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United Nations: UN Convention on International Settlement Agreements Resulting from Mediation Enters into Force
United Nations: UN Convention on International Settlement Agreements Resulting from Mediation Enters into Force
Introduction
United Nations Convention on International Settlement Agreements Resulting from Mediation (the Singapore Convention on Mediation) entered into force. The United Nations Commission on International Trade Law (UNCITRAL) adopted the Singapore Convention on Mediation in 2018. Still, it came into force in September 2020, six months after six countries ratified the Convention. At the signing ceremony in August 2019, representatives from 46 countries signed the Convention. The Singaporean Prime Minister noted that the Convention was the “missing piece in the international dispute resolution enforcement framework.”
The United States first initiated the proposal to develop an enforceable multilateral convention to codify international commercial settlement agreements through mediation in 2014. Before the entry into force of the Singapore Convention on Mediation, the only multilateral legal instruments for resolving international commercial disputes were the various instruments on international litigation under the Hague Convention for Private International Law and the New York Convention, which provided for arbitration on such disputes.
International Law
The Singapore Convention includes similar wording to the New York Convention regarding enforcement, including that each state party “shall enforce a settlement agreement following its rules of procedure and under the conditions laid down in this Convention.” (Singapore Convention art. 3(1).) It has been noted that this new provision on enforcement expands the potential impact of the Singapore Convention beyond the limited effect that the 2008 European Union Directive on Mediation has had on enforcing mediated settlements in the EU. Specifically, article 6 of the EU Directive requires the Member States to consent to the written agreement resulting from mediation to be made enforceable. In addition, under the EU Directive, the content of a mediation settlement agreement must not be contrary to the law of the Member State. The law of that State must provide for the enforceability of the settlement.
In addition, article 5 of the Singapore Convention includes defences to enforcement similar to the defences in article V of the New York Convention, including the defences of (i) incapacity to enter into an arbitration agreement and (ii) when the subject matter of the dispute is not capable of settlement by arbitration (mediation) under the law of the country where recognition or enforcement is sought. In addition, the Singapore Convention also includes a provision mirroring the New York Convention defence to enforcement: (iii) the “public policy” defence.
As the International Mediation Institute and UNCITRAL note, mediation as a means to settle international disputes, as opposed to litigation or arbitration, has been on the rise. The perceived benefits of mediation are that it is faster, less expensive, and more likely to preserve commercial relationships than international arbitration or litigation. The global enforcement of these mediated settlements is now simplified with the Singapore Convention on Mediation, which is especially important during times of uncertainty in international business, such as the COVID-19 pandemic. Several other significant factors have influenced the rise in mediation in global dispute settlement, including China’s Belt and Road Initiative, a multi-trillion US dollar infrastructure development strategy across Asia and Europe, and the increase in trade investment related to the Trans-Pacific Partnership.
Conclusion
However, in the future, it is unclear how courts will interpret the Singapore Convention and how commonly it will be invoked in practice. As one commentator notes, a 2016 survey commissioned by the Singapore Academy of Law of 500 legal professionals around the region reported a clear preference for international commercial arbitration, with 71% preferring to use arbitration, 24% preferring litigation, and a mere 5% preferring mediation. The survey respondents emphasised enforceability, confidentiality, and fairness as leading factors for choosing arbitration over mediation.
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