The Singapore Convention : Decisions, Decisions

Bill Wood discusses the choice between opt-in and opt-out systems under the Singapore Convention

There is no mistaking the general excitement that has surrounded the recent signing of the Singapore Convention[1]. It is seen as recognition that mediation has now achieved such maturity and acceptance internationally that it deserves the status that arbitration has enjoyed since the New York Convention of 1959.

The place of signing is significant too. Singapore has again enthusiastically grasped the opportunity to brand itself as a new and dynamic international dispute resolution centre.

The Convention has been supported by the signatures of 46  countries including China and the United States. The UK along with the rest of the EU has remained aloof thus far. Indeed the Times recently speculated as to whether our abstention will diminish London’s standing as a forum for international disputes and damage trade generally [2].

Of course it is important to remember that no country has yet ratified.  When the moment of ratification comes countries will have an important choice to make. Article 8 of the Convention allows ratifying countries either to bring the Convention into law as an opt-in regime (where the parties expressly elect to submit to  the enforcement rules when settling) or as an opt-out (where the default setting is that the enforcement rules do apply). Paragraph 1(b) runs as follows:

            “1.  A party to the Convention may declare that

                        … (b) it shall apply this Convention only to the extent that the parties to the settlement agreement have agreed to the application of the Convention.”

There was understandably lengthy discussion of this clause during the drafting of the Convention and it is going to be an absolutely critical choice. Many of us have wondered whether at the moment of concluding a settlement parties will find opting-in an easy matter to agree. One assumes that in the average money dispute the paying party may not be enthusiastic about agreeing to grant his opponent supercharged enforcement powers.

It is easy to forget that because of Article 6 of the EU Mediation Directive EU countries have had similar enforcement  processes available for cross-border mediation settlements for some years now. Where a settlement “results from mediation” the parties, if they all agree, can apply to the court for a Mediation Settlement  Enforcement Order or MSEO[3]. When granted by the court this gives the settlement the enforcement statues of a judgment. Like the Singapore Convention it copes with situation  where proceedings have not yet been started and the parties do not have the option of enshrining their settlement in a consent award or judgment . (Unlike the Singapore Convention an application to the court is needed.)

This provision passed into law in 2011  but, to the best of my knowledge at least, it has disappeared utterly without trace. I have not heard it raised as an issue or  discussed by lawyers or  colleagues at any point in the eight years of its life to date and as far as I am aware no application for an MSEO has ever been made[4]. So much for an opt-in system.

Is the lesson of the MSEO  experience  that  Singapore Convention countries should choose an opt-out  system?

Or is another possible lesson that enforcement is not actually a major consideration and that concerns about enforcement are not in fact a significant brake on the advance of international mediation at all.

Parties mediating disputes post-litigation in England and Wales routinely agree “Tomlin orders”, consent orders embodying the settlement.  Pre-litigation parties cannot do so. Parties should not feel they have to start proceedings to get an enforceable deal. All perfectly rational.

But  in the long list of reasons that over the years I have heard given for parties being reluctant to move to mediation (“I don’t wish to appear weak”, “I don’t know what mediation is”, “Can I trust the mediator/the opposition to respect confidentiality” , “I don’t wish to appear weak”) I have to say I cannot remember hearing  enforcement worries mentioned.

The vast majority of commercial disputes whether domestic or international end in settlement. There is nothing about a mediated settlement as distinct from a negotiated settlement that makes it intrinsically more vulnerable to being disregarded. Where the parties in the negotiations which I facilitate have concerns about the other side’s willingness or ability to perform  that can be policed in the agreement. For example if a party has spent the mediation complaining of poverty and arguing that the case should settle because “there will be nothing left at the end of a trial” then the solution may be to make performance a condition subsequent to the agreement. If the defendant doesn’t pay the claimant’s claim revives.

The Singapore Convention is a welcome celebration of the arrival of mediation as a mature participant on the world stage and a  welcome celebration of Singapore itself. But as one observer wittily  put it: “I’m a huge fan of the Singapore convention, it’s all the stuff about enforcement I am not sure about ”.

