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.

A Baptism of Fire

Returning to London for a series of mediations this spring my cure for  jet-lag is a one-day Civil Justice Council workshop on the role of ADR in the civil justice system.

90 people packed into the ballroom of a central London hotel: High Court Judges, District Judges, Employment Judges, solicitors, barristers, arbitrators, mediators, the voluntary sector, civil servants from the Ministry of Justice and Her Majesty’s Court Service. As well – a sign of the times, various providers of dispute resolution software.

Chaired by Brick Court’s Bill Wood QC there were no speeches, no talking heads and no power points. Just fast moving discussion;

Why hasn’t the ADR message got through to the public? Are the existing prompts in the system working? If ADR can help parties without representation how is that to be funded and provided? Has ADR been treated as being limited to mediation for too long? Is some form of compulsion or automatic referral to ADR inescapable? If you have to provide at least some opt-outs does that inevitably bog the system down in satellite arguments? How big are the political obstacles in the path of radical reform? Will online access to the Court make all of these questions obsolete or raise new challenges? And what does the overseas experience tell us?

None of us envied the six members of the working group who now have to pick the bones out of it all and write a final report!

Read the CJC ADR Working Group’s Interim Report

Milestone Civil Justice Council Report Out for Comment

An expert working group of the Civil Justice Council has published a comprehensive interim report on the role of ADR in civil justice in England and Wales.

The CJC is now seeking written submissions and recommendations of the report, ahead of organising a seminar at which the proposals can be discussed and a final report prepared and submitted to the Government.

Chairman of the CJC Working Group is Brick Court’s Bill Wood QC

ADR has failed to achieve the integral position in the civil justice system that was intended and expected for it at the time of Woolf. The CJC assembled this Working Group (including representatives of the Bench, the professions, the ADR community and an academic) to try to understand the reasons for failure and to suggest some possible solutions.

Our aim is to stimulate a debate between all stake-holders as to the nature of the problem and the possible practical solutions, including the thorny issue of mandatory mediation. With the Online Court in development and pilot local mediation schemes up and running in a number of centres, this is an exciting time. The Report does not try to be utterly comprehensive nor does it purport to have all the answers but we hope it can make a contribution, and that in due course a final report can set out a widely-supported basis for moving forward.

Chairman of the CJC, Sir Terence Etherton, the Master of the Rolls

ADR is a very effective means of resolving civil disputes quickly and cheaply. This report explores the current use of ADR and the reasons why it is not used more frequently. As we prepare to enter a digital age of dispute resolution it is an ideal time to look in detail at how the potential for ADR can be maximized.

Read the full report

Written submissions by Friday 15 December 2017 to civiljusticecouncil@judiciary.gsi.gov.uk.

In other BC news, Bill Wood has recently been reappointed to the Civil Justice Council until 2020.

A New Seat at the Mediation Table? The Impact of Third-Party Funding on the Mediation Process (Part 1)

In the first of a two-part article, Geoff Sharp looks at the development of third-party funding of litigation, arbitration and mediation in part 1 and later in part 2 we will look at how TPF impacts the mediation process

litigation-funding-image

Third party funding (TPF) of claims has been around for quite some time. Historically however, some jurisdictions have prohibited a stranger to a lawsuit financing the claim of another in return for a share of the spoils.

Over time that has changed as many jurisdictions overcome fears that litigation financing somehow perverts the course of justice – that a third-party funder “might be tempted, for his own personal gain, to inflame the damages, to suppress evidence or even suborn witnesses” (Lord Denning in the Trepca Mines Case 1963). 

Over the intervening years, concerns over access to justice have come to trump the very real risks of third-party funding and as a result many jurisdictions have relaxed notions of champerty and maintenance.

Just in the last fortnight the Court of Appeal (UK) confirmed that position in the long running Excalibur Ventures v Texas Keystone case saying “Third party funding is a feature of modern litigation” and that it is “an accepted and judicially sanctioned activity perceived to be in the public interest.”

So the tide has definitely turned and the last couple of years have seen a dramatic increase in the level of TPF generally, with most funding confined to lawsuits (i.e. those claims bought in the courts). However, we are now seeing a similar rise in levels of arbitration funding and in particular, the international commercial arbitration community appear to be embracing TPF with many jurisdictions like Singapore and Hong Kong responding with enabling legislation. 

These South East Asian jurisdictions are reforming to allow funded arbitration to ensure their continuing status as favoured dispute resolution hubs. On 7 November 2016 the Civil Law (Amendment) Bill was introduced in the Singaporean Parliament allowing for third-party funding of arbitration by early 2017 and Hong Kong is currently in a consultation process that will see a similar result.

With the rise of TPF in litigation and arbitration, it follows that funding of mediation is also on the increase, given that much mediation happens along side these two dispute processes and in the 2nd part of this article we will look at the consequences of TPF for the mediation process itself, in particular the dynamics of the mediation table itself, but first…

What is TPF and how does it work?

Well, at its most simple, it’s not complicated.

