The UK to Sign The Singapore Convention — The New “New York Convention” for Mediation?
On 2 March 2023, the UK Ministry of Justice (“MoJ”) announced its decision to join the Singapore Convention on Mediation.
The United Nations Convention on International Settlement Agreements Resulting from Mediation (or the “Singapore Convention”) is a relatively new instrument which aims to develop the use of mediation in international commercial disputes by making international commercial mediation settlement agreements directly enforceable in the national courts of signatory states. It was adopted on 20 December 2018, and entered into force on 12 September 2020.
To date, not including the UK, the Singapore Convention has been signed by 55 countries (including Singapore, Qatar, Saudi Arabia, Belarus, Georgia and Iran) and ratified by 10 of those. It has not been signed by the European Union, nor any of its member states. It has been signed (but not yet ratified) by the USA.
A consultation took place last year in the UK on the merits of entering the Singapore Convention. The MoJ’s report on the consultation cited both the financial benefits of mediation and the UK’s desire to remain an international dispute resolution centre. The MoJ also confirmed that the UK would sign the Singapore Convention as soon as possible, with ratification to follow (pending all necessary instruments being put in place), coming into force 6 months after that.
What is the Singapore Convention?
The effect of the Singapore Convention is that, where a party to a qualifying mediated settlement agreement fails to meet its obligations, said settlement agreement can be directly enforced in the national courts of any signatory state rather than needing to re-start litigation or arbitration proceedings. The Singapore Convention is therefore analogous to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards for arbitral awards.
The Singapore Convention is purposely non-prescriptive and has been framed in a way to apply to any processes of a similar nature, regardless of the exact terminology used by the parties. Parties can seek to enforce settlement agreements under the Singapore Convention where they:
i. result from mediation: this is broadly defined to cover any process where “parties attempt to reach an amicable settlement of their dispute with the assistance of a third person or persons (“the mediator”) lacking the authority to impose a solution upon the parties to the dispute” (Article 2(3)). The Singapore Convention excludes from its scope any settlement agreements that would otherwise already be recognized or enforced as court judgments or arbitral awards;
ii. were concluded in writing: this includes electronic format;
iii. resolve commercial disputes: settlement agreements (i) relating to family, inheritance or employment law disputes, or (ii) concluded by a consumer for personal, family or household reasons, are excluded from the scope of the Singapore Convention;
iv. were of an international character at the time of its conclusion: this is where (i) at least two parties have their places of business in different States, or (ii) the State in which the parties have their place of business is different from the State in which the settlement agreement’s subject matter is located, or a substantial part of the obligations thereunder are performed; and
v. were concluded after the date on which the Singapore Convention enters into force for the relevant State.
Enforcement of the Settlement Agreements
Only the country in which enforcement of the agreement is sought must be a signatory to the Singapore Convention (rather than the country of the location of the project, the governing law of the contract, or even of the party’s residence) — parties can therefore seek enforcement in jurisdictions where there are available assets.
The Convention provides very limited grounds for refusing enforcement. These grounds, which are notably similar to those in the New York Convention, include (i) a party’s incapacity, (ii) the mediator breaching his or her standards of conduct, (iii) where granting relief would be contrary to public policy, or (iv) where enforcement would be contrary to the terms of the settlement agreement (i.e., where parties “opt out” of the Singapore Convention in their settlement agreement) (Article 5).
Additional Points to Note
Although the Singapore Convention is silent on its applicability to investor-state disputes, such disputes are not included in the exceptions and therefore seem to fall within its scope. However, States can express a reservation when signing or ratifying the Singapore Convention that it will not apply to settlement agreements to which they or their governmental entities are a party (Belarus, Georgia and Iran have already done this). Signatory States can also make a reservation in their domestic law that the Singapore Convention would only apply where the parties to a settlement agreement have agreed to its application — in other words, settlement agreements that are intended to be enforced in a jurisdiction that has made such a reservation would require an “opt-in” from the parties. It would therefore be good practice to ensure this language is always included in mediated settlement agreements.
In order to be enforced under the Singapore Convention, a qualifying settlement agreement need only be (i) signed by the parties, and (ii) supported by evidence that it resulted from a 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.
In summary, the Singapore Convention is a fairly flexible instrument with few criteria with which to comply, and, in principle, will give parties another option for enforcement, if they are able to reach a mediated settlement.
* Garrett Finch is a trainee in our London office
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.