7 August 2019 marked the signing of the United Nations (UN) Convention on International Settlement Agreements Resulting from Mediation in Singapore. With its 53 signatories to date, the Singapore Convention on Mediation has proven to be a momentous one in signalling the feasibility of mediation as an alternative dispute resolution method for cross-border commercial disputes. However, strong as the initial take up may have been, it has not sufficed to distract mediation’s detractors from the glaring disappointment caused by the continued absence of signatories from the European Union (EU).
Some European mediators have explained that the absence of the EU was due more to practical problems within the EU. They point to the reality of the EU as a grouping of fiercely independent states whose governments’ political and legal agendas in recent years had been taken over by the crises brought on by Brexit and the Covid-19 pandemic. Compared to Asian jurisdictions such as China, India, Japan, and Singapore, general awareness of the Convention in the EU has been low because it has not featured in the domestic media. These mediators rationalise that with the dust finally settling on Brexit and Covid-19 vaccines being rolled out, the issue of EU members signing the Convention will now feature on their governments’ agenda. Time will tell if this optimism proves unfounded.
Why is the EU’s Signature So Important to the Convention?
To appreciate the impact of the EU’s absence from the signatories of the Singapore Convention on Mediation, one need only look at the EU’s importance in the international dispute resolution eco-system, as well as its commercial power as a bloc. According to data from the World Bank, the EU had a total GDP of USD 15.6 trillion and it held the second largest share of global exports and imports of goods (15.4% worldwide), surpassing that of China and India. That a region with such an extensive volume of commercial trade may not be covered by the Convention would be a significant disadvantage for the global community and most particularly impact the companies based in the EU.
The EU’s centrality to trade has driven the growth of a thriving ADR industry including legal, finance, third party funding, and insurance professionals. According to the 2018 Queen Mary University of London International Arbitration Survey (QMUL Survey), four out of seven of the most preferred seats of arbitration worldwide were in the EU, namely Paris, Geneva, Stockholm and London (before Brexit). New York, Singapore, and Hong Kong made up the remaining 3 most popular seats. Out of more than a hundred arbitration institutions surveyed, the International Chamber of Commerce (ICC) and the Stockholm Chamber of Commerce (SCC) ranked as the first (77%) and fifth (16%) most preferred arbitration centres. The London Court of International Arbitration (LCIA) was ranked second (51%). Notably, the report observed that the ICC and the LCIA had been the top two preferred institutions for the past decade and would likely remain leaders amongst ADR service providers. Most of these institutions also had in place procedures for mediation of cross-border disputes before the Convention was signed. Another indication of commercial mediation’s prevalence in the EU is that of the International Mediation Institute’s 651 certified mediation professionals, nearly half were based in the EU.
A Booster for European Businesses
By facilitating enforcement of mediated settlement agreements (MSAs) for international commercial disputes, the EU’s participation in the Convention would open the door for European businesses to tap on mediation’s multitude of benefits. Sophisticated European business leaders have, for a long time, embraced mediation’s flexible and less costly nature, and recognised that it is well suited to firms of all sizes and spending powers. Mediation’s underlying principle of tackling disputes in a non-adversarial manner helps ensure that amity is preserved between parties. With relationships having been strained by the multiple series of recent global crises, signing the Convention would become a powerful signal of the EU’s pivot towards greater solidarity and re-ignite much needed optimism in the bloc.
Drawing the Right Lessons from the EU Mediation Directive 2008
The optimism would be supported by current history. The EU is no stranger to the concept of a multi-lateral arrangement to promote the enforceability of MSAs. In 2008, the EU Mediation Directive (EMD) was effected to provide a framework for MSAs to be enforced across EU jurisdictions. Given that the EMD predates the Convention, it is possible that it inspired the Convention. However, the truth is that the EMD has not been well-used among EU member countries and this has reinforced the views of the Convention’s sceptics within the EU. These have surmised that the EMD’s low take-up was a clear premonition for the Convention’s bleak future.
Instead of adopting such a gloomy and fatalistic view, it is arguable that a more productive mindset would be to study and draw from the known challenges of implementing the EMD. The lessons gleaned from there can accelerate the development of the international framework for the Convention. This is another reason why the EU’s participation in the Convention would be invaluable. Indeed, because of the benefit of its experience with the EMD, if and when it decides to become a signatory, the EU would wield a formidable influence on the dialogue shaping the framework for the enforcement of MSAs.
A Major Role for the EU in Setting International Mediation Standards
For example, one reason for the EMD’s low take-up has been that there are easier alternate pathways through the mutual recognition of court orders. Most EU courts have not formulated a clear process to enforce MSAs from another jurisdiction. Part of this is the result of the inability of EU members to agree on what distinguishes a negotiation process as a “mediation”. This distinction is needed so that the resulting agreement can qualify for enforcement as an “MSA” and the same debate is taking place at a global level amongst current signatories to the Convention as they seek to agree on a universal set of best practices during a mediation. The EU can shed light on the discussion, not by providing answers but by using the ongoing consensus building journey to nudge the signatories towards agreement.
With the breach of applicable practice standards being an express ground under Art 5(1)(e) of the Convention to resist the enforcement of an MSA, there is an urgency to reach a reasonable level of salience on this topic. The conversation will require its participants to be cognizant that international standards can never be cast in stone. Conflicts and the ways to resolve them will evolve. Yet, while we will need to retain room for flexibility and adaptability in the international standards to suit each nation’s context, there must also be sufficient specifics to offer guidance and predictability. Essentially, the experience and expertise of drafting international arbitration and litigation rules can be borrowed for mediation. Due care and skill need to be applied to refine the international mediation framework and practice to ensure they keep up with the evolving nature of conflict and conflict resolution. The recent transition to digital processes due to the international travel restrictions is a good example of how suddenly things can change.
Conclusion: Different Needs and Different Speeds of Progress
While there appears to be a decision that the EU should sign (and not sign) the Convention as a bloc, it is unsurprising that different member states have started to move at different speeds towards signing the Convention, depending on how relevant the Convention is for them. For instance, Turkey, located at the crossroads of Asia, Africa, and Europe, would have significant commercial interests to sign the Convention because Asia and Africa are the two most well-represented continents amongst the Convention’s signatories. Other EU member countries with progressive governments and significant trading relations with Asia and the USA may similarly be more interested to add their names to the list to facilitate future commercial disputes. In these cases, the global community should actively encourage them to sign the Convention.
To conclude, both the EU and the rest of the world have much to gain from the EU’s addition to the Convention. We hope the next step that the EU embarks on will be a step in the direction towards a better multi-lateral framework under which cross-border disputes can be more effectively and amicably resolved.
This article was originally published on the Sage Mediation blog on 29 January 2021, and is republished with permission. Sage have an IMI Mediation Advocacy Qualifying Assessment Program.
Author Chloe Lee is a current intern with Sage. Connect with her on LinkedIn here.