Overview of the Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention)

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Aisha Ado Abdullahi
Green Edge Attorneys, Abuja

As civilisation evolved, so were instruments, principles and regulations innovated by authorities to ensure effective resolution of disputes at both the domestic and international levels. These instruments, principles and regulations took the form of legislation, customs and policies that were recognised and enforced by the judicial mechanism of States.

The principal international institution, through which a good number of such innovations have been developed by the world community, is the United Nations (UN), an intergovernmental organisation responsible for maintaining international peace and security, developing friendly relations among nations, and achieving international cooperation. The UN serves as the main centre for harmonising the actions of the various nations of the world. It was established after the Second World War with the aim of preventing future wars, having witnessed how that war had threatened the very existence of human civilisation.

The UN Commission on International Trade Law (UNCITRAL) was established by the UN General Assembly by Resolution 2205 (XXI) of 17 December 1966, as a core legal body of the UN system in the field of international trade law. UNCITRAL’s mandate is to further the progressive harmonisation of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial law.

The Convention on International Settlement Agreements Resulting from Mediation (the ‘Singapore Convention’ or the ‘Convention’), adopted on 20 December 2018 and opened for signature on 7 August 2019, is one of the most recent efforts in promoting commercial law related instruments. A treaty or convention is one of the major sources of international law. It is a written agreement that States willingly sign and ratify, and which as such they are obliged to follow.

Mediation has been described in different ways – it is basically a process where a third party assists other parties to resolve a dispute. It has special features which give it its unique qualities. The process is confidential, usually not expensive, strictly party-driven, and voluntary. Even when parties are referred to mediation by a court of law, they determine the process and the outcome, and they must agree to the terms of settlement.

Mediation is increasingly gaining popularity especially in relation to international commercial transactions. This has naturally led to a rise in the number of institutions and programmes designed to enhance the practice of mediation as it develops. However, professional mediators and end-users who have enjoyed its benefits over time are pushing back against overregulating the process in order to maintain flexibility.

One important factor that has served as an obstacle to the growth of mediation, both in terms of the quality of the process and its popularity as a viable mechanism for resolution of dispute, is the issue of enforceability of the outcome. The aim of the Singapore Convention is to tackle this obstacle and pave a smoother path for the development of harmonious international economic relations and administration of international transactions by commercial parties. The Singapore Convention is almost a replica of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which is also known as the New York Convention.

The aim of both of these Conventions is for foreign awards and settlement agreements to be recognised and enforced in a State other than the State in which recognition and reinforcement is sought.

The Singapore Convention has been strategically designed to assist parties to a mediation and to enforce a settlement agreement in a different state. This does not apply to all kinds of mediation agreements. The conditions for applicability as provided in Article 1 are:

• the dispute must be commercial in nature;
• the settlement agreement must be written;
• the settlement agreement must have been a result of a mediation;
• the dispute must have arisen from an international commercial transaction; and
• at least two of the parties must have their place of business in different States, so that the State in which the parties to the settlement agreement have their places of business is different from the State where a substantial part of the obligations under the settlement agreement is performed or the State with which the subject matter of the settlement agreement is most closely connected.

The requirement for parties that wish to rely on the settlement agreement under the Singapore Convention, as provided in Article 4, is that a party shall apply to a competent authority of the party to the Convention where relief is sought with the following documents:

• settlement agreement signed by the parties; and
• evidence that the settlement agreement resulted from mediation, such as the mediator’s signature on the settlement agreement, or a document signed by the mediator indicating that a mediation was carried out, or an attestation by the institution that administered the mediation, or other evidence acceptable to the competent authority. 

Where the communication is via electronic means, then the requirement of signature will be replaced bya method that will be used to identify the parties or the mediator, and to indicate the parties’ or mediator’s intention in respect of the information contained in the electronic communication. The method used must either be as reliable and appropriate for the purpose for which the electronic communication was generated or communicated, in the light of all the circumstances, including any relevant agreement, or proven in fact to have fulfilled the functions of establishing that the settlement agreement resulted from mediation, by itself or together with further evidence.

If the settlement agreement is not in an official language of the party to the Singapore Convention where relief is sought, the competent authority may request a translation thereof into such language. In addition, the competent authority may require any necessary document in order to verify that the requirements of the Convention have been complied with. The Convention also provides that when considering the request for relief, the competent authority shall act expeditiously.

Article 5 of the Convention provides for the grounds upon which the application for enforcement of the settlement agreement may be refused:

1. The competent authority of the Party to the Convention where relief is sought under Article 4 may refuse to grant relief at the request of the party against whom the relief is sought, if that party furnishes to the competent authority proof that:

(a)  a party to the settlement agreement was under some incapacity;

(b)  the settlement agreement sought to be relied upon:

(i) is null and void, inoperative or incapable of being performed under the law to which the parties have validly subjected it or, failing any indication thereon, under the law deemed applicable by the competent authority of the Party to the Convention where relief is sought under Article 4;

(ii) is not binding, or is not final, according to its terms; or

(iii) has been subsequently modified;

(c) the obligations in the settlement agreement:

(i)  have been performed; or

(ii) are not clear or comprehensible;

(d) granting relief would be contrary to the terms of the settlement agreement;

(e) there was a serious breach by the mediator of standards applicable to the mediator or the mediation without which breach that party would not have entered into the settlement agreement; or

(f) there was a failure by the mediator to disclose to the parties circumstances that raise justifiable doubts as to the mediator’s impartiality or independence, and such failure to disclose had a material impact or undue influence on a party, which in absence of such failure, would not have entered into the settlement agreement.

2. The competent authority of a Party to the Convention where relief is sought under Article 4 may also refuse to grant relief if it finds that:

(a)  granting relief would be contrary to the public policy of that Party; or

(b)  the subject matter of the dispute is not capable of settlement by mediation under the law of that Party.

The Convention expressly lists the categories of agreements excluded from applicability. They are settlement agreements:

(a) concluded to resolve a dispute arising from transactions engaged in by one of the parties (a consumer) for personal, family or household purposes;

(b) relating to family, inheritance or employment law.

3. The Convention also does not apply to:

(a) settlement agreements that have been approved by a court or concluded in the course of proceedings before a court; and those that are enforceable as a judgment in the State of that court; and

(b) settlement agreements that have been recorded and are enforceable as an arbitral award.

The Singapore Convention aims to proffer a solution to the challenges encountered in enforcing international settlement agreements resulting from international commercial mediation, and boosting the growth and development of mediation as a preferred method of resolution of disputes. Its drafting and adoption were the result of hard work by the initiators, spanning years of dedication and commitment. However, just like everything man-made, we can only ascertain its effectiveness through usage. That is the only means by which its limitations and the room for improvement, where necessary, will be known.

There will be the need for a body of guidelines which would set the grounds for implementation upon its coming into force.

So far more than 50 countries have signed the Convention. Entry into force will be six months after the deposit of the third instrument of ratification, acceptance, approval or accession.

References

1. International Bar Association Mediation Committee Rules on Investor-State Mediation.
2. Singapore Convention, www.singaporeconvention.org.
3. New York Convention, www.newyorkconvention.org.
4. UNCITRAL, www.uncitral.un.org.