The United Nations Convention on International Settlement Agreements Resulting from Mediation, known more succinctly as the "Singapore Convention", is designed to enable cross-border enforcement in signatory countries of settlement agreements reached via mediation of international commercial disputes.  The heart of the Convention is expressed in its article 3.1 which embodies this provision.

What Mediation Means under the Convention

Mediation can take many forms in different countries and cultures.  Nevertheless, it is defined for Convention purposes as follows under Article 3 (3) of the Convention: " 'Mediation' means a process, irrespective of the expression used or the basis upon which the process is carried out, whereby parties attempt to reach an 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 to the dispute."

Scope of Application of the Convention

The Convention applies only to commercial disputes which are defined very broadly. It specifically excludes consumer, employment, and family-related matters. These commercial disputes must be international in nature as defined more precisely in Article 1(1).  Settlement agreements approved by a court and recorded as enforceable judgments in the State of that court, or recorded as enforceable arbitral awards, are also explicitly outside the scope of the Convention under Articles 3 and 4 respectively.

We must also bear in mind that the Convention does not touch the mediation process itself.   Rather, it only deals with post-mediation effects, namely the enforceability across national borders of mediated settlement agreements for international commercial disputes.

Signers – map and EU issue

The Convention was signed in Singapore on Aug. 7, 2019 by 46 countries including major trading nations such as the U.S., China, India, South Korea, and most countries in the Middle East. As of May 26, 2020, six more countries have signed on.

Some other major countries may be poised to sign the Convention. For example, the author of this article was informed by a reliable source at the August 2019 Convention signing ceremony that Russia was willing to sign, however there was an internal difference of views between the Justice Ministry and the Economics Ministry as to which would take the lead in implementing the Convention. On top of this, the onset of the COVID-19 pandemic around the globe has certainly diverted governments' attention and delayed progress in signing and ratifying the Convention.

One noticeable absence are the EU countries.  The EU has its own Mediation Directive scheme and so proposed at the drafting stage that soft law in the form of a Model Law be approved instead of a convention. The decision was taken to give each country both options, giving birth to both this brand new Convention and a Model Law.

The author of this article was informed by a reliable source that Russia was willing to sign, however there is an internal dispute between the Justice Ministry and the Economics Ministry as to which would take the lead in implementing the Convention.

With one foot still in and the other foot going out of the EU as of the date of this article, the UK, with its many Commonwealth and other trading relationships, may see fit to consider signing the Convention.  For the UK, this could conceivably happen after leaving the EU.

At first blush, it would appear that the Singapore Convention would not be very helpful as far as disputes involving EU countries or the UK are concerned, at least until the Convention is signed and ratified by the EU or member states or the UK.  However, this is not necessarily the case.

Unlike the New York Convention for Enforcement of International Arbitral Awards, the Singapore Convention does not provide for a reservation (see below) or otherwise require that the instrument being enforced (the parties' mediated settlement agreement) to have been signed/executed in a Convention signatory country. The only effect of being a Convention country is that the mediated settlement can be enforced there.  So from a practical perspective, mediated settlement agreements for commercial disputes involving one or more parties from the EU or UK can be enforced in any of the 52 other countries which have signed the Convention, provided the signatory country for enforcement has taken the further step to ratify it.

Coming into Force of the Convention

Under its Article 14(1), the Convention comes into force six months following deposit of the third instrument of ratification, acceptance, approval or accession.  A country signing the Convention (usually by its executive power) is one thing, and ratification (usually by its legislature) is another.  Ratification usually means that the ratified convention or treaty becomes part of the ratifying country's domestic law, and for some countries a treaty is considered "the supreme law of the land", under Art VI of the U.S. Constitution for example.

As of July 27, 2020, the Convention has been ratified by five countries, two more than the three necessary to bring it into force.  Singapore and Fiji were the first two countries to ratify the Convention, followed by Qatar, Saudi Arabia and Belarus.