How much practical effect the Convention is going to have will clearly  depend on choices yet to be made by the countries who ratify and the choices subsequently made by the parties themselves.


[1] The UN Convention on International Settlement Agreements resulting from Mediation.

[2] “Could the UK’s absence from the Singapore convention harm its post-Brexit prospects?” Times, 5th September 2019.

[3] CPR 78.24.

[4] If you have a drawer full of MSEOs in your litigation department please let me know; I will be delighted to publish a correction.

The Singapore Convention

Settlements reached in cross border mediation will soon be enforceable internationally just like arbitral awards when UNCITAL’s Singapore Convention, the first UN treaty named after Singapore, comes into force in August next year provided sufficient countries ratify.

As a result, there is an expectation by Singaporean authorities that the city state’s most favoured status as an international mediation venue will be further confirmed.

Seen as mediation’s answer to the New York Convention that allows for the easy enforcement of arbitration awards, the Singapore Convention comes on top of much mediation activity in Singapore having last year also enacted a Mediation Act whereby mediated agreements can be recorded as orders of Singapore’s courts, allowing parties to enforce their terms more easily.

Key terms of the Singapore Convention include*;

Article 1 outlines the scope, applying the Convention to cross-border commercial disputes resolved through mediation where “at least two parties to the [written] settlement agreement have their places of business in different States” or in which parties “have their places of business different from either the State in which a substantial part of the obligations under the settlement agreement is performed or the State in which the subject matter of the settlement agreement is most closely connected.” Article 1 specifically excludes settlement agreements related to consumer, family, inheritance, and employment matters, as well as those enforceable as a judgment or as an arbitral award.

Article 2 defines key terms used in the Convention such as “place of business,” “in writing,” including in electronic form, and even “mediation.”

Article 3 summarizes the general principles and obligates member States that ratify the Convention and also permits a party subject of the Convention to invoke a defense and to subsequently prove that a particular dispute being raised was already previously resolved by a settlement agreement.

Article 4 provides a specific but broad checklist of what a party must supply for enforcement of the international settlement agreements that result from mediation. Article 4 includes submission of a “settlement agreement signed by the parties” and “evidence that the settlement agreement resulted from mediation.” Evidence includes items “such as” a “mediator’s signature on the settlement agreement,” or “a document signed by the mediator,” or “an attestation by the institution” administering the mediation. In the absence of such proof, Article 4 allows a party to submit “other evidence” acceptable or required by a competent authority of the member State where relief is sought. Article 4 also addresses key issues related to electronic communication, translation of settlement agreements, and calls for the competent authority of the member States enforcing the settlement agreements to “act expeditiously.”

Article 5 was vigorously debated and certain overlaps within the Article are intentional to accommodate the concerns of a member State’s domestic legal systems. Article 5 includes the grounds when a competent authority may refuse to grant enforcement. These circumstances include incapacity of a party, or where the settlement agreement a) is null and void, inoperative or incapable of being performed; b) not binding or not final; c) was subsequently modified; d) was performed; e) is not clear or comprehensible; or where granting relief would be contrary to terms of the settlement agreement or contrary to public policy, and subject matter is not capable of settlement by mediation under the law of that party. A competent authority may also refuse to grant relief where there is a serious breach by the mediation of standards applicable to the mediator or the failure by the mediator to disclose to the parties’ circumstances as to the mediator’s impartiality or independence.

Article 6 addresses issues of parallel applications or claims and draws inspiration from the New York Convention. It grants, to the competent authority of the member State where relief is being sought, wide discretion to adjourn its decision under the Convention where an application or claim relating to a settlement agreement was made in a court, an arbitral tribunal, or other competent authority.

Article 7 also draws inspiration from the New York Convention and allows member States flexibility to enact national legislation in their countries to expand the scope of settlement agreements excluded by Article 1, Paragraphs 2 and 3 of the Singapore Convention.

Article 8 allows for a tailored adoption of the Convention by each member State, allowing for two reservations when ratifying the Convention. The first reservation is one which relates to the member State or its own governmental agency. The second allows for a declaration that the Convention applies only where the parties to the settlement agreement resulting from mediation have agreed to the application of the Convention.

