The United Nations Convention on International Settlement Agreements Resulting from Mediation or the Singapore Convention on Mediation is seen as a first international convention that regulates the enforcement of the mediation proceedings at international level in regard to cross-border commercial dispute. The need for the convention arose because reluctance towards using international mediation despite it being one of the most favourable alternative dispute settlement. The reluctance was there because of lack of uniformity and the enforcement mechanism to make the mediation a success at the internationally arising disputes. Thus, the present note explains why the need for the Singapore Convention arose and how it benefits.
Further, it is required to understand the scope of the applicability of the present Convention. This will include the instances whereby the Convention is applicable and the instances which are excluded from the Singapore Convention. Thus, the application of the Convention is discussed to better grasp the understanding. Lastly, it ends by discussing the settlement of the international disputes through mediation by discussing the enforcement of such settled agreement. Along with that the requirements necessary for the application relief are also mentioned. It ends by discussing the grounds of refusal under the Convention. In the conclusion, it talks about the fact how the effectiveness is still lacking because of less participants to the Convention which needs attention now more than ever for the benefit of mediation internationally.
As the court proceedings are becoming more and more lethargic and time-consuming, parties have started looking for alternate methods of dispute resolution. One of the prominent alternative dispute resolution mechanisms is of mediation.
The mediation proceedings took place between the parties at a disintegrated and unorganised manner in international arena. There was always felt a need for an understanding and recognition of mediation at the international legal system which can be uniform in nature. This need arose to settle mediation disputes quickly, and to get the settlement agreement enforced in the domestic law. Thus, to bridge the gap between the increasing need of mediation and the lacuna in the form of no established international mediation framework, the Singapore Convention on Mediation emerged as a savoir of the different complexities.
Need for the Convention
The United Nations Convention on International Settlement Agreements Resulting from Mediation or the Singapore Convention on Mediation (hereinafter referred as the Singapore Convention) has provided for a uniform framework for enforcement of mediations resulting from such agreements in the international commercial disputes. As regard to earlier, international arbitration mechanism were much more preferred because of the enforceability through the Convention on the Recognition and Enforcement of Foreign Arbitral Awards or New York Convention which was adopted on June 10, 1958 and effective from June 7, 1959. So much so, that one of its lacking features in matter of cost and charges are often ignored. What was missing was a cost effective and time-saving alternative dispute settlement. Since, mediation was applied through the Med-Arb or through different other forms but not at a standalone manner.
This was because the parties to the dispute after going through so much of lengthy hours in the form of negotiations through international mediation, if a party refuses to hold on to its promise which was agreed to through written agreement; there exist no platform to get that agreement enforced and to make the parties obligated and binding towards the reached negotiation. This was definitely felt as the drawback of mediation at an internal level. Furthermore, if a party refuses to fulfil its conditions through mediation, then the matter will start again in arbitration or litigation with all the energy, time and cost wasted already.
The convention would encourage the mediation process in cross-border commercial disputes as it is seen a win-win situation. As a global uniform mechanism is established, it will lead to increase in its usage as it is backed by the U. N. Commission on International Trade Law (UNCITRAL), a body of United Nations General Assembly, as well. This would further the legal community as well to adopt mediation at an international level and to reach a conclusion of complex disputes through a series of negotiated measures rather than adjudicatory and forceful decisions.
Application of the Convention
The Singapore Convention was adopted on December 20, 2018 and it was opened for signatures on August 7, 2019. It received its official effect from September 12, 2020 after six months of receiving the requisite ratification (three) for its operation. This multilateral treaty resolves through its components to make the mediation easier and much more favourable within the alternative dispute settlement mechanisms.
The Singapore Convention applies to an agreement resulting from mediation and concluded in writing by the parties to resolve a commercial dispute and that dispute at the time of conclusion is of international nature (Article 1). The scope of this convention is, thus, firstly to the extent of the commercial disputes that takes place. Further the mediation should have happened internationally and it should be “concluded in writing”. Concluded in writing is an important aspect so as to get the terms enforced later on when a party refuses to perform their obligation. Along with that only the concluded agreement reached will be enforceable. Cross-border commercial disputes are applicable in business and international trade. It defines what an international must mean. It means where the parties have their place of business in different states.
The scope is also seen from the instances where this convention does not apply. It does not apply to agreements that are concluded for personal, family or household purposes (Article 1.2). Moreover, it enlists other settled agreements like the one approved by the court or, those enforceable as judgement or arbitral awards (Article 1.3) to not be included within the application of this Convention. It clearly mentions these circumstances which are not covered within this Convention so as to make sure that it does not creating a conflicting situation. It deals with standalone mediation proceedings and not the mixtures of it with or attachment of it with other litigation or arbitration proceedings.
Settlement of International Commercial Disputes
Through its Article 3, 4 and 5 the relief is ensured. Article 3 ensures the enforcement of the settled agreements and if the dispute arises the aggrieved party can invoke the provisions of this Convention. Furthermore, the requirements of the agreements are also mentioned through Article 4 enlists certain conditions. This ensures that the concluded agreement must be signed by the parties, mediators’ signatures, evidences relied on, attestation of the institution, document by mediator that mediation was done. Thus, these requirements need to be furnished for the mediation in international commercial disputes.
There are certain grounds according to which the relief can be refused given under Article 5 of the Singapore Convention. These grounds are enlisted in a wide variety. An important part of this is that the ground of refusal comes when relief is sought under Article 4. It says that if the sufficient proof is furnished to the competent authority that there the settled agreement was void or inoperative or incapable of being performed or any relevant condition not fulfilled, it can be refused. Further, if the settled agreement is not binding or not final; or has been modified; in those conditions it can be refused. At the first juncture, it comes whether the parties are at incapacity. Incapacity comes for both natural and legal persons. Further, the refusal can be when the obligations are performed or are not clear under the agreement. These come at the perusal of the settled agreement and certain lacuna in there.
Secondly, the grounds for refusal are on the basis of mediators. If there is a breach by the mediators of the standards which are applicable to the mediator or the mediation process; or there was failure of the mediator to disclose the parties certain circumstances which might question the impartiality or independence of the mediator, will lead to the refusal. The third and fourth ground is that if it opposes the public policy or it goes beyond the subject matter of mediation. Thus, these are wide circumstances for refusal of mediation.
Thus, it can definitely be concluded that the Singapore Convention has turned out to be one of its kind to help in the harmonising of mediation settled agreements. It would bring forth more parties and businesses to use such a method of ADR to resolve their commercial disputes in a uniform and consolidated manner backed by the enforceability mechanism. Yet even after its enforcement, the ratification is still less even after the end of two years; it shows the uncertainty in the acceptance rate of the Singapore Convention with less turnover. What is lacking is its slow international response rate. Without which the effectiveness of the mediation will not be realised fully at international arena. Therefore, the need is for establishing of mediation with the help of the Singapore Convention as a fruitful ADR mechanism in regard to trans-national commercial transactions.
Vivekananda Institute of Professional Studies