Dispute resolution

The UK consults on signing the fledgling Singapore Convention on Mediation

Published on 22nd Feb 2022

The UN treaty will become more effective as more countries sign up, but, in the meantime, how useful is it?

Statue of justice, Old Bailey court

The UK government has opened a consultation on becoming a signatory to the Singapore Convention on Mediation.

The development comes as the UK mediation sector is estimated to have reached £17.5bn in value in 2020, according to government figures, with mediation saving businesses up to £4.6 billion a year in management time, relationships, productivity and legal fees. The consultation opened in early February and runs until 1 April 2022.

Mediation appeals to commercial parties primarily for its relative speed and low costs compared to litigation or arbitration. It can be tailored to the parties and is generally less adversarial than bringing proceedings, allowing companies to better preserve business relationships. Like arbitration, it is also confidential.
However, for parties based in different jurisdictions, it can be a disincentive to mediate if, to enforce a settlement, proceedings would nevertheless have to be brought in the foreign court.

The Convention – in full, the United Nations Convention on International Settlement Agreements Resulting from Mediation – seeks to change this and has been heralded as the mediation equivalent of the New York Arbitration Convention. In force since 12 September 2020, it currently has 55 signatories. But how useful is it for businesses?

What is the Convention’s purpose?

The Convention's aim is to enable simple cross-border enforcement of international commercial settlements reached by way of mediation. As mentioned above, the current state of affairs requires the bringing of foreign court proceedings (unless the agreement has been incorporated into a court judgment or arbitral award). Where a country has signed up to and ratified the Convention, a party can instead enforce the agreement in that country by applying directly to the foreign court without having to issue proceedings. This could save significant cost and time and provide greater certainty of enforceability.

How useful is the Convention?

There are a number of issues that raise doubts as to the (current) utility of the Convention.

Firstly, the Convention is only effective if a country has ratified it. Of the 55 signatories, only nine have ratified: Belarus, Ecuador, Fiji, Georgia, Honduras, Qatar, Saudi Arabia, Singapore and Turkey. Australia, China, India and the US have signed up but not the EU or an EU member state. By contrast, the New York Arbitration Convention has 169 signatories, all of whom have ratified.

Secondly, there are practical issues regarding enforcement. The Convention allows signatory states to enforce a settlement agreement in accordance with their own procedural rules. One of the attractions of mediation is the ability to agree inventive, commercial settlements. It is not uncommon to agree that one side will provide services to the other, for instance, if the dispute involved unfinished works. If the agreement was then broken, the innocent party would want to ensure that the agreed services were still provided. However, in some jurisdictions, courts are reluctant to enforce the provision of services; for example, if doing so would require the court to monitor performance on an ongoing basis. Such an agreement may be impermissible under that country's procedural rules. In such instances, it is unclear how a party could enforce the settlement.

Another practical issue concerns one of the permitted grounds for refusing enforcement. Relief may be refused where the mediator has committed a “serious breach” of “standards applicable to the mediator or the mediation”, without which the enforcing party would not have agreed to the settlement. There is no guidance on when a breach may be “serious” nor what “standards” these are – there exist no international mediation standards and jurisdictions have very varying approaches when it comes to oversight of mediators. As a result, the rule could be applied inconsistently across jurisdictions, undermining the Convention’s aim of providing a uniform enforcement mechanism.

Finally, the consensual nature of mediation settlements means that they are largely self-enforcing. It is arguable whether an enforceability mechanism is necessary for the vast majority of agreements.

The global rise of mediation

There is no evidence yet of a party using the Convention to enforce a mediation settlement. However, the creation of the Convention and the number of signatories in under two years indicate a growing global interest in mediation.

There was a notable climb in 2020 in  cases registered with key mediation centres, such as that of the International Chamber of Commerce, and this seems likely to have continued in 2021. The Convention itself will probably gain more signatories this year. There are also indications that Australia and the US could ratify in the near future. The American Bar Association has urged the US secretary of state to seek approval of the treaty in the Senate – a forerunner of ratification – while the Australian government has said that it will begin work on implementing the Convention.

In the UK, the civil courts are actively promoting the use of mediation. Last July, the Civil Justice Council (CJC) held that mandatory alternative dispute resolution (ADR) is compatible with the European Convention on Human Rights. In response, the Master of the Rolls, the head of civil justice, stated: "ADR should no longer be viewed as 'alternative' but as an integral part of the dispute resolution process; that process should focus on 'resolution rather than 'dispute'." More recently, for low-value contested civil disputes, the CJC has advocated for a compulsory mediation appointment.

Osborne Clarke comment

The Convention has reinvigorated the global conversation on mediation. As more countries sign up and there are more opportunities for its use, the treaty will become more effective and the above issues may be clarified. The Convention would then be a valuable tool in international dispute resolution and would enable businesses to agree international mediation settlements with greater confidence.

Zoe Hughes-Nind co-authored this article.


 

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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