* Singapore Convention: A First Look by Deborah Masucci and M. Salman Ravala

Brick Court mediators are active in Singapore and Hong Kong and would be delighted to talk to you about mediating in Asia.

Brick Court Mediators In Asia

This week Geoff Sharp was appointed one of a handful of Senior International Mediators to the new Mainland China – Hong Kong Mediation Center.

Being the first joint mediation center in the region set up by two major mediation institutions in Mainland China and Hong Kong, the Center aims to provide an effective platform for resolving cross-border commercial disputes between Mainland China and Hong Kong, in particular with China’s “Belt and Road” initiative.
The Center is a joint venture between the China Chamber of International Commerce and the Hong Kong Mediation Centre, with the vigorous support of the Department of Justice.
The Belt and Road inititive together with the National 13th Five-Year Plan means cross-border trade is set to increase drastically and commercial disputes are expected to follow.

 

Mediation in Singapore

Singapore Guidemediation-in-singapore-dataLast week Thomson Reuters launched “Mediation in Singapore: A Practical Guide”  highlighting the growth of mediation in Singapore.

The publication provides an overview of both the development and current practice of mediation in Singapore. It includes discussions on aspects of mediation encompassing the psychological, cultural and legal aspects of the mediation process: how parties choose a mediator, mediation agreements, enforcement of mediation settlements, accreditation of mediators, mediation in family disputes, divorce, family estate disputes, and many other topics.

Editors include BCC mediators’ good friend and local commercial mediator George Lim S.C. and CEDR’s man in Asia, Danny McFadden.

Other contributors include well known Singaporeans in mediation circles; mediation academic from the National University of Singapore, Associate Professor Joel Lee, Gloria Lim from the Ministry of Law, Eunice Chua from Singapore International Mediation Centre, and Loong Seng Onn and Deborah Koh from Singapore Mediation Centre. Purchase information

Well done to all involved.

BCC mediators are active in Asia and a number belong to the invitation only panel of the Singapore International Mediation Centre and are available for mediations in Singapore.

Clever Thinking Out of Dubai

Dubai, February 2015: DIFC Courts Practice Direction No. 2 of 2015 – parties can now choose to refer their DIFC money judgments for enforcement through the DIFC-LCIA Arbitration Centre, effectively converting their judgement to an arbitral award.

Having done that, the arbitration award should be enforceable in all New York Convention countries thereby avoiding limitations of state court judgments that they are not normally enforceable outside of the home jurisdiction absent the usual and limited reciprocal enforcement mechanisms.

To some extent this mirrors the efforts by some in the mediation community, including the IBA, to find a mechanism to turn a cross border mediated settlement into an arbitral award which would then be enforceable internationally under the New York Convention.

For more, see two short Kluwer articles The Handbrake on Global Mediation and The Race towards a New York Convention for Cross-border Mediated Settlement Agreements: the Fable of the Tortoise and the Hare Revisited?

This lack of any coherent method of enforcement is widely seen as a major impediment to further globalisation of mediation, the argument being how can we expect parties involved in large international commercial disputes to embrace mediation if there is a risk that any outcome might be, to all intents and purposes, unenforceable.

DIFC’s innovative Practice Direction issued in February and subject of much discussion since late 2014, is the first of its kind globally – it offers parties the advantages of both litigation and arbitration since it allows the DIFC-LCIA Arbitration Centre to provide an additional remedy to the judgment creditor if the parties choose to submit any disputes they may have about the payment of money judgments to arbitration under the auspices of the DIFC-LCIA Arbitration Centre. In this way the judgment creditor obtains an arbitral award for their unpaid money judgment that can be enforced in the 150 plus New York Convention countries providing greater enforcement internationally.

As Michael Hwang, Chief Justice of the DIFC Courts, says

 we have developed an important tool to synthesize litigation and arbitration by giving concurrent remedies for enforcement and thereby resolve one of the great problems of international litigation

DIFC Courts Practice Direction No. 2 of 2015 – Referral of Judgment Payment Disputes to Arbitration

DIFC Courts – Chief Justice’s Explanatory Lecture on Referral of Judgment Payment Disputes to Arbitration – November 2014