Although TPF products offered by third-party funders are now quite sophisticated, basically TPF is the funding of litigation or arbitration parties (usually claimants and increasingly class claimants) in return for a share of the proceeds. 

“Litigation funding is where a third party provides the financial resources to enable costly litigation or arbitration cases to proceed. The litigant obtains all or part of the financing to cover its legal costs from a private commercial litigation funder, who has no direct interest in the proceedings. In return, if the case is won, the funder receives an agreed share of the proceeds of the claim. If the case is unsuccessful, the funder loses its money and nothing is owed by the litigant” (Association of Third Party Funders – England and Wales)

On one view, TPF is simply another way to fund claims there having always been a number of ways to pay the costs of pursuing a claim in the courts or in arbitration – obviously, parties can simply fund their own costs, or equally, they may finance them by a loan from their bank or they may negotiate a fee structure with their lawyer (e.g. a no win, no fee contingency arrangement or a success fee conditional upon the result of the litigation).

Third-party funding however is different – a funded party will not normally have to pay any amount back to the third-party funder if the proceedings are unsuccessful. And these days it’s not only for financially distressed claimants who lack the ability to bring a claim.

As Ruth Stackpool-Moore, Director of Litigation Funding at Harbour Litigation Funding says, claimants approach her organisation with a request to fund for a variety of reasons ranging from hedging risk to not having a legal budget to fight the case.

To record the funding arrangement, the third-party funder and the funded party sign a Third-Party Funding Agreement covering the matters you would expect, including what and how the funder gets paid out of a money judgement or award, the degree of the funder’s control over the conduct of the proceedings, what happens if there is a disagreement (for instance, around settlement), the funders liability for things like adverse costs orders or security for costs etc. Such agreements are usually bespoke and very much depend on the individual circumstances.

TPF Issues

One of the issues currently exercising a number of jurisdictions is whether there should be greater regulation of the TPF industry to mitigate risk of abuse.

Some, like in England, favour self-regulation where funders subscribe to a voluntary code of conduct setting out capital adequacy requirements, ethical matters, limitation on the withdrawal of funding and what happens in the event of disagreement etc. A particularly important question is the funder’s level of control and ability to influence the conduct of a claim. There are competing views depending upon the jurisdiction – for instance ALF’s voluntary code takes a relatively conservative position requiring a funder “not seek to influence the Funded Party’s solicitor or barrister to cede control or conduct of the dispute to the Funder”.

The alternative view is that since a funder is putting up the money and has a stake in the outcome, important decisions like who to appoint as arbitrator or whether to settle at a particular level are quite properly a matter for funder input.

Jane Player of King & Spalding says “As an adviser I think funders are here to stay  and the good ones leave you alone to run the case and report  back at regular intervals on a risk assessment basis… I see [funders] as a positive influence as they often lend objective thinking to ultimate settlement offer discussions”

The reality is that there is usually little disagreement between the parties to a Third-Party Funding Agreement where it has been well drafted following a solid due diligence process and more importantly where there is effective communication between the parties who understand what is expected of each other.

Ruth Stackpool-Moore again; “When we do our due diligence we try to establish not only the legal merits of the claim, but also the realistic value and the realistic budget. We then agree the cost of funding based on the risks, the size and length of the case. Our pricing process – agreed upfront with the claimant – includes discussions regarding their settlement expectations. Our terms are clearly expressed in our funding agreement, so the claimant can calculate with ease how much they will owe us at all times“. 

Steven Friel, Chief Investment Officer at Woodsford Litigation Funding says;

“Ultimate control rests with the claimant and the claimant’s lawyers. We have the right to provide input, but we don’t necessarily have veto rights. Ultimately, however, my objective as a commercial funder is to ensure that I choose and cultivate the relationships with my claimants in such a way that I rely on cooperation, rather than strict contractual rights, when advancing my position in relation to settlement.

I am delighted to say that I have never found myself in dispute with one of my claimants in relation to settlement (or anything else, for that matter). If there is a dispute however, it is open to either party to refer it for expert determination”.

So, what kind of claims attract third-party funding?

Well, they are usually high value and often international.

There are varying reports of how strong a case must be before it will interest a third-party funder – some reports have that as low as 60% chance of success or as high as 85% – the Jackson Preliminary Report (2009) put it at around 70% for UK funders. Harbour Litigation Funding will fund a claim value greater than £10 million and the only cases unsuitable for funding are divorce and personal injury cases.

One thing is for sure, funders will normally undertake their own case assessment and only fund a very small proportion of the those offered to them.

 Steven Friel again;

“We will only fund meritorious claims, pursued by motivated claimants against solvent defendants, where costs are proportionate to the likely recovery, and where the governing law and jurisdiction afford relative certainty”.

In part two of this article Geoff Sharp will look at what factors are taken into account in deciding whether or not to take a funded case to mediation, how funders decide whether to attend on mediation day and what impact that has on the mediation dynamic, what role they do play if they do attend and the volume of funded cases actually going to mediation… and more

In the meantime, an excellent publication with a focus on contemporary issues in third-party funding of arbitration is Norton Rose Fulbright’s International Arbitration Report, issue 7, September 2016