Much has already been written on the upcoming United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as the Singapore Convention. Deborah Masucci and M. Salman Ravala have claimed that adoption of the Convention “signals the most credible acknowledgment of mediation as a meaningful tool to resolve cross-border commercial disputes”. Dr. Peretz Segal has highlighted the importance of party autonomy in mediation through the Convention.
In this piece, George Lim and Karl Mackie discuss the Singapore Convention. How will it benefit businesses? What will countries gain from signing the Convention? What will signing the Convention entail?
A successful mediation results in a settlement agreement. Currently, however, a party may face difficulties in ensuring that the other party complies with the terms of the settlement agreement, which is only binding contractually and therefore not directly enforceable in the courts. This has posed an obstacle to the international growth of mediation. Thus far, there has been no international mechanism for the efficient enforcement of such settlement agreements for international commercial parties.
The Convention will be the first multilateral agreement to facilitate the enforcement of mediated settlement agreements across borders. It is the result of work undertaken by a Working Group of UNCITRAL and is expected to be adopted by the 73rd United Nations General Assembly in December 2018. The Convention will be open for signature in Singapore in August 2019.
Benefits of Mediation
By addressing an oft-cited weakness of mediation, the Convention will promote the use and acceptability of mediation as an option for businesses to resolve their disputes. The advantages for businesses which choose to use mediation to resolve these disputes include:
- Cost and time savings. Mediations can be organised within weeks, and concluded in a day or two, and therefore incur less costs than court proceedings or arbitrations. Around 70% of disputes mediated globally are settled within one day.
- Control over outcome. Parties are responsible for, and jointly determine the terms of the settlement, with the mediator facilitating the resolution. This is unlike litigation or arbitration, where the outcome is decided by the judge(s) or arbitrator(s).
- Preservation of relationship. Mediation is non-confrontational and facilitated by the mediator, whereas litigation and arbitration are more adversarial forms of dispute resolution. Mediation may be more suitable where parties wish to preserve and avoid affecting long-term commercial relationships.
- Confidentiality. Mediation is a confidential process where what was discussed or agreed in private would not be disclosed to a third party without the consent of the parties.
Benefits of Signing the Convention
First, signing the Convention will add to the signatory’s attractiveness as a place for doing business, and contribute to the economy.
- Businesses and investors will have greater assurance that they can use mediation to resolve any disputes that arise, with the benefit of cross-border enforceability.
- For countries which are in the process of building up the physical infrastructure to support their economic growth, mediation can prove particularly useful, allowing disputes to be resolved in a timely and cost-efficient manner without jeopardising the entire project, given that infrastructure projects tend to be complex, long-term, and high-value ones.
- The benefits to businesses and investors will grow over time, as the number of signatories to the Convention increases.
Second, being among the first signatories of the Convention will cement a signatory’s status. Signatories will be among the first to offer commercial parties the ability to mediate with the advantage of cross-border enforceability.
Third, being among the first signatories of a ground-breaking Convention on international trade law would strengthen the signatories’ stature in the international community. Signatories can position themselves as active leaders in the international community (particularly in the area of international trade law) by associating themselves with the Convention.
Signing the Convention
It may be necessary to create a domestic legislative framework to implement the obligations under the Convention. This may entail passing an Act and amending the procedural rules of the courts to give effect to the Convention. Singapore will be happy to assist in training and technical assistance.
After signing the Convention, a signatory may deposit its instrument of ratification with the Secretary General of the United Nations. The Convention shall enter into force for the signatory six months after the date of the deposit of its instrument of ratification.
Countries who sign up to the Convention will be well positioned to be a first mover to take advantage of the potential benefits the Convention can bring to their respective economies and business communities.
Written by George Lim and Karl Mackie.
To see the full article, including an overview of the Convention’s various articles, download the full PDF document here.
George Lim was called to the Bar in 1981, and was appointed Senior Counsel in 2010. He was President of the Law Society of Singapore between 1998–99, and currently chairs the Singapore International Mediation Centre. George serves on the Board of the International Mediation Institute and is Singapore’s mediation consultant to UNCITRAL Working Group II on Conciliation. George is the co-editor of Mediation in Singapore: A Practical Guide.
Karl Mackie is the Co-Founder and pioneering CEO of CEDR. Karl is widely recognised as “one of mediation’s biggest names”. He is rated consistently in the top tier of commercial mediators, “ranked by his mediation peers as one in a million” (Legal 500), and noted for his ability to impress clients in his handling of the nuances of complex commercial, legal and personal negotiations.