This article compares the Singapore Mediation Convention to one of the most successful United Nations treaties to date, the New York Convention, and provides some tips to parties to assist them in determining which Convention they should use to enforce their mediated settlement agreements.
The United Nations Convention on International Settlement Agreements Resulting from Mediation, better known as the Singapore Mediation Convention (SMC), came into force on 12 September 2020.
The SMC provides a framework to directly enforce the terms of a mediated settlement in Contracting States without the need to commence fresh proceedings. It applies to settlements that (a) have resulted from mediation, (b) have been concluded in writing, (c) concern a commercial dispute, and (d) are international (see Article 1 of the SMC). Prior to the SMC, a party who wanted to enforce a mediated settlement agreement would have had to do so either through litigation or arbitration – both of which entail substantial costs and time.
The SMC has been lauded as a ‘game-changer’ and described by Singapore’s Prime Minister Lee Hsien Loong as the ‘missing third piece’ in the international dispute resolution enforcement framework (apart from litigation and arbitration). The SMC currently has 53 signatories including the United States, China and India, and has been ratified by six countries including Ecuador, Fiji, Qatar and of course, Singapore.
Unsurprisingly, given the similarities between the SMC and the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, more commonly known as the 1958 New York Convention (NYC), which provides a framework for cross-border enforcement of arbitral awards, the SMC has been touted as the mediation-equivalent of the NYC. Pertinently, as the SMC does not apply to mediated settlement agreements that are enforceable as arbitral awards, parties who choose to mediate their cross-border disputes will still have a choice of enforcement under the NYC or the SMC (see SMC Article 1(3)(b)). This begs the following questions: (a) what are some of the significant differences between the SMC and NYC, and (b) what are the implications of such differences? This blog post seeks to explore these questions and provide some observations and practical tips to assist parties to determine which Convention to utilise to enforce their mediated settlement agreements.
Significant differences between the SMC and NYC
First, the success of any international convention depends on its uptake. In this regard, the coverage of the NYC is currently considerably more extensive than the SMC. This is to be expected given that it is still early days for the SMC. While it is promising that major economies such as the United States, China and India have already signed the SMC, some countries appear to be adopting a wait and see approach to determine if the SMC gains sufficient traction. Notably, key players such as the European Union, the United Kingdom and Australia have yet to sign the SMC. In the meantime, businesses who wish to utilise mediation as a dispute resolution mechanism may still rely on hybrid provisions such as med-arb and arb-med-arb, which allow settlement agreements reached through mediation to be enforced by way of an arbitral award.
Second, unlike the NYC, the SMC does not operate on the basis of reciprocity. One should therefore not assume that the SMC will not apply to a mediated settlement agreement conducted in a state which is not a signatory to the SMC because a mediated settlement agreement can be recognised and enforced in any contracting state to the SMC.
Third, while there are similar grounds of refusal to grant relief under the SMC (Article 5) to those under the NYC (Article V), there are different grounds as well. In particular, there are two grounds for refusal of enforcement under Article 5 of the SMC which have no NYC-equivalent that are worth highlighting:
- Article 5(1)(e) which provides that relief may not be granted if 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’.
- Article 5(1)(f) which refers to a ‘failure by the mediator to parties to disclose to parties circumstances that raise justifiable doubts as to the mediator’s impartiality of independence’.
There are uncertainties in the new grounds of refusal. For instance, what are the ‘standards applicable to the mediator or the mediation’? Whilst in international arbitration there are well-established guidelines for arbitrators, such as the International Bar Association Guidelines on Conflicts of Interest in International Arbitration, there are no clear guidelines for mediators which are used equally extensively. As regards Article 5(1)(e) and (f), there is also no definition of what constitutes a ‘serious breach’ or ‘justifiable doubts’ respectively. That the abovementioned grounds have no NYC-equivalent is significant because one cannot look to the jurisprudence of the NYC for guidance or as a reference point in relation to the abovementioned uncertainties. Rather, one would have to monitor developments in domestic law, guidelines set down by international bodies and/or interpretations found in case-law, which would hopefully provide added clarity on these areas in time.
Fourth, in contrast to the NYC which regulates both arbitration agreements and arbitral awards, the SMC does not regulate the enforcement of agreements to mediate. The implication is that a party who wishes to enforce an agreement to mediate will have no recourse under the SMC, and will have to look to domestic legislation of the enforcing state instead (for example section 8 of the Singapore Mediation Act 2017, which allows for the enforcement of agreements to mediate).
Fifth, a significant feature of the SMC is a reservation provision under Article 8(b) which allows Contracting States to declare that they will apply the SMC only to the extent that the parties to the settlement agreement have agreed to the application of the SMC. Commentators have stated that this reservation clause has the potential to limit the overall extent to which the SMC will apply globally. Given that the place of enforcement may not always be clear at the time a settlement agreement is entered into, it would be prudent for users to expressly stipulate the application of the SMC in their agreement in order to take advantage of the SMC for enforcement purposes.
With the increase in transnational disputes arising from the growth in international trade, users can only benefit from more options to resolve their disputes. After all, there is a wide spectrum of transnational disputes and some may be better suited for mediation whereas others arbitration (or even litigation).
The SMC is to be welcomed for elevating mediated settlement agreements to a sui generis status comparable to arbitral awards. In so doing, the SMC has provided a crucial boost to the legitimacy of mediation as a dispute resolution mechanism. Businesses and practitioners should monitor developments relating to the SMC as highlighted above closely. It is hoped that the SMC will be widely adopted and be able to rival the NYC in relation to the extent of application in time to come.
Kevin Tan is a partner in Rajah & Tann Singapore LLP. He practices international arbitration and commercial litigation. He acts as counsel in mediations and is an accredited mediator with the Singapore Mediation Centre.