On 7 August 2019, in Singapore, I had the pleasure of watching the signing ceremony of the UNCITRAL Convention on the Settlement of Disputes Resulting from Mediation, otherwise to be known as “the Singapore Convention”. The Convention, approved by UNCITRAL in June 2018, has been signed by 46 countries, the highest number of “first day” signatories ever for a UNCITRAL Convention. They are:
Afghanistan, Belarus, Belize, Brunei, Chile, China, Colombia, Republic of the Congo, Democratic Republic of the Congo, Kingdom of Eswatini, Fiji, Georgia, Grenada, Haiti, Honduras, India, Iran, Israel, Jamaica, Jordan, Kazakhstan, Laos, Malaysia, Maldives, Mauritius, Montenegro, Nigeria, North Macedonia, Palau, Paraguay, Philippines, Qatar, South Korea, Samoa, Saudi Arabia, Serbia, Sierra Leone, Singapore, Sri Lanka, Timor Leste, Turkey, Uganda, Ukraine, the US, Uruguay and Venezuela.
However, notably it has not been signed by the UK and most of Western Europe.
Alongside the Convention sits a new Model Law on International Commercial Mediation and International Settlement Agreements, which came about from Mediation 2018. The new model law amends the Model Law on International Commercial Conciliation 2002. Its intention is to offer countries a law to reform and modernise, or even enact for the first time, laws governing mediation procedure. The use of the term “conciliation”, which for decades has been used interchangeably with “mediation”, has now been dropped by UNCITRAL. This simply reflects the practice in the commercial world of dispute resolution. Importantly, the model law now also includes a new section on international settlement agreements and their enforcement. It is these new provisions which are at the vanguard of the new model law, and which practitioners and legislators alike hope will lead the way in increasing the use of mediation to resolve international commercial disputes in preference to litigation and arbitration.
The Convention and the new model law’s stated aim is of course to encourage the use of mediation as a means of alternative, and largely amicable, commercial dispute resolution. It also aspires to provide a means by which settlements reached as a result of the mediation process may be enforced in Convention states, in much the same way as the New York Convention aids the recognition and enforcement of foreign arbitration awards.
The New York Convention, arguably one of the most successful trade conventions in history, now boasts 160 contracting states. However, it was signed on 10 June 1958, with just 24 signatories, and came into force on 7 June 1959, following ratification by three states.
So the Singapore Convention begins life on a broader platform of support. I suspect that there will be a flurry of further countries moving to sign up to its provisions in the near future. Of those that have already signed, there will likely be a race to proceed swiftly to ratify it, not least by those states with a need to provide a viable alternative means to resolve international commercial disputes, while at the same time trying to reduce the workload (and cost) of their domestic, overburdened, publicly funded court systems.
So, what is it about?
Article 1 of the Convention provides that it applies to:
“… an agreement resulting from mediation and concluded in writing by parties to resolve a commercial dispute (‘settlement agreement’) which, at the time of its conclusion is international…”
“International” is also defined. The Convention does not apply to settlement agreements concluded to resolve personal, family or household disputes, or those relating to family, inheritance or family law matters (Article 2). The Convention is also inapplicable to settlement agreements which have been approved by a court or concluded in the course of proceedings before a court, and which are enforceable as a judgment in the state of that court. It also does not apply to settlement agreements which have been recorded and which are enforceable as arbitration awards.
There are two general principles underpinning the Singapore Convention. These are that:
- The contracting states should enforce international settlement agreements resulting from mediation in accordance with their rules of procedure and according to the conditions set out in the Convention.
- If a dispute arises which a party contends has already been resolved by a settlement agreement, a Convention party shall allow the party to invoke the settlement agreement in order to prove that the matter has already been resolved (Article 3).
Article 4 of the treaty sets out the conditions which must be met to permit reliance on the settlement agreement. As with any contract or settlement agreement, there is a need for the party seeking to rely on it to prove its existence and its terms. The Convention sets out some non-exhaustive examples of the ways in which this can be done.
