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Overview: The Singapore Convention on Mediation

Published on : 21 Aug 2021
Author(s):Several

The Singapore Convention on Mediation

“An ounce of mediation is worth a pound of arbitration and a ton of litigation!”

                                                                                          — Joseph Grynbaum

Introduction 

Mediation is a fairly underrated process of dispute resolution as compared to arbitration. Corporations and individuals choose arbitration instead, overlooking the many benefits that can be derived out of mediation. The mechanism used to settle your dispute is the key difference between mediation and arbitration. 

On the one hand, mediation allows settlement of dispute amicably between the parties and is a non-binding process, while on the other hand, arbitration is binding. 

Sometimes parties go through a shaky patch which does not necessarily call for a lawsuit but merely require a mediator to advise them on how to go around the dispute at hand. As compared to litigation, mediation allows parties to come together in an environment where they can freely present their position, along with the advantage of keeping their dispute confidential. 

In modern times, mediation is gaining immense popularity because of its cheap, easy and quick nature of dispute resolution. Though not binding, it allows parties to reach a settlement amicably, which can be advantageous in cases of minor disputes. Therefore, efforts are being made by countries to promote this means of dispute resolution. 

One such effort in unifying the mediation process into one cohesive framework is the Singapore Convention on Mediation. This Convention aims to facilitate international trade and business by affording parties an opportunity to invoke dispute resolution process across borders. 

The Singapore Convention on Mediation is a multilateral treaty; it aims to provide an efficient framework to its signatories to resolve international commercial disputes. This treaty can be seen to draw a similarity to the New York Convention that was signed with respect to arbitration. 

Further, just like arbitration has become so widely used for solving commercial disputes, this treaty aims to promote the use of mediation in the same way. The absence of a cross-border process to provide legal force to negotiated settlement agreements is considered to constitute a major obstacle to the ability of some organizations to use mediation.

The need for this Convention was seen when the UNCITRAL noticed that mediation settlements are harder to enforce in the domestic as well as the international sphere. In some jurisdictions, many businesses find it difficult to persuade their business partners to participate in mediation based on the perception that it lacks a stamp of international legitimacy, such as the New York Convention. The introduction of this Convention will allow companies to successfully conduct mediation proceedings. Further, it will also serve as an added alternative to litigation and arbitration. 

Key Features 

Having said that, we can say the Convention has the following features:

  1. The parties should conduct business in two different states.
  2. The Convention offers a consistent and effective procedure to implement the terms of that agreement in other jurisdictions for parties who have agreed to a negotiated settlement, in the manner that the New York Convention does for international arbitral awards.
  3. Further, the Convention can be invoked as a defense to claims that have already been settled. 
  4. There are certain matters that are excluded from the ambit of the Convention, such as arbitration awards and court judgments that involve employment, family and inheritance matters.  

How can the Convention be enforced?

The party that is seeking enforcement of the Convention has to provide the following to the relevant authority:

  1. A copy of the mediation settlement agreement; the agreement