The Singapore Mediation Convention: Plugging the gap in cross-border enforceability of commercial settlement agreements
4 April 2018
This article is produced by CMS Holborn Asia, a formal law alliance between CMS Singapore and Holborn Law LLC.
On 26 June 2018, the final drafts for a convention on the enforcement of international settlement agreements resulting from mediation and the corresponding model law were approved at the 51st Session of the United Nations Commission on International Trade Law (UNCITRAL). Proposals were endorsed for a signing ceremony to be held in Singapore in August 2019 and for the convention to be named the “Singapore Mediation Convention” – the first such convention to be named after Singapore.
The Singapore Mediation Convention aims to implement, for the first time, an international regime for the enforcement of mediated commercial settlements similar to the 1958 New York Convention (on the enforcement of foreign arbitral awards) and the 2005 Hague Convention (on the enforcement of foreign court judgments). States Parties to the Singapore Mediation Convention are required to enforce a mediated commercial settlement in accordance with their rules of procedure and under the conditions laid down in the Convention. They must similarly allow a party to a mediated commercial settlement to invoke the settlement to prove that a matter has already been resolved. There are limited grounds for refusing to grant relief, including incapacity of a party to the settlement; the settlement being void, not binding or subsequently modified; a serious breach by the mediator of applicable standards or a failure by the mediator to disclose circumstances raising doubts as to the mediator’s impartiality or independence where without such breach or failure that party would not have entered into the settlement agreement; and that to do so would be contrary to public policy of the State Party where relief is sought.
The Singapore Mediation Convention will focus on the enforcement of settlement agreements in scenarios where these other instruments are not applicable, for example, where a settlement agreement has not been concluded in the course of court proceedings, or recorded as a court judgment or an arbitral award. This arguably plugs what is perceived by many legal counsel and commercial parties to be an existing gap in the enforceability of commercial settlement agreements.
At present, parties who conclude a mediated settlement outside the context of court proceedings or arbitration can generally only enforce the settlement as a contract. This typically involves first obtaining a court judgment and then enforcing the judgment in a chosen jurisdiction. Depending on the jurisdiction in question, the process can be tedious and complex, not to mention costly and time-consuming.
By simplifying the enforcement of mediated settlement agreements, the Singapore Mediation Convention will lend credibility and robustness to mediation as an effective and recognised dispute resolution mechanism. This is a sentiment reinforced by the results of an international survey conducted in 2014, in which an overwhelming number of respondents (74%) indicated that having an international instrument that recognises and enforces settlement agreements arising out of international commercial mediation would encourage greater use of mediation as an ADR mechanism.
- The impact of the Singapore Mediation Convention could be particularly significant in Asia where sentiment towards mediation is very favourable, yet take up for cross border commercial disputes appears relatively low. A large-scale international survey conducted from 2016 to 2017 in 24 countries found that more than any other region, respondents from Asia desired increased regulation to promote recognition and enforcement of settlements and believed that demand for certainty and enforceability of outcomes would have the most significant impact on future policy-making in dispute resolution.
- As observed by Mr George Lim, S.C. (who is part of the UNCITRAL Working Group and Chairman of the Board of the Singapore International Mediation Centre), the ability to enforce a mediated settlement internationally through the Singapore Mediation Convention will mean that “[m]ediation will now have ‘teeth’”.
- This development certainly bodes well for commercial parties hoping to reap the benefits of a more conciliatory means of dispute resolution but who still hope for an outcome that has bite.
*Co-authored with Eunice Chua, Assistant Professor at the Singapore Management University (SMU) School of Law.