The Singapore Convention: A breakthrough for international trade
The agreement will facilitate transnational trade by allowing mediated settlements to be more easily recognized and enforced.
Litigation and arbitration can be lengthy and costly, which explains in part why mediation has been gaining in popularity as a method for resolving cross-border commercial disputes. What’s lacking, however, is a comprehensive legal framework for the enforcement of international settlement agreements. Without one, parties to a mediated settlement usually have to get a court judgment in a foreign jurisdiction to enforce the agreement.
That is set to change, as the United Nations Commission on International Trade Law (UNCITRAL) moves forward with a new tool that will facilitate the recognition and enforcement of mediated settlements. This year, UNCITRAL approved the Convention on International Settlement Agreements Resulting from Mediation – informally known as the Singapore Convention. The document is now open for signing.
The document is the culmination of a process that began in May 2014, when the United States proposed to develop a multilateral approach that would assist with the recognition and enforcement of mediation settlements. In essence, the idea was to replicate the mechanisms that exist under the New York Convention for arbitration awards.
The Singapore Convention, which applies only to “international agreements resulting from mediation” and concluded in writing, excludes several matters from its jurisdiction — consumer, family and employment disputes, for example. Article 1 also excludes settlement agreements which (a) have been approved by a court or have been concluded in the course of court proceedings; (b) are enforceable as a judgment in the state of that court or (c) that have been recorded and are enforceable as an arbitration award. These exceptions are intended to avoid conflicts with other international conventions, namely the New York Convention.
Some conditions must be fulfilled for a state to enforce a settlement agreement. Under Article 4, a party must supply a signed settlement agreement, and evidence that it resulted from a mediated process. Proof of this may include the mediator’s signature on the settlement agreement, an attestation by the institution administering the mediation or any other evidence acceptable to the competent authority under their domestic law. An affidavit from the mediator may be sufficient.
Litigation and arbitration can be lengthy and costly, which explains in part why mediation has been gaining in popularity as a method for resolving cross-border commercial disputes.
Much like the New York Convention, a signatory state may refuse relief only on one of five grounds outlined in Article 5. Otherwise, it must recognize and enforce the settlement agreement. The five grounds are: (a) the incapacity of a party to the settlement; (b) the settlement agreement is null and void, inoperative or incapable of being performed under the applicable law; (c) the settlement agreement is not binding, or is not final, according to its terms; has been subsequently modified; the obligations in it have been performed or are not clear or comprehensible; granting relief would be contrary to its terms; (d) there was a serious breach of mediator standards; (e) failure by the mediator to disclose to the parties’ circumstances that raise justifiable doubts as to the mediator’s impartiality or independence.
Article 5(2) also provides that relief by a signature state may be refused where it is “contrary to the public policy” of the state where enforcement is sought or the “subject matter of the dispute is not capable of settlement by mediation under the law of that state.” Within the context of the UNCITRAL Model Law and the New York Convention, there is an abundance of case law explaining the scope of Article 5(2).
Ultimately, once it comes to effect, and assuming a critical number of states agree to sign it, the Singapore Convention ought to facilitate transnational trade by allowing mediated settlements to be more easily recognized and enforced by the different signatory states. For example, by allowing arbitration awards to be recognized and enforced across different jurisdictions, the New York Convention became one of the most successful treaties in private international law. Hopefully, by helping alleviate the cost of litigation, the Singapore Convention will achieve the same measure of success and mark a breakthrough for international trade.