“Finally!” was the reaction in the UK mediation community on 3rd May 2023, the day the UK signed the Singapore Convention on Mediation. For UK dispute resolution lawyers and mediators, this announcement was long awaited as the Singapore Convention was first opened for signature back in 2019. It was an important step in the UK firming up its position as a major mediation and dispute resolution jurisdiction on the world stage. All the more important given the dearth of European legislation relating to dispute resolution, recognition and enforcement of judgments post Brexit.
The Convention gives enhanced rights of enforcement of a wide range of UK-related mediated settlement agreements. While fortunately this is rarely needed (as part of a mediator’s role is to reality test any proposed agreement with all parties), it is reassuring for those involved in international disputes to have the back-up of the international framework if a settlement agreement is not honoured. I set out some tips below to make sure parties in dispute will have the benefit of the Convention if need be.
What does the Convention provide?
It provides an international framework and process for the direct enforcement of cross-border settlement agreements between parties resulting from mediation. This allows the party seeking enforcement to apply directly to the courts of the State where the assets are located. The relevant authority may refuse to enforce the settlement agreement only in limited circumstances.
When does it apply?
The Convention will apply where the settlement agreement:
• is in writing;
• results from a mediation;
• is an agreement between two or more parties who have their place of business in different States; or
• the place of business of the parties to the agreement is different from either:
i. the State in which a substantial part of the obligations of the settlement agreement is performed; or
ii. the State with which the subject matter of the settlement agreement is most closely connected.
When does it not apply?
The Convention does not apply to settlement agreements:
• relating to consumer transactions nor to family, inheritance or employment law;
• that have been approved by a court or concluded in the course of proceedings before a court and that are enforceable as a judgment in the State of that court; or
• that have been recorded and are enforceable as an arbitral award.
UK implementation of the Convention regarding its applicability
There are also two permissible reservations under Article 8 of the Convention. The UK government has announced that it will not be taking up the one relating to itself and therefore mediated agreements involving government or state parties will be covered by the Convention.
Importantly however the UK government allowed parties in dispute to opt-out of the Convention by expressly excluding it in their settlement agreement in accordance with Article 5(1)(d) of the Convention. This is controversial. The idea that a party who comes to a mediation may decide in advance that they are not signing up to an enforcement regime may ring alarm bells and lead others to question their good faith. The last thing any litigant wants is for the other party subsequently to seek to “wriggle out” of any settlement agreement they may reach and not to have recourse if so. It will be interesting to see whether parties pre-empt this and include such a provision in their dispute resolution clauses in contracts from the get-go. Further whether any such provision would be held binding (or would it merely be “an agreement to agree”).
Which countries have signed/ ratified the Convention?
• The UN Convention on International Settlement Agreements Resulting from Mediation (known as the Singapore Convention on Mediation) opened for signature on 7 August 2019 and was signed by a record breaking 46 States, including importantly the US, China, India, Malaysia, the Philippines, Singapore and South Korea. It came into effect on 12 Sept 2020.
• As of 24 July 2023, it has 55 signatories and 10 countries where it is has been fully incorporated into the local law. (Singapore, Fiji, Qatar, Saudi Arabia, Ecuador, Georgia, Honduras, Kazakhstan, Turkiye and Belarus).
• Notably, the European Union and Australia have not yet signed the Convention. It seems that the reason why the EU has not yet signed is because a question of process as to whether individual countries or the European Union will sign remains to be resolved.
Any tips for a lawyer going with a client to a mediation to which the Convention may apply?
Consider whether the Singapore Convention may apply to any settlement agreement that may result. If so:
• The mediator should sign the settlement agreement or a separate document to confirm that the settlement was reached through mediation.
• If a settlement is reached shortly after the main mediation session, consider reciting in the agreement it was entered into following a mediation.
This is because under the Convention the enforcing court must be satisfied the settlement agreement arose from a mediation.
• Take particular care to draft the settlement agreement so it will be easily understood by any overseas court. Make sure statutory references are made in full, for example. Spell out in detail the meaning of any legal concepts particular to English law or the common law. For example, the concept of a trust is not easily understood by a civil law jurisdiction. Also bear in mind rules on legal costs recovery vary enormously from one jurisdiction to another.
• Consider whether any aspect of the settlement agreement may not be capable of being enforced in the relevant country due to conflict with local public policy or other overriding provision. For example, an agreement under English law that is not Shariah compliant (say where interest is payable) may not be able to be enforced in a Shariah based jurisdiction. The deal may be re-structured in such a way that a similar, Shariah compliant outcome is achieved.
How may UK Mediation Agreements otherwise be enforced internationally?
The use of Med Arb can according to some jurisdictions (notably Singapore and New South Wales, Australia) create a settlement in the form of an arbitral award enforceable under the New York Convention on the Recognition and Enforceability of Arbitral Awards. Med Arb is a process whereby it is agreed from the outset either:
• if a mediation does not settle, the dispute is immediately determined by arbitration or
• that the settlement reached at mediation will be handed down as an arbitral award.
This approach is not considered mainstream from a UK perspective and has several drawbacks that are beyond the scope of this article to consider. Interestingly, the Singapore Convention expressly does not apply to settlements recorded and enforceable as an arbitral award.
At the time of writing, some 172 States have signed the New York Convention.
Does the Convention have any effect in countries that have not signed it?
It may do. Those settling disputes in non-signatory States should still be mindful of it. This is because the Convention applies where two parties mediate and the place:
(i) where the settlement agreement is to be performed; or
(ii) where the subject matter of the settlement agreement is most closely connected
is in a State that has signed the Convention.
Therefore, the Singapore Convention, unlike for example the New York Convention on Enforcement of Arbitral Awards, is not based on reciprocity and can be availed by UK disputants in some circumstances even though the UK has not signed or ratified it.
Does the Convention serve any broader function?
Some say the success of the Convention will largely depend on the extent to which it is accepted and ratified by States. It is a bit like when the telephone was introduced – only useful if others signed up for it too. In the meantime, it does in any case serve to raise the profile of mediation as a credible method of dispute resolution for cross-border disputes (the Ministry of justice recently dropped the “alternative” from its name to a further sigh of relief, or perhaps even a “hurrah”!). It also has the limited application for those in non-contracting states mentioned above.
The Singapore Convention is in any case a welcome adjunct further to increase confidence in international mediations.
International Mediation – what is the way forward?
In recent years there has been an increase in online mediations, and peoples’ appetite to use them to settle disputes. These are particularly suited to international mediations given they can be set up quickly and easily at a relatively low cost. Parties and their advisers can attend from their offices or homes. All they need is a computer/ tablet or a phone and an internet connection. Statistics suggest outcomes from remote mediations are as successful as those taking place in person.
Rebecca Attree, Mediator, IPOS Mediation.
Dual qualified UK/ US Civil and Commercial Mediator
24 July 2023