Legal Update: Singapore Convention on Mediation
The United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as the “Singapore Convention on Mediation” (the “Convention”) is intended to provide a framework for the enforcement of international settlement agreements resulting from mediation.
What is mediation?
Mediation is a process whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person or persons (the mediator) lacking the authority to impose a solution upon the parties to the dispute.
Why consider mediation?
The mediation process is more flexible, and in many instances, more cost and time efficient than other dispute resolution processes such as litigation and arbitration.
Further, as noted in the Preamble to the Convention, the use of mediation reduces instances where a dispute leads to the termination of a commercial relationship.
What agreements does the Convention apply to?
Agreement resulting from mediation and concluded in writing by parties to resolve a commercial dispute (the “settlement agreement”) which, at the time of its conclusion, is international.
What settlement agreements are excluded by the Convention?
- Agreements arising from transactions engaged in by one of the parties for personal, family or household purposes
- Agreements relating to family, inheritance or employment law
- Agreements that have been approved by a court or concluded in the course of proceedings before a court, and are enforceable as a judgment in the State of that court
- Agreements that have been recorded and are enforceable as an arbitral award
What are the requirements for enforcement?
- Settlement agreement signed by the parties; and
- Evidence that the settlement agreement resulted from mediation
What grounds can the competent authority of the Party to the Convention rely on to refuse to grant relief?
- Party to the settlement agreement was under some incapacity
- Settlement agreement is null and void, inoperative or incapable of being performed under the law to which the parties have validly subjected it
- Settlement agreement is not binding, or is not final, according to its terms
- Settlement agreement has been subsequently modified
- Obligations in the settlement agreement (i) have been performed or (ii) are not clear or comprehensible
- Granting relief would be contrary to the terms of the settlement agreement
- 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
- 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
- Granting relief would be contrary to the Party’s public policy
- Subject matter of dispute is not capable of settlement by mediation under the law of the Party where relief is sought
Which states have signed the Convention?
As of 7 August 2019, 46 states have signed the Convention. A full list of the signatories is available here.
What is the status of the convention?
The Convention enters into force six months after deposit of the third instrument of ratification, acceptance, approval or accession. As of the date of this Article, the Convention is not yet in force.
How does the Convention impact the shipping industry?
In recent years, mediation as a mode of dispute resolution is increasingly gaining recognition in the shipping industry. Mediation forms part of BIMCO’s Standard Dispute Resolution Clause. Maritime arbitral institutions have procedures by which parties are asked to consider whether the case is suitable for mediation (e.g. Third Schedule of LMAA Terms and Schedule A of SCMA Rules) and have also set up mediation procedures either within or associated with the arbitration process (e.g. LMAA / Baltic Exchange Mediation Terms, SMA Rules for Mediation, SCMA Arb-Med-Arb Protocol).
Further, given the expectation of an increase in the number of international commercial disputes in Asia with trade initiatives such as China’s Belt and Road Initiative, it is important that such disputes can be resolved quickly and efficiently.
The coming into force of the Convention therefore promotes the cross-border enforcement of international commercial settlement agreements reached through mediation.
To this end, Members may wish to consider whether it may be appropriate (a) to refer dispute(s) to mediation in the first instance and/or (b) for mediation clauses to form part of their standard form contracts.
Source: UK P&I