Several countries had expressed doubts about signing the Convention because they said they had no process in place to implement its provisions.  However, a persuasive counter-argument was made that: (1) no country has such a process in place for this Convention yet; and (2) if the will is there, the best step would be to sign now and ratify later once an implementation procedure is developed.  Every signatory country will have to develop its own route or methods for implementing the Convention in their courts.  Some may be the same as or similar to that taken for the NY Convention, others perhaps different.  This line of reasoning was accepted by a number of states signing the Convention, including China.

Defenses to Application of the Convention

Article 5 ("Grounds for refusing to grant relief") enumerates several of these which can be invoked in a court of a nation Party to the Convention:

• party incapacity;
• nullity of the settlement agreement under applicable law;
• the agreement is not binding or final;
• the agreement has been subsequently modified;
• the obligations in the agreement have been performed or are not clear or comprehensible;
• granting relief would be contrary to the terms of the settlement agreement;
• serious breach by the mediator of ethical or other professional standards, without which, breach the parties would not have entered into the settlement agreement;
• failure by the mediator to disclose circumstances raising justifiable doubts about the mediator's impartiality or independence, without which breach the parties would not have entered into the settlement agreement;
• granting relief would be contrary to the public policy of the enforcing jurisdiction; or
• the matter in dispute was not capable of being settled by mediation under the law of the enforcing jurisdiction.

More flexible and easier to apply than the NY Convention

While some of these grounds/defenses look similar to those in the New York Convention (UN Convention on Recognition and Enforcement of Foreign Arbitral Awards), especially the public policy exception, the Singapore Convention is simpler than the New York Convention in these major respects:

(1)  Unlike the NY Convention, the Singapore Convention does not require formal recognition of the instrument (settlement agreement in the case of the Singapore Convention).  All that is required is evidence of the settlement agreement in writing (including electronic format under prescribed conditions) and the fact that it was a mediated one, which can be shown in several ways: the mediator can sign it, can sign a separate statement to that effect, or any institution involved in the mediation can produce such a statement.

(2) Unlike the NY Convention, the instrument/settlement agreement itself need not be entered into in a country which is a Party to the Convention. The New York Convention does not expressly require this, but does allow in Article I (3) for a reservation allowing countries signing, ratifying or otherwise acceding to it, to require that the arbitral award being enforced there, to have been made only in the territory of another Contracting State. Many states have adopted this so-called "Reciprocity Reservation."

In the case of the Singapore Convention there is no such provision or impediment. The settlement agreement can be signed/executed by the parties anywhere.

We also note here that the Singapore Convention does not require that the party to the dispute invoking enforcement of its mediated settlement agreement under the Convention, come from, be based in, or be a citizen of one of the countries which have ratified the Singapore Convention.

Similar to the provisions of the NY Convention on Foreign Arbitral Awards, subject to the Convention defenses described above, an aggrieved party to a settlement agreement can go to courts in any Convention country to take measures to enforce it.

Limited Reservations available

Article 8 of the Singapore Convention permits only two types of reservations by a state Party signatory:

(a) The Convention shall not apply to that state or any of its government agencies; and

(b) For the Convention to apply in that state, it shall apply only to parties to a settlement agreement which have agreed to that effect.

To the authors' knowledge, so far Belarus, Iran and Saudi Arabia are the only states that have signed or ratified the Convention with reservations. Belarus adopted Reservation (a), while Iran has adopted Reservations (a) and (b) above. On ratification, Saudi Arabia adopted Reservation (a) above.

Some challenges with the Convention

No treaty, convention or agreement is perfect. In the case of the Singapore Convention, we see at least two challenges.

The first challenge arose just a few months ago with the fast-spreading COVID-19 pandemic: how to keep states on a signatory track when their attention is riveted on the pandemic?  There is no easy answer for this one – only time will tell.  Keeping the Convention alive in the minds of decision-makers via well-directed publicity will surely help.

While the challenges are important, we believe it will be in many countries' best interests to consider the approach taken by China – having the President sign the Convention as soon as possible, while at the same time working on how to implement it prior to ratifying it in the legislature.

