The Impact of Enforcement on Dispute Resolution Methodology

The IMI/CCA/Strauss Institute Mixed Mode Taskforce have just published a series of articles on mixed mode dispute resolution in the New York Dispute Resolution Lawyer. These articles are reprinted with permission. The below article was produced by Working Group 6, and authored by Kathleen Paisley and Jane Player.

When disputes cannot be avoided and are subjected to a formal amicable dispute resolution procedure involving a neutral, whatever that procedure may entail, the value of resolving that dispute is enhanced to the extent that the outcome is enforceable if the other side does not live up to its side of the bargain. Knowing that the result will be respected either voluntarily or through legal enforcement mechanisms increases party buy in to the process, increasing the likelihood that the dispute will be resolved.

Although parties voluntarily comply with most amicable resolutions, enforcement mechanisms are an important piece of the dispute resolution process. Their speed and predictability encourage party participation and enhances the credibility of the process with reluctant parties.

The primary enforcement mechanisms available to enforce amicable resolutions internationally are the Singapore Convention on Mediation1 and the New York Convention on arbitral awards.2

Enforcement Considerations in Planning Dispute Resolution Proceedings

During the Task Force’s tenure, the means available to enforce amicable resolutions was significantly enhanced when the Singapore Convention on Mediation was adopted on 20 December 2018 and entered into force on 12 September 2020. By providing a recognized means of enforcement of mediated settlements, the goal of the convention is to promote the use of mediation as a faster, less expensive form of dispute resolution for international disputes and one which is more likely to preserve commercial relationships.

Prior to the entry into force of the Singapore Convention, mediated settlements were typically treated the same as any other contract or settlement agreement for purposes of enforcement.3 This required a party seeking enforcement of a mediated settlement to proceed in the same way it would have for the breach of the underlying contract that was the initial source of the dispute, potentially leading to another dispute resolution procedure. The Singapore Convention eliminates the need to litigate the breach of (the settlement) contract; now the obligations contained in international settlement agreements are directly enforceable in contracting states by virtue of the fact that they resulted from a mediation.

Prior to the Singapore Convention (and today except in the five countries that have ratified it), the alternative was to have the mediated settlement reflected in a consent award that could be enforced under the New York Convention. As will be discussed further below, the New York Convention generally allows for enforcement of consent awards where the arbitrator was in place before the mediation and when a genuine dispute existed. However, where an arbitrator is put in place later, or the mediator becomes an arbitrator after the settlement was reached for purposes of issuing a consent award, the New York Convention may not allow for enforcement.

The uncertainty with respect to the enforcement of mediated settlements led UNCITRAL to consider