A new international treaty, the United Nations Convention on International Settlement Agreements Resulting from Mediation, enhances the global framework for mediation and portends its continued growth.
The global rise of mediation as an effective mechanism for resolving complex disputes will continue to grow thanks to a new treaty that establishes a global framework for enforcement of settlement agreements resulting from mediation.
The United Nations Convention on International Settlement Agreements Resulting from Mediation (the "Convention on Mediation" or "Singapore Convention") facilitates international dispute resolution by making settlement agreements resulting from mediation directly enforceable in the courts of its member States. Less than two years after opening for signature in August 2019, the Convention on Mediation has entered into force for six countries (Belarus, Ecuador, Fiji, Qatar, Saudi Arabia, and Singapore) and has 48 signatories pending ratification, including the United States and China.
The rise of mediation may be underestimated because so many examples of its success simply never become public. Mediation has proven particularly effective in cases in which the parties are engaged in a continuing business relationship and/or have an interest in collaborating in the future, and enter into agreements to mediate after a dispute has arisen. (Indeed, the authors have advised on the successful resolution of hundreds of millions of dollars of claims through customized mediation proceedings, none of which are in the public domain.)
The Convention on Mediation will facilitate further growth. It is comparable in many ways to its older sibling, the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), which is in force for 168 countries and has been a cornerstone for the growth of arbitration and related enforcement. The New York Convention has made this a reality for international arbitral awards. In contrast, the 2005 Convention on Choice of Court Agreements provides for the enforcement in its member States of settlement agreements approved by or concluded before a court of a member State, but does not otherwise include settlement agreements resulting from mediation. It also has a much more limited membership comprised essentially of European States, Mexico, and Singapore, and has suffered notable criticism, and has not been widely embraced.
The Convention on Meditation follows a wave of efforts to promote the use of mediation as an alternative dispute resolution method. In several countries, mediation is mandatory before litigation. Forty five jurisdictions have adopted legislation on mediation procedure inspired by the Model Law on International Commercial Mediation (previously "Conciliation") adopted by the United Nations in 2002, and amended in 2018 to reflect the provisions on settlement agreements of the Convention on Mediation. Most international arbitral institutions such as the ICC, ICDR, and LCIA also provide mediation services, and their standard clauses include an option that provides for mediation as a first step before any party can refer the dispute to arbitration. Institutions such as ICSID have also promoted mediation for the resolution of Investor-State disputes. Mediation may also take place by agreement of the parties once arbitration has already started, and the parties have a better sense of their respective cases.
Because of the amicable and consensual nature of mediation, parties often comply voluntarily with settlement agreements resulting from it. The Convention on Mediation adds legal certainty to this process, by simplifying the enforcement of settlement agreements in case there is no voluntary compliance. This might be particularly important for complex settlement agreements, the performance of which involves multiple steps and/or extends into the future, and that could give rise to disagreements along the way.
Some of the noteworthy features of the Convention on Mediation, include:
- Any party to a settlement agreement may seek the enforcement of such agreement directly in the national courts of a member State where assets are located, or invoke the settlement agreement in a court proceeding to prove that the matter has already been resolved.
- Enforcement will take place according to the rules of procedure of the enforcing State.
- The settlement agreement must be in writing and the product of a mediation, i.e., a process whereby a mediator helps the parties to reach a commonly agreed solution and does not have the authority to impose a solution on the parties. When enforcement is sought, the party relying on the settlement agreement must provide evidence that it resulted from mediation such as (i) the mediator’s signature on the agreement, (ii) a document signed by the mediator indicating that the mediation took place, (iii) an attestation from the institution that administered the mediation, or (iv) any other evidence acceptable to the enforcing authority. The settlement agreement does not have to reference the Convention on Mediation.
- The settlement agreement cannot be concluded in the course of proceedings before a court or have been approved by a court.
- The settlement agreement must concern an international dispute, i.e., at least two parties to the settlement agreement have their places of business in different States, or the State of their place of business is different from the State where the settlement agreement will be performed or from the State that is most closely connected to the subject matter of the settlement agreement.
- Enforcement of a settlement agreement may be denied in case (i) of incapacity of a party, (ii) the agreement is defective or not final, (iii) the mediator commits a serious breach of the standards applicable to the mediation or fails to disclose circumstances that affect his/her impartiality or independence, such that a party is led to enter into a settlement that it would not otherwise do, (iv) enforcement would be contrary to the public policy of the enforcing State, and (v) the law of the enforcing State does not allow the dispute to be settled through mediation.
- It applies to settlement agreements involving States and their agencies, unless the State makes an express reservation that the Convention does not apply to such agreements.
In short, the Convention on Mediation simplifies the enforcement of settlement agreements resulting from mediation, and once it enters into force in a significant number of jurisdictions, it will widen the options for enforcement, providing easy access to courts where relevant assets or operations are located. The Convention on Mediation adds a valuable tool to the international dispute resolution toolbox for cross-border commerce.
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