A principal challenge will be how to implement the Convention in the courts, especially developing an enforcement route and mechanism. Many courts are already very full with hundreds of cases in backlog and are also being asked to assume other responsibilities. The authors suggest considering similar routes as used for arbitration cases which often involve special courts or chambers utilized in some countries to handle all matters related to arbitration. A number of countries such as Brazil have implemented this type of approach for arbitration with considerable success.

Another challenge may occur in a relatively few number of cases where the mediated settlement agreement calls not for monetary payment but for a specific action to be taken or not taken by one or more parties in dispute.  It is easier for courts in one country to freeze/transfer assets of a party violating that agreement, than to order that party to do or refrain from doing something specific – especially if that party is a foreign party without any presence in the country, or if the objects of the settlement agreement are not located there.  Of course, the enforcement court could order performing or refraining from performing a specific activity on penalty of monetary fines or even criminal penalties in severe cases, but this would be an additional measure to work out on a country-by-country basis.

Projected effect/benefits for business and corporate counsel

One of the organizers and prime movers of the Singapore Convention stated in a recent webinar by the Singapore International Arbitration Center and ICSID, that in India, the Supreme Court has cited the country's signing the Convention as a pillar to support the spread of mediation in the country.

Whether or not many enforcement actions are necessary, the primary effect and benefits of this Convention for international business look to be more proactive than reactive.  Gaining elevated cross-border enforcement status for mediated international commercial settlement agreements is designed to produce effects similar to those of foreign arbitral awards under the NY Convention.  When a sufficient number of countries ratify the Singapore Convention, this will raise the status bar considerably for mediation.  In these countries, mediated international commercial settlement agreements will no longer be considered as mere contracts – foreign ones at that – to be enforced slowly if at all.  Rather, they will gain a higher berth and become enforceable on their own under this Convention.  Article 4, paragraph 2, subparagraph 5 states: "When considering the request for relief, the competent authority shall act expeditiously."

Over time, this should generate more confidence in the use of mediation by counsel for companies doing international business, leading to more mediation or med-arb clauses in international commercial agreements which in turn sow the seeds for mediation.  When successful, mediation almost always reduces cost, time, energy and stress for both corporate counsel and business clients expended in disputes.  Facilitating party communication via mediation also offers the possibility of preserving parties' commercial relationships when appropriate.  Mediation usually has very little downside, if any, and is much faster, more flexible and economical than other methods of dispute resolution.

In terms of interest and the demand side for a viable mediation settlement enforcement mechanism, a survey conducted by the International Mediation Institute and the Institute for Dispute Resolution, showed that some 80% of the 98 respondents answering this question would be more inclined to favor and encourage use of mediation for their companies' disputes if a viable uniform global enforcement mechanism like the Singapore Convention were available. See REPORT ON INTERNATIONAL MEDIATION AND ENFORCEMENT MECHANISMS:  Issued by the Institute for Dispute Resolution (IDR) NJCU School of Business to the International Mediation Institute for the benefit of delegates attending the UNCITRAL Working Group II (Dispute Settlement) 67th Session by Professor David S. Weiss, Esq. and Michael R. Griffith, Esq.

The survey results are available by downloading the article icon at the bottom of that page, and referring to survey question 4 results on page 15 of the survey report.  The raw data on which this report is based comes from the IMI's Global Pound surveys conducted in many countries in 2016-17.  Respondents come from a variety of professional fields such as law, construction, energy, architecture, international business, healthcare, food and beverage service, water and waste management, tourism, trading, education, and finance.

It may take some time – after all, the New York Convention providing for cross-border enforcement of arbitral awards was first signed onto in 1958 by only 10 or 11 countries.  Granted, we have many more countries now with the breakup of the former Soviet Union and Yugoslavia, independent African states, etc. on the map.  Even so, 46 signatories was a very strong opening day launch for the Singapore Convention providing for cross-border enforcement of mediated settlement agreements for international commercial disputes.

Paul Mason is an International Counsel, Arbitrator & Mediator based in Miami and Brazil, Mr. Mason served as in-house counsel/International Legal Director for Latin America, Russia and Canada at Digital Equipment, Oracle, and 3Com. See www.paulemason.info for more details. He participated as a delegate at the signing and related events for the Convention in Singapore on Aug. 7, 2019.