August 20, 2019

The Singapore Convention on Mediation – A Commitment to Multilateralism

THE SINGAPORE CONVENTION: MAKING HISTORY

On 7 August 2019, Singapore hosted the signing ceremony for the "Singapore Convention on Mediation" (the "Singapore Convention"). The signing ceremony is significant for the small island state not least because of the name of the convention, but also because it signifies the growth of the legal landscape in Singapore, in its bid to become a dispute resolution hub in the region and beyond.

The Singapore Convention was signed by 46 countries, surpassing the 10 countries who had initially signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention") when it opened for signature in New York in 1958.

Economic powerhouses like China, India and the United States are signatories of the Singapore Convention. From the perspective of international trade, this is promising because countries that have yet to be a signatory may feel a greater impetus to come on board.  While it remains to be seen how much impact the Singapore Convention will have on the use of mediation in respect of commercial disputes, the early signs are encouraging and the Singapore Convention has already been touted as the "New York Convention" for mediation.[1]

THE IMPACT OF THE SINGAPORE CONVENTION ON CROSS BORDER COMMERCIAL DISPUTES

In short, the Singapore Convention provides a uniform international framework to enforce mediated agreements of cross-border disputes. Its aim is to give businesses more confidence in opting for mediation to resolve disputes, ultimately facilitating international trade.[2]  Reports have also alluded that disputes arising from China’s Belt-Road Initiative may benefit from mediation as being a way of settling such disputes which better reflects Asian values and is tailored to Asia’s needs.[3]

Before the Singapore Convention, a non-breaching party to a mediated settlement agreement would have to commence an action against the breaching party either through litigation or arbitration to enforce the mediated settlement agreement, unless the mediated settlement agreement had been enshrined in a court order ("consent order") or arbitral award ("consent award"). This process would necessitate unnecessary costs and time for the non-breaching party.

With the Singapore Convention, a mediated settlement agreement would be, in and of itself, enforceable between its signatories. Countries who have ratified the Singapore Convention will be obliged to enforce mediated settlement agreements, provided the agreements have not already been recorded in a consent order or consent award.

WHAT ARE THE GROUNDS FOR A COURT TO REFUSE TO ENFORCE A MEDIATED SETTLEMENT AGREEMENT?

While the applicability and scope of the Singapore Convention are clearly set out in in Articles 1 and 4 of the Singapore Convention, the grounds for refusing to grant relief under the Singapore Convention may not be as straightforward.

For example, under Article 5(1)(e) of the Singapore Convention, the competent authority where relief is sought (in other words, a national court) may refuse to grant relief on the grounds that "there was a serious breach by the mediator of standards applicable to the mediator or the mediation without which breach that party would not have entered into the settlement agreement."

A serious breach of standards applicable to the mediator or the mediation may entail having to look at the applicable rules and codes of conduct applicable to the mediator and to the mediation (and the applicable rules to the mediation would depend on the jurisdiction in which the mediation took place).

Further, the question of whether the settlement agreement would have been entered into but for the serious breach by the mediator of standards applicable to the mediator or the mediation would place in issue potentially thorny issues of fact as to what the motivation was of the party seeking to resist enforcement for entering into the mediated settlement agreement.

Similarly, Article 5(1)(f) of the Singapore Convention provides that the competent authority where relief is sought (ie. the national court) may refuse to grant relief if "there was a failure by the mediator to disclose to the parties circumstances that raise justifiable doubts as to the mediator's impartiality or independence and such failure to disclose had a material impact or undue influence on a party without which failure that party would not have entered into the settlement agreement."

What will constitute a justifiable doubt remains to be determined, but again, this article places in issue the motivation of the party seeking to resist enforcement for entering into the mediated settlement agreement – a fact that may be difficult to prove.

However, these concerns regarding the scope and applicability of Article 5 of the Singapore Convention appear to be more apparent than real. From a Singapore perspective, there is hope that the initial doubts regarding the clarity and scope of the Singapore Convention, including Article 5, will be addressed in parliament via a draft Bill which will be required to implement the convention.

Further, as with the passing of the International Arbitration Act (Chapter 143A), which implemented the New York Convention (with minor reservations), the Singapore judiciary will no doubt provide the answer for any issues relating to the interpretation and applicability of the Singapore Convention. 

CONCLUSION

The Singapore Convention is a welcome addition to the arsenal of international instruments for the enforcement of awards, judgments, and settlement agreements arising from international disputes. Other instruments include the Hague Convention on Choice of Court Agreements and The New York Convention.

Hailed as a "game-changer"[4] for cross border mediation and mediated settlement agreements, the Singapore Convention addresses the lack of enforcement options for mediation, and will no doubt "encourage the use of mediation as a speedy, cost-saving and often relationship-preserving means of dispute settlement."[5]

 

[1] http://simc.com.sg/blog/2018/07/25/singapore-convention-milestone-mediation/

[2] https://www.straitstimes.com/singapore/46-countries-sign-mediation-treaty-named-after-spore

[3] https://www.ft.com/content/71288fe2-9e6f-11e9-9c06-a4640c9feebb and https://www.straitstimes.com/asia/east-asia/singapore-china-to-set-up-mediators-panel-for-belt-and-road-projects

[4] https://www.straitstimes.com/singapore/convention-a-game-changer-industry-players

[5] https://www.straitstimes.com/singapore/convention-a-game-changer-industry-players , per Lord Mance's comments