The Singapore Convention Has Now Entered Into Force

Purpose

One of the major roadblocks for parties contemplating mediation of cross-border commercial disputes has been the uncertainty, cost and/or delay in enforcing a breach of a term of mediated settlement agreement. This has often resulted in parties to a commercial cross-border dispute resorting to court/curial focused litigation or indeed foreign arbitral proceedings which are enforceable under the New York Convention. The Singapore Convention seeks to bring the enforceability of mediated cross-border commercial disputes more into line with the enforcement of foreign arbitral awards under the New York Convention, although there do appear to be some differences which are highlighted in this note.

Background

The Singapore Convention on Mediation (the “Singapore Convention”) seeks to establish a uniform and efficient framework for international settlement agreements resulting from mediation. It applies to international settlement agreements resulting from mediation, concluded by parties to resolve a commercial dispute.

The Singapore Convention seeks to facilitate international trade and commerce by enabling disputing parties to more readily enforce and invoke settlement agreements across borders. It envisages businesses will benefit from mediation as an additional dispute resolution option to litigation and arbitration in settling cross-border disputes.

In December 2018, the United Nations General Assembly adopted, by consensus, the United Nations Convention on International Settlement Agreements Resulting from Mediation, recommended that the Convention be known as the “Singapore Convention on Mediation”, and authorised the signing ceremony of the Convention to be held in Singapore on 7 August 2019.

Forty-six countries, 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, signed the Convention on the day it opened for signature, while another 24 countries attended the signing ceremony to show their support for the Convention. Presently, 53 countries have signed the Convention.

On 25 February 2020, Singapore and Fiji became the first two countries to deposit their respective instruments of ratification of the Convention at the United Nations Headquarters in New York.

With the deposit on 12 March 2020 of the third instrument of ratification by Qatar, the Convention will enter into force on 12 September 2020.

What is the Singapore Convention on Mediation

A uniform and efficient framework for international settlement agreements resulting from mediation.

The Singapore Convention applies to international settlement agreements resulting from mediation, concluded by parties to resolve a commercial dispute. It provides an efficient and harmonised framework for the enforcement of international settlement agreements resulting from mediation and for allowing parties to invoke such agreements.

The Singapore Convention has been designed 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. It seeks to ensure that a settlement reached by parties becomes binding and enforceable in accordance with a simplified and streamlined procedure.

The Convention’s primary goals are to:

• facilitate international trade; and

• promote the use of mediation for the resolution of cross-border commercial disputes.

The Critical Articles of the Convention

Article1 Scope of Application

The Convention applies to international commercial settlement agreements resulting from mediation and concluded in writing, which, at the time of its conclusion is international in that:

1. At least two parties to the settlement agreement have their place in different States or
2. The State in which the parties to the settlement agreement have their places of business is different from either;
   1. The State in which a substantial part of the obligations under the settlement agreement is performed or
   2. The State with which the subject matter of the settlement agreement is most closely associated.

The Convention does not apply to settlement agreements:

1. Concluded to resolve a dispute arising from transactions engaged in by one of the parties (a consumer) for personal, family or household purposes;
2. Relating to family, inheritance or employment law;
3. That have been approved by a court or concluded in the course of proceedings before a court;
4. That are enforceable as a judgment in the State of that court; or
5. That have been recorded and are enforceable as an arbitral award.

Article 4 Requirements for reliance on settlement agreements

A party seeking to rely upon a settlement agreement shall supply to the competent authority of the Party to the Convention the settlement agreement signed by the parties together with evidence that the settlement agreement resulted from mediation (as defined in Article 2).

The competent authority may require any necessary document in order to verify the requirements of the Convention have been complied with.

When considering the request for relief, the competent authority shall act expeditiously.

The courts of a Party to the convention are expected to handle applications:

• To enforce a settlement agreement in accordance with its rules of procedure and under the conditions laid down in the Convention.
• To allow a party to invoke the settlement agreement in accordance with its rules of procedure and under the conditions laid down in the Convention, in order to prove that the matter was already resolved by the settlement agreement.

Article 5 Grounds for refusing relief

The courts of a Party to the Convention may refuse to grant relief on the grounds laid down in the Convention, including:

• If a party to the settlement agreement was under some incapacity;
• If the settlement agreement is not binding, null and void, inoperative or incapable of being performed under the law to which it is subjected;
• If there was a serious breach by the conciliator of standards applicable to the conciliator, without which breach that party would not have entered into the settlement agreement;
• If granting relief would be contrary to the public policy of the contracting party.

