THE Singapore Convention on Mediation (Convention) entered into force on September 12, marking a significant development in international commercial dispute resolution.
Businesses in India and around the world will now have greater certainty in resolving cross-border disputes through mediation, as the Convention provides a more effective means for mediated outcomes to be enforced.
The Convention, also known as the United Nations (UN) Convention on International Settlement Agreements Resulting from Mediation, is the first UN treaty to be named after Singapore.
As of September 2020, the Convention has 53 signatories, including India, China, and the United States. Five countries have ratified the Convention to date – Singapore, Fiji, Qatar, Saudi Arabia and Belarus.
With the Convention in force, businesses seeking enforcement of a mediated settlement agreement across borders can do so by applying directly to the courts of countries that have signed and ratified the treaty, instead of having to enforce the settlement agreement as a contract in accordance with each country’s domestic process.
The harmonised and simplified enforcement framework under the Convention translates to savings in time and legal costs, which is especially important for businesses in times of uncertainty, such as during the current COVID-19 pandemic.
With the Convention, businesses can rely on mediation as a dispute resolution option for their cross-border transactions, with greater certainty and assurance that their mediated outcomes are enforceable. The conciliatory nature of mediation also helps to preserve commercial relationships despite the disputes.
As adoption of the Convention becomes more prevalent globally, it will also strengthen Singapore’s position as an international dispute resolution centre and better serve the needs of international businesses that use Singapore as a base for their international commercial transactions.
Over the years, Singapore has set up various institutions, including the Singapore International Arbitration Centre, Singapore International Mediation Centre, and Singapore International Commercial Court to provide a full suite of dispute resolution services for international commercial parties to resolve their disputes in Singapore.
Singapore had worked with the United Nations Commission on International Trade Law (UNCITRAL) and other UN member states and non-governmental organisations to contribute to the development of this important instrument.
As many as 46 countries signed the Convention.
Significantly, the number of first-day signatories was among the highest for any UN trade convention, reflecting international recognition and support of the Convention’s benefits.
Minister for Home Affairs and Law K Shanmugam says, “The Convention’s entry into force is a significant milestone, as it further strengthens the international dispute resolution enforcement framework. This benefits businesses by providing greater certainty in resolving cross-border commercial disputes, ultimately facilitating international trade and commerce.”
Anna Joubin-Bret, Secretary of the United Nations Commission on International Trade Law, says, “With the Convention successfully entered into force, we look forward to it bringing certainty and stability to the international framework on mediation, and contributing to the Sustainable Development Goals, including the goal of promoting peaceful and inclusive societies for sustainable development.”
Benefits of the Convention
Mediation is rising in popularity as a means to resolve cross-border commercial disputes. Mediation results in significant benefits, such as reducing the instances where a dispute leads to termination of commercial relationships, facilitating the administration of international transactions by commercial parties and producing savings in the administration of justice by States. Mediation complements other modes of dispute resolution as it can be used in conjunction with litigation or arbitration.
However, its growth has been hindered by a long-standing obstacle – the difficulty that a party faces in ensuring that the other party complies with their mediated settlement agreement. This is because a mediated settlement agreement, unlike a court judgment or an arbitral award, is only binding contractually and, therefore, not directly enforceable in the courts. The lack of an efficient and harmonised framework for cross-border enforcement of settlement agreements resulting from mediation was often cited as a challenge to the use of mediation.
The Convention therefore addresses the lack of an effective means to enforce cross-border commercial mediated settlement agreements. Businesses can have greater assurance that mediation can be relied on to settle cross-border commercial disputes, because mediated settlement agreements can be enforced more readily by the Courts of contracting parties to the Convention and may also be invoked by a party as a defence against a claim.
This will facilitate the growth of international commerce and promote the use of mediation around the world.
Key Features of the Convention
The Convention will apply to international commercial settlement agreements resulting from mediation.
It will not apply to international settlement agreements that are concluded in the course of judicial or arbitral proceedings and which are enforceable as a court judgment or arbitral award.
It will not apply to settlement agreements concluded for personal, family or household purposes by one of the parties (a consumer), as well as settlement agreements relating to family, inheritance or employment law.
The courts of a contracting party will be expected to handle applications either to enforce an international settlement agreement which falls within the scope of the Convention or to allow a party to invoke the settlement agreement in order to prove that the matter has already been resolved, in accordance with its rules of procedure, and under the conditions laid down in the Convention.
List of countries that signed and ratified the Singapore Convention on Mediation
Note: Countries that have ratified the Singapore Convention on Mediation are denoted with an asterisk (*)