who have agreed a mediated settlement may enforce the terms of that agreement in other jurisdictions, similar to how the New York Convention on the Recognition and Enforcement of Arbitral Awards facilitates the enforcement of international arbitral awards.
What are the conditions for enforcement?
First, there must be an international commercial settlement agreement resulting from mediation:
• The mediation settlement agreement must be international in character (i.e. the parties have their place of business in different states or the parties' place of business is different from the state in which a substantial part of the obligations under the settlement agreement is performed or with which the subject matter of the settlement agreement is most closely related).
• The mediation settlement agreement must be commercial (i.e. disputes arising from transactions by consumers for personal, family or household purposes, or relating to family, inheritance or employment law are excluded).
• Second, the Singapore Convention does not apply to settlement agreements that are enforceable as a judgment or arbitral award.
• Third, the competent authority of a signatory state to the Singapore Convention may refuse to grant relief on the grounds laid down in the Singapore Convention including:
• The disputing party was under some kind of incapacity when entering the settlement agreement.
• The settlement agreement is null and void, inoperative or incapable of being performed under the law to which the parties have validly subjected it.
• The settlement agreement is not binding, or final according to its terms; or has been subsequently modified.
• The obligations in a settlement agreement have been performed or are not clear or comprehensible; or granting relief would be otherwise contrary to its terms.
• There was a serious breach by the mediator of the applicable standards without which breach that party would not have entered into the settlement agreement.
• 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 settlement agreement.
Further, relief may be refused by the competent authority where relief is sought on the grounds that:
• Granting relief would be contrary to public policy in the enforcing state.
• The subject matter of the dispute is not capable of settlement by mediation under the laws of the enforcing state.
• Fourth, a signatory state may make the following reservations when signing the Singapore Convention:
• To qualify that the Convention would not apply to settlements involving the state or its government agencies.
• To adopt an opt-in approach which provides that the Convention only applies to the extent that the disputing parties agree to its application.
Will the Singapore Convention usher a new age for mediation?
The Singapore Convention is intended as a legal framework within which international mediation settlement agreements may be enforced (without reliance on other frameworks). This is clearly a mechanism which is long over-due and in response to a clear commercial need for quick and effective dispute resolution.
With the COVID-19 pandemic, rising geopolitical tensions and trade protectionism issues leading to more disputes, there is even greater need now for a good dispute resolution mechanism which is party-driven and prizes the preservation of relationships. It is in that context that the Singapore Convention on Mediation has taken on more significance.
Since the Singapore Convention was open for signature on 7 August 2019, 54 countries have signed and seven have ratified the convention.
Singapore is playing a key role on the global stage in promoting the Convention and mediation generally, which is consistent with the efforts to solidify the nation-state's place as an international dispute resolution hub.
This is particularly so in the context of Asian business culture where parties are keen to work towards an outcome which is commercially viable and face-saving. We can see this in how several Asian jurisdictions have enacted mediation legislation in the past few years including China, Singapore, Malaysia and Hong Kong.
While the Singapore Convention would no doubt enable easier enforcement of international mediated settlement agreements globally, parties would still be wise to:
• Plan forward to achieve an enforceable result. This includes understanding the requirements of jurisdictions where enforcement may be sought.
• Achieve express agreement on the approach to be adopted and implemented by the mediator. This is to address the lack of clarity around the standards which are to apply to mediators or mediation, which in turn would have a bearing on one of the grounds for refusing enforcement.
• Clearly define in the mediated settlement agreement the remedies which are available in the event of a breach. Article 3(1) provides that "each Party to the Convention shall enforce a settlement agreement …" but in the context of mediated settlements which do not clearly spell out the remedies for a breach, the path to enforcement under the Convention may be considerably more challenging.