Mediated settlements could soon be enforced internationally, following the adoption of UNCITRAL’s Convention on the Enforcement of Mediation Settlements and corresponding Model Law. We highlight some of the conversations that have been stirring in the last one month.
The 2019 Singapore Convention could be for mediation what the 1958 New York Convention currently is for arbitration.
In June this year, a draft legal framework for international commercial mediation was finalised at UNCITRAL’s 51st session*. The Commission approved the Model Law on International Commercial Mediation and International Settlement Agreements resulting from Mediation, essentially allowing parties to enforce their mediated settlement agreements across jurisdictions. The Commission also endorsed proposals for the signing ceremony to be held in Singapore on August 1, 2019, and for the Convention to be referred to as the “Singapore Mediation Convention”.
The landmark decision comes after three years of negotiations and drafting, a mammoth task that involved input from as many as 85 countries and 35 NGOs. It still pends approval by the UN General Assembly in December 2018 and, once approved, remains subject to there being sufficient countries ratifying it next year.
What is significant about the Singapore Mediation Convention is that it offers enforcement of settlement agreements achieved from mediations conducted in foreign jurisdictions, much akin to what the New York Convention has achieved for arbitration awards.
This addresses the rare, but real instances where parties fail to adhere to the terms of settlement. It is a timely tool in view of the exponential growth in cross-border deal-making.
With the Convention, “mediation will now have ‘teeth’,” SIMC Chairman George Lim SC explained.
“Once enforcement becomes possible under an international Convention, mediation will gain better traction with businesses,” he said. A Singapore-based international mediator himself, Mr Lim was also part of the UNCITRAL Working Group II, which worked on the draft.
Currently, the use of mediation as a form of dispute resolution is frustrated by the fact that “unless a settlement reached via mediation is in the context of a pending arbitration and can be converted into an arbitral award, parties can only enforce it in the same way as any other contract.”
As highlighted by Herbert Smith Freehills, this can be mean an onerous, lengthy journey to reach a court judgment and then enforcing it in a foreign jurisdiction.
The Convention is also expected to encourage businesses to turn to Singapore as a venue for sorting out their tussles amicably. The country is well-known for its stable political climate, ease of doing business, as well as robust legal and commercial infrastructure. It has also been building its reputation as an international hub for aviation, shipping, financial services and construction.
SIMC has been working with international legal professionals in these sectors to boost mediation, and more recently, with the Asian Development Bank on Public-Private Partnership infrastructure projects.
The Singapore Mediation Convention is another feather in the city-state’s cap in promoting mediation as a form of dispute resolution. In November 2017, Singapore enacted the Mediation Act, which allows users to enforce their settlement agreements arising from mediations at SIMC as consent orders.
Next year’s signing, as Mr Lim put it, “will be the next game-changer in the field of international dispute resolution.”
*United Nations Commission on International Trade Law