The United Nations Convention on International Settlement of Agreements Resulting from Mediation, also known as the Singapore Convention on Mediation (“Singapore Convention”), establishes a standard framework for the enforcement of settlement agreements reached in mediation in international commercial disputes.
The Singapore Convention was signed by its initial signatories in August 2019. To date, 56 countries have signed (including the US, Singapore, and China), and of these, 11 have ratified the Singapore Convention.
For the purposes of the Singapore Convention, “mediation” covers a broad range of settlement processes, and is broadly defined in Article 2(3) of the Singapore Convention on Mediation Act 2020 (“the Convention”) as a process whereby parties attempt to reach an “amicable settlement” of their dispute with the assistance of a third person (“the mediator”) lacking the authority to impose a solution upon the parties to the dispute.
If the settlement process falls within the definition, the Singapore Convention applies regardless of whether the process of settlement is called “mediation”. The aim is to resolve commercial disputes in an amicable manner, which provides parties with substantial cost reductions, greater flexibility, the benefits of efficiency and the opportunity to enforce a settlement agreement.
Key Provisions under the Singapore Convention
The Singapore Convention is designed to assist parties to a mediation with enforcing a settlement agreement.
The conditions for applicability as provided in Article 1 of the Convention are:
- the dispute must be commercial in nature;
- the settlement agreement must be in writing (this includes electronic format);
- the settlement agreement must result from mediation;
- the dispute must have arisen from an international commercial transaction; and
- at least two of the parties must have their place of business in different States, such that the State in which the parties to the settlement agreement have their places of business is different from the State where a substantial part of the obligations are performed or the State with which the subject matter of the settlement agreement is located.
The requirement for parties to a dispute that wish to rely on a settlement agreement under the Singapore Convention is that a party shall apply to a competent authority of the Convention State where relief is sought with the following documents:
- the settlement agreement signed by the parties; and
- evidence that the settlement agreement resulted from mediation, such as the mediator having signed the settlement agreement, or a document attesting that the mediation was carried out by the mediator or a mediation institution.
Article 5 of the Convention provides potential grounds for refusing enforcement of the settlement agreement being:
- i) a party to the settlement agreement was under incapacity;
- ii) the settlement agreement sought to be relied upon –
- is null and void, inoperative or incapable of being performed under the law to which it is subject;
- is not binding, or is not final, according to its terms; or
- has been subsequently modified;
- iii) the obligations in the settlement agreement –
- have been performed; or
- are not clear or comprehensible;
- iv) granting relief would be contrary to the terms of the settlement agreement;
- v) 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; or
- vi) there was a failure by the mediator to disclose circumstances relevant to the mediator’s impartiality or independence, and such failure to disclose had a material impact or undue influence on a party which, in absence of such failure, would not have entered into the settlement agreement.
The competent authority may also refuse to grant relief if it finds that:
- i) granting relief would be contrary to public policy; or
- ii) the subject matter of the dispute is not capable of settlement by mediation.
Article 8 of the Convention provides that signatory countries may make “reservations” such that the Singapore Convention: (a) will not apply to government contracts; and / or (b) will only apply to the extent that the parties have agreed for it to apply, namely, a reservation potentially requiring parties to “opt-in” to the Singapore Convention applying to their settlement agreement.
As outlined, the Singapore Convention gives rise to a number of issues to consider when resolving commercial disputes by mediation, and care should be taken to ensure that the resulting settlement agreement will not be subject to any of the limited grounds for refusing enforcement. If a party decides to “opt-in” to the Singapore Convention, then it should ensure that all the formalities required under the Singapore Convention are complied with when entering into its settlement agreement.
In summary, the Singapore Convention is reasonably flexible, and will give parties another option for enforcement, if they are able to reach a mediated settlement.
Director of Burke Lawyers and Head of our Commercial & Dispute Resolution Divisions, Meghan Warren, is admitted to practice as an Australian Legal Practitioner and as an Attorney at Law to the New York State Bar in the US.
For any assistance with Australian, US or international commercial transactions, dispute resolution or litigation, contact us today on +61 3 9822 8588.