The Singapore Convention - a welcome framework to further encourage mediation of international disputes
Mediation is a means of resolving a dispute which involves parties negotiating and often voluntarily settling their dispute in the presence of a neutral mediator. It is a popular and successful means of alternative dispute resolution in the UK, with reportedly almost 90% of mediations reaching a settlement.
A common perception is that settlement agreements can be difficult to enforce internationally. This is because the terms of settlement agreements often require confirmation in an arbitral award or court judgment before they can be enforced against assets in another country. This potential further expense can put parties off using mediation to settle an international commercial dispute in the first place.
The Singapore Convention (or United Nations Convention on International Settlement Agreements Resulting from Mediation, as it is formally known) which was released for signature on 7 August 2019 has now been signed by 52 countries, and seeks to tackle these concerns by establishing a framework for the international enforcement of settlement agreements. If a settlement agreement of an international commercial dispute meets certain criteria, then its terms will be as enforceable internationally as though it had resulted from a court judgment or arbitral award.
So far, notable signatories include the USA, India and China. The UK is currently yet to sign up, most likely as a result of having been preoccupied with Brexit. The Convention is not in force yet and will only come into force when it is ratified (meaning brought into national law) by three states. Some think this could be as early as mid-2020. The Convention is likely to further encourage the use of mediation as a means to settle international commercial disputes.
We recommend the following steps to ensure parties are able to take advantage of the Convention to enforce international settlement agreements when it comes into force:
- As a matter of good practice, when drafting a settlement agreement, ensure that its provisions are drafted clearly to avoid the agreement being deemed unenforceable by a court on the grounds of it being not clear and comprehensive.
- Include in the agreement a clause expressly incorporating the Convention to ensure its applicability.
- To make sure it is clear that the settlement agreement arose as a result of the mediation (a requirement under the Convention), it is wise to include an express clause to this effect in your agreement. Consider appending the mediation agreement to your agreement to evidence this.
It remains to be seen whether the Singapore Convention will be a success, but judging from its potential to overcome the key sticking point surrounding the enforcement of settlement agreements internationally, the Convention is a welcome international framework to make mediation even more attractive to parties in dispute.