By: Michael D. Lee, LL.M., Esq., Vice President, ICDR-AAA Case Management Center, Singapore
Smrithi Ramesh, Director, ICDR-AAA Case Management Center, Singapore
The United Nations Convention on International Settlement Agreements Resulting from Mediation (“Singapore Convention”) opened for signatures on 7th August, 2019. Forty-six states including the world’s two largest economies--the United States and China--and three of the four largest economies in Asia--China, India, and South Korea--met in Singapore and inked a new international treaty on mediation that will enable the enforcement of mediated settlement agreements amongst the signatory countries.1
The Singapore Convention largely is touted to be for mediation what the New York Convention is for arbitration. This convention first was proposed to fill a perceived lacuna in the alternative dispute resolution (ADR) realm, where mediations often were relegated to second choice owing to a lack of enforcement mechanisms or credibility. The main purpose of this Convention was to “become an essential instrument in the facilitation of international trade and in the promotion of mediation as an alternative and effective method of resolving trade disputes.”2
To understand if the Singapore convention can be the harbinger of change, it is important for us to take a step back to understand the history and the proposed trajectory of the Convention.
Mediation as a mode of dispute resolution has gained popularity in many spheres, including family and domestic matters. However, acceptance was not as high in international business transactions due to the lack of enforcement mechanisms or the perception that there was not enough legitimacy to mediated settlements. This has led to ingenious and circuitous methods, such as recording a mediated settlement as a “consent award” in arbitration proceedings to make the award enforceable under the New York Convention.
However, the existing options, while entirely feasible and functional, have their share of pitfalls, often resulting in huge time delays and substantial costs to parties. The Singapore Convention addressed this urgent need by seeking to provide a direct enforcement process of cross-border settlement agreements resulting from a mediation between parties.
Does the text of the convention fulfill the purpose it set out to achieve?
The Convention has been structured and debated sufficiently and in its present form is applicable to international settlement agreements resulting from mediation concluded in writing by parties to resolve a commercial dispute (Article 1).3
Well-crafted exclusions specifically narrow the scope to make the Convention conducive for international commercial matters, particularly settlement agreements concluded by a consumer for personal, family, or household purposes or those relating to family, inheritance, or employment law. Settlement agreements enforceable as judgments or arbitral awards also are excluded from the scope of the Convention to avoid possible overlap with existing and future conventions.
Another noteworthy provision is Article 5, which provides for the grounds under which a Court can refuse to grant relief; for example, the subject of the dispute cannot be settled by mediation. This provision is elaborately drafted to anticipate potential issues and to minimize grounds for refusing enforcement.
Article 8 of the Convention provides for two permitted reservations; i.e., a caveat to a country’s acceptance of the Convention. Arbitral institutions such as the AAA-ICDR, countries, companies, and parties alike will keep a keen eye on this aspect of the Convention. The two permitted reservations are (a) a State may declare and exclude itself or its agencies from the application of the Convention and (b) the Convention would apply only to the extent that parties have specifically agreed to apply it.
The number of countries that choose to declare these reservations also will directly affect the implementation of the convention. It is anticipated that the Singapore Convention will enter into force six months after it is ratified by three states. A reasonable estimate would be for this to occur by early 2020. It also will be prudent to observe the reservations made during the ratification process. For example, countries such as the United States and India require a lengthy, convoluted legislative ratification process. Another important milestone is how and when European Union countries adopt this convention.
Arbitral institutions and alternate dispute resolution service-providers will watch developments attentively in the coming months. With a more structured option to parties, multi-tiered methods and feeble attempts to promote mediation may be replaced with stronger ones. The AAA-ICDR long has been a proponent of mediation, and parties to AAA- or ICDR-administered mediations historically have enjoyed a high rate of settlement. These results likely will increase with the use of international stand-alone mediation clauses.
In conclusion, the drafting of the convention is well thought out and seems to be poised for long-term impact. The convention remains in the stage of infancy, and change, when it happens, will be slow, gradual and inclusive. There is no fear of any overnight replacement of arbitration as the most preferred form of dispute resolution. To the contrary, the mediation convention is designed to complement the New York Convention and will continue to be complementary to the arbitral process as well.
 Ministry of Law, Singapore (2019). 46 States signed new international treaty on mediation. [online] Available at: https://www.singaporeconvention.org/news-7aug-signing-ceremony.html [Accessed 4 Nov. 2019].
 Singaporeconvention.org. (2019). About the Convention | Singapore Convention on Mediation. [online] Available at: https://www.singaporeconvention.org/about-convention.html [Accessed 4 Nov. 2019].
 United Nations Convention on International Settlement Agreements Resulting from Mediation (New York, 2018) (the "Singapore Convention on Mediation"), available on https://uncitral.un.org/en/texts/mediation/conventions/international_settlement_agreements [Accessed on 4 Nov 2019]
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