Member Article

On 7 August 2019 a new UN convention was signed in Singapore by 46 countries, the "UN Convention on International Settlement Agreements Resulting from Mediation", also known as the Singapore Convention.

The Singapore Convention applies to international settlement agreements resulting from mediation and aims to be an instrument for international trade to facilitate and promote mediation as an alternative method of resolving trade disputes.

The Convention establishes an efficient and harmonized framework for the right to invoke international settlements agreements resulting from mediation and for the enforcement of such agreements across borders in a contracting state. Until now, the challenge with mediated settlement agreements as an alternative method for dispute resolution has been the lack of an efficient framework for cross-border enforcement of such agreements.

In response, the Singapore Convention has been adopted which governs the formalities for relying on a settlement agreement and allows the disputing party seeking enforcement to apply directly to the courts of the contracting state where the assets are located and execution will be sought if the enforcement process is successful. This will prevent potential multiple proceedings and will facilitate international trade and commerce to apply mediation as an additional dispute resolution option to litigation and arbitration in settling cross-border disputes.

The Singapore Convention will serve as an important step towards encouraging cross-border disputes to consider mediation as an alternative dispute resolution, and is intended to do the same for international mediated settlements as the New York Convention of 1959 has done for international arbitral awards.

The mediation process is very flexible, and in many instances, more cost and time efficient than the other dispute resolution processes like litigation and arbitration. The mediator’s role is not to decide, but rather to facilitate discussions between the disputing parties to find at a mutually commercially acceptable solution. The parties remain in control of the outcome, as mediation is not binding unless and until the parties agree on the terms of the settlement.

The Convention's article 2(3) provides a broad definition of mediation whereby parties "attempt to reach 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". As long as the settlement falls within this definition, the Singapore Convention applies regardless of whether the process of settlement is called a "mediation". In addition, there is no requirement that the mediation being administered by a mediation institution or conducted by an accredited mediator, and maintains the flexibility which is one of the attractive features of mediation.

Still, the signatory states are permitted to make two reservations under article 8: Firstly, that the Convention will not apply to settlement agreements to which the signatory state or any governmental agencies itself are a party. Secondly, the convention will apply only to the extent that the parties to the settlement agreement have agreed to the application of the convention. This means that where a signatory state has expressed such a reservation, the parties to the settlement agreement itself will need to agree to the Singapore Convention to apply. It will be interesting to see whether these reservations will have an unwanted effect on the application of the convention and limit the effect of mediation as an alternative dispute resolution method.

The Singapore Convention will come into force six months after three countries have ratified, accepted, approved or acceded to the Convention. Already, 46 countries have signed the Convention, including China and USA, and it is expected that many more countries will follow in the following months. Still, the European Union and the United Kingdom have not yet signed the Convention.