Broadly, these exceptions reflect provisions that would equally apply to the enforcement of domestic and foreign arbitral awards.

Article 7 Other Laws or Treaties

The Convention shall not deprive any interested party of any right it may have to avail itself of a settlement agreement in the manner and to the extent allowed by the law or the treaties of the Party to the Convention where such settlement agreement is sought to be relied upon.

Article 8 Reservations

A Party to the Convention may declare that it shall not apply the Convention to settlement agreements to which it or its government agencies are a party.

As at the date of this paper, Saudi Arabia, which has ratified the Convention, has made such a reservation. Iran and Belarus have foreshadowed they will make such a reservation when they ratify the Convention.

Article 12 Participation by regional economic integration organisations

A regional economic integration organisation that is constituted by sovereign States and has competence over certain matters governed by this Convention may similarly sign, ratify, accept, approve or accede to this Convention. The regional economic integration organisation shall in that case have the rights and obligations of a Party to the Convention, to the extent that that organisation has competence over matters governed by this Convention.

For example, it is understood the EU is looking at whether it ratifies the Convention, as distinct from its member States.

Article 13 Non-unified legal systems

If a Party to the Convention has two or more territorial units in which different systems of law are applicable in relation to the matters dealt with in this Convention, it may, at the time of signature, ratification, acceptance, approval or accession, declare that this Convention is to extend to all its territorial units or only to one or more of them, and may amend its declaration by submitting another declaration at any time.

Article 14 Entry into force

The Convention shall enter into force six months after deposit of the third instrument of ratification, acceptance, approval or accession. As mentioned, this threshold has now been achieved such that the Convention came into force on 12 September 2020.

When a State ratifies, accepts, approves or accedes to this Convention after the deposit of the third instrument of ratification, acceptance, approval or accession, this Convention shall enter into force in respect of that State six months after the date of the deposit of its instrument of ratification, acceptance, approval or accession.

Article 16 Denunciations

A Party to the Convention may denounce this Convention by a formal notification in writing addressed to the depositary.

The denunciation shall take effect 12 months after the notification is received by the depositary.

Who has/has not signed/ratified the Singapore Convention?

As at the date of this publication, the current list of signatures and ratifications is here.

Forty-six countries, 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, signed the Convention on the day it opened for signature, while another 24 countries attended the signing ceremony to show their support for the Convention. Presently, 53 countries have signed the Convention.

Interestingly, Australia, Canada, the UK and most major European nations have yet to commit to signing the Convention. As mentioned earlier, the EU is apparently considering signing, which might explain why a number of the European nations have not yet signed.

Presently, only Belarus, Ecuador, Fiji, Qatar, Saudi Arabia and Singapore have ratified the Convention.

Why has Australia not yet signed the Singapore Convention?

It is an interesting question.

There has been some controversy around the requirements in Article 4 which requires evidence that the settlement agreement resulted from mediation, such as;

• The mediator’s signature on the settlement agreement;
• A document signed by the mediator indicating that the mediation was carried out;
• An attestation by the institution that administered the mediation; or
• In the absence of the foregoing, any other evidence acceptable to the competent authority.

The controversies include an unwillingness on the part of a mediator to sign the settlement agreement or indeed disclose that a mediation was carried out.

In my opinion, it ought be possible to navigate this evidentiary requirement, not least because of the ‘any other evidence’ provision above. One imagines such issues are best canvassed at the outset of a mediation with the mediator and the counterparties.

Can a party to a mediation in Australia take the benefit of the Singapore Convention if Australia has not signed and ratified the Convention?

In my opinion, yes.

Providing the mediation settlement agreement falls within the scope of the convention as specified in Article 1 (commercial dispute which at the time of its mediated conclusion is international), a party could look to utilise the Convention to enforce the settlement agreement in the competent authority of a State that has ratified the Convention. Whilst presently only a modest number of States have ratified the Convention, it is expected many States will ratify the Convention.

To take such steps does not require that Australia be a State that has signed and ratified the Convention.

Authored by:

Patrick Walsh, Partner

Patrick is a Nationally Accredited Mediator; he also completed the Harvard Negotiation Masterclass in 2017 and the Harvard Advanced Mediation: Mediating Complex Disputes course in 2019.