The passage of a Convention on the enforcement of mediation settlements for cross-border commercial disputes

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Andrea Maia[1]
FindResolution, Rio de Janeiro
andrea@findresolution.com.br

Paul Mason
Miami and Rio de Janeiro
paulericmason@gmail.com

Deborah Masucci
Masucci Dispute Management and Resolution Services, New York
dm@debmasucciadr.com


In June 2018, the United Nations Commission on International Trade Law (UNCITRAL) celebrated two events – the 60th Anniversary of the New York Convention and the approval of final drafts of the Convention on the Enforcement of International Settlement Agreements with corresponding Model Law.[2]

The adoption of the new Convention – to be known as the ‘Singapore Mediation Convention’ – acknowledges mediation as an effective process for resolving disputes and will contribute to its steady growth globally. The combination of both Conventions (the New York and Singapore Conventions) solidifies arbitration and mediation as viable alternatives to domestic courts – a welcome advance for global companies.

Background and rationale

The United States submitted a proposal to the UNCITRAL Working Group II (WGII) in 2014. The goal of the proposal was to develop a multilateral Convention on the enforcement of international commercial settlement agreements.[3] The proposal would encourage the acceptance of mediation as a credible process for resolving international commercial disputes.

Although there was initial scepticism about the need for a Convention, this was overcome by vigorous debate that included diverse viewpoints. Deliberations over eight WGII sessions included participation by 85 member states and 35 non-governmental organisations, including the International Mediation Institute (IMI).

Three major benefits for proposing the Singapore Convention were cited by the authors in a previous article on the subject:

  • Curative – rendering violations of mediated settlement accords much more difficult. Mediated settlement agreements under the Singapore Convention will have cross-border effect similar to those enjoyed by arbitral awards under the New York Convention. This means that a violator’s assets could be pursued in any country ratifying the Singapore Convention, with some very limited exceptions.
  • Preventive – avoiding or minimising non-fulfillment of mediated accords in the future.
  • Encouraging – by making mediated settlements as easy to enforce as arbitral awards, the Singapore Convention instills confidence in and international prestige for the use of cross-border mediation by businesses, which leads to good commercial relations between companies doing business internationally. The Convention also nullifies arguments for refusing to use mediation because of the lack of an enforcement mechanism.

During the deliberations, delegates and others shared ideas and viewpoints. Initially, there was a lack of understanding about the differences between processes. There was confusion about the operation of arbitration versus conciliation versus mediation. Much of the confusion resulted from regional and cultural differences in how conciliation and mediation operated. Also highlighted was a tendency to encumber the provisions with rules that worked well in arbitration but would diminish the value of mediation.

In the course of the deliberations, which took place across 2016–2017, IMI convened the Global Pound Conference series.[4] Participants in the series represented major stakeholders in dispute management and resolution, including members of the judiciary, in-house and outside counsel, business leaders, academics and others. One of the many questions asked at the events was why disputing parties do not try mediation to resolve their cross-border disputes. Lack of a universal mechanism to enforce mediated settlements was cited as the second-highest ranked reason. On another question, over 80 per cent of respondents answered they would be more likely to use mediation if there was a uniform global mechanism to enforce mediation settlements. 

Delegates and observers listened to each other and attended education sessions so they could understand the impact of the provisions they were drafting. The result became an integrated document.

Elements of the Singapore Convention[5]

The purpose and scope of the Convention is to enforce mediated settlements of cross-border commercial disputes. Workplace or employment disputes, as well as consumer disputes, are not included. The settlement must be in ‘writing’. The Convention excludes settlement agreements that have been approved by a court or were concluded in the course of a court proceeding, and those that are enforceable as an arbitral award. The rationale for the exclusions is that there are other viable enforcement mechanisms for those instruments whether through the New York Convention or domestic courts.

Article 4 of the Convention includes a checklist of what a party must provide to enforce an international mediation settlement agreement. The settlement agreement should be signed by the parties[6] and include evidence that the document was the result of a mediation.[7] Some mediation experts cringed at the type of evidence that must be provided. There was general acceptance that one type of evidence is an attestation by an administering body; another type of evidence is the signature of the mediator. In some countries, courts require a domestic mediation settlement to be signed by the mediator, but in other countries, mediators scrupulously avoid signing the mediation settlement. As a result, the Convention gives latitude to the type of evidence so that regional practices and norms can be accommodated.

Another provision that was influenced by regional cultural and domestic state legal differences is Article 5, which enumerates grounds when the court or other competent authority might refuse to grant enforcement. The grounds include incapacity of a party and situations where there is a serious breach of mediation standards, such as a failure of a mediator to disclose circumstances that might impact the mediator’s impartiality or independence. Some readers might conclude that this is a provision that is influenced by arbitration, and they might be correct. The provision might become a future quagmire, but depends on self-enforcement by the mediators and the parties.

Articles 6 and 7 borrow concepts from the New York Convention. Article 6 allows a competent authority in a member state to defer decisions where an application is pending at another competent authority – this avoids inconsistent and duplicative efforts at enforcement. Article 7 allows member states to expand the scope of settlement agreements that are covered by the Singapore Convention.

Preparing for the Convention’s adoption

The next step is for the UN General Assembly to adopt the Singapore Convention and Model Law. At least three member states must ratify the Singapore Convention for it to come into force, with a signing ceremony expected in Singapore in late 2019. In the meantime, there will be many education programmes to encourage member states to ratify the Convention or Model Law. During that time, the use of mediation will continue to grow and be integrated into the lifecycle of dispute management and resolution.

Notes


[1] The authors of this article represent the International Mediation Institute (IMI), a not-for-profit organisation and foundation registered in The Hague, with a mission to promote high competency standards for the practice of mediation globally. It does not provide or administer mediation services. The IMI is registered with the UN as an NGO advising UN delegates and others about the practice of mediation. See www.imimediation.org

[2] There are no substantive differences between the Singapore Convention and the Model Law. The purpose of adopting a companion Model Law is to give member states the opportunity to adopt whichever form comports with their laws. 

[3] UNCITRAL, 51st Sess. UN Doc A.CN.9/942, 25 June 2018.

[4] Global Pound Conference Series 2016-17, Shaping the Future of Dispute Resolution and Improving Access to Justice, Cumulated Data Results, available at www.globalpound.org/wp-content/uploads/2017/11/2017-09-18-Final-GPC-Series-Results-Cumulated-Votes-from-the-GPC-App-Mar.-2016-Sep.-2017.pdf

[5] At the time of writing, the final drafts of the Singapore Convention and the Model Law were not published. The Agenda for the 51st Session of WGII can be found at: https://documents-dds-ny.un.org/doc/UNDOC/GEN/V18/028/74/PDF/V1802874.pdf?OpenElement, embodied in the Agenda are links to the draft Convention and Model Law. They can be found at: A/CN.9/942 Draft convention on enforcement of international commercial settlement agreements resulting from mediation A/CN.9/943 Draft revised UNCITRAL Model Law on International Commercial Conciliation.

[6] UN Doc A/CN.9/942 note1, at Art. 4.

[7] UN Doc A/CN.9/942 note1, at Art. 4.

 

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