Article 5 of the Convention provides a list of grounds upon which a Convention party may refuse to enforce the settlement agreement. While particular to mediation settlement agreements, they broadly follow the principles upon which enforcement of a foreign arbitration award might be refused under the New York Convention. Grounds for refusal to grant relief include what may loosely be called seriously irregular conduct on the part of the mediator and, as a separate ground on which to refuse enforcement, a material failure by the mediator to disclose facts or circumstances leading to justifiable doubts about the mediator’s impartiality or independence. Thus, actual or apparent bias on the part of the mediator. However, and importantly, the failure to disclose must also have had a “material impact or undue influence” on a party, without which it would not have entered into the settlement agreement.
Article 8 of the Singapore Convention sets out a list of reservations. These include the right of a Convention party to declare that it shall apply only to the extent that parties to settlement agreements have agreed to the application of the Convention.
So, given the limitations and safeguards written into the Convention, why is there resistance to it amongst professional mediators, especially in the US and Europe? The Singapore Convention already has its detractors.
The original 2002 Model Law on Conciliation was used as the basis of mediation legislation enacted in 33 states covering 45 jurisdictions. However, its scope was limited to providing a framework for mediation agreements and the conduct of a mediation. While stating that the settlement agreement was binding and enforceable, the means of enforcement and whether it should be mandatory was left open.
Of concern to some mediators now are the evidentiary requirements for proving that the settlement agreement has resulted from a mediation, which are set out in Article 4, 1(b). Two ways in which this can be proved, are:
- By the mediator also signing the settlement agreement.
- By the mediator signing a document indicating that the mediation was carried out.
The settlement agreement may also be proved by an attestation by the institution (if any) that administered the mediation.
Mediators traditionally do not sign settlement agreements, nor do they make themselves available to give evidence about any aspect of the mediation. Agreements to mediate normally include terms which stipulate that the mediator may not be called in any proceedings to give evidence, and that the mediator will preserve the confidentiality of the process and all information included in the mediation. Clearly, the Article 4 requirements for the mediator to assist to prove the settlement agreement will conflict with these duties. However, the answer is not to ditch the Convention, but for the parties to the mediation to deal with any actual or potential conflicts when the agreement to mediate is made. Article 4 makes clear that the means by which it suggests a settlement agreement may be proved are not mandatory or exhaustive, and a party may produce “any other evidence acceptable to the competent authority” to prove its existence.
The next “big issue” for those who do not support the Convention is the inclusion in Article 5 of two grounds for refusal to grant relief. As noted above, these are based on the conduct of the mediator.
However, in the event that a mediation agreement was procured by fraud, or undue influence, it would be susceptible to attack in any event before most competent courts. In reality, there are questions as to whether the mediator is any more at risk by reason of Article 5, 1(e):
“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…”
Similarly, by reason of, Article 5, 1(f):
“… 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 without which failure that party would not have entered into the settlement agreement.”
In my view, that answer is “no”. In both cases, without any reference to the terms of Article 5, were such facts to be proved in a dispute about the validity of a mediated settlement agreement, the mediation agreement would be set aside by a court. Arguably, given the evidentiary requirements to prove that the settlement agreement would not have been made but for the conduct complained of, the mediator is better protected from unwarranted attacks under the terms of the Convention.
Moreover, the reality of the situation is that it will always remain the case that a party to an alternative dispute resolution (ADR) process, who is independently advised and signs a settlement agreement, will have great difficulty persuading any competent court that it should be set aside and that it did not genuinely reflect its intention or the terms by which it agreed to settle the dispute. UNCITRAL’s belt and braces provisions are really not grounds to avoid the Convention. Ultimately, there is the backstop in Article 8, so that if parties do not wish to be bound by the Convention, it is open to the contracting state to provide them with a licence to agree that its terms should not apply. So, where there is a desire to keep mediation wholly consensual, without state backing for enforcement purposes, there is scope for states and parties to take that position, whilst making it possible for those engaged in international trade, who feel that the Convention is of benefit to them in their commercial dealings, to take advantage of its terms.
The world of international trade has been saying for many years that the problem with mediation and settlement agreements is the absence of an effective system of recognition and enforcement. Well, here it is and congratulations to UNCITRAL for finally bringing it all together.