The United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention) opened for signature in Singapore on August 7, 2019. So far, 46 States have signed, including China, India, Turkey and the US. The Singapore Convention responds to the demand from a growing body of mediation users for an enforcement mechanism applicable to mediated settlement agreements in cross-border disputes.
In accordance with the Article 14, the Convention will enter into force on 12th September 2020, when 6 months after Qatar’s approval -12th March 2020- , which is the third country to approve the contract, as it will come into force within 6 months after the approval process of the 3 Member States.
The Convention is in force in Turkey since April 11th, 2022.
Purpose of The Convention
The Convention provides provisions for cross-border enforcement of settlement agreements resulting from mediation.
Mediation is a dispute solution method customized to in which the demands and suggestions of the parties. And it is clear that the dispute solution way is less costly and more practical besides arbitration and court trials. Currently, before the Convention, settlement agreements are generally only enforceable as any other contract. The Convention is intended to provide a solution that international commercial disputes may be enforced. At this point, the Singapore Mediation Convention aims to make mediation a serious alternative to court proceedings and international arbitration over international commercial disputes, by significantly reducing the possibility of non-enforcement of the settlement agreement reached by the parties with the agreed provisions.
Scope and Terms of The Convention
This Convention applies to an agreement resulting from mediation and concluded in writing (“Settlement Agreement”) by parties to resolve a commercial dispute. Settlement agreements that have been approved by a court or concluded in court proceedings, and that are enforceable as a judgment in the State of such a court, or those that have been recorded and are enforceable as part of an arbitral award are excluded from the scope of the Singapore Convention. Also, other settlement agreements namely family, inheritance or employment law, and disputes arising from transactions engaged in by a consumer for personal, family or household purposes, are excluded.
Under the Singapore Mediation Convention, adjudication of settlement agreements by judicial authorities is not allowed. Notwithstanding that just like the New York Convention, the Singapore Mediation Agreement Article 5 gives courts the power to refuse the execution of the settlement agreement in certain circumstances. The grounds for refusal are;
- The parties’ incapacity
- The settlement agreement’s being null and void, incapable of being performed under the law to which the parties have validly subjected, or not binding, or is not final
- Settlement agreement’s subsequent modification
- The prior performance of the obligations in the settlement agreement
- The obligations being not clear or incomprehensible
- Parties’s excluding the settlement agreement from the Singapore Convention
- The mediator’s violation of the rules, suspicion that the mediator is not independent and impartial and in connection with this situation, will of one of the parties’ being defective.
It is an obligation for the party claiming the above-mentioned situations to prove, and in the parts related to the mediator, in addition to the violation of the mediator, the party must prove that without mediator’s breach they would not have entered into the settlement agreement.
The competent authority of the Party to the Convention where relief is sought under article 4 may also refuse to grant relief if it finds that:
- Granting relief would be contrary to the public policy of that Party; or
- The subject matter of the dispute is not capable of settlement by mediation under the law of that Party
In addition, The Convention has opportunity to put reservations. According to Article 8 of the Convention, a Contracting State may declare that the Convention does not apply to itself or its institutions, or may declare that this convention can only be applied if the parties to the settlement agreement agree to the implementation of the Convention. Accordingly, it is extremely important to keep track of which countries have made reservations to the Convention, and it is useful to draft the terms of the settlement agreement obtained at the end of mediation accordingly. Because these reservations contradict with the aim of creating a uniform practice in the execution of the settlement agreement, which was obtained as a result of international mediation.
The Singapore Convention is the first step to sign international settlement agreements. Also, it is highly likely that the Singapore Convention will reduce the applications of the parties to court or arbitration. Taking into consideration the mediation in regard to peaceful negotiation climate, inexpensiveness and practicability, the Convention will provide convenience for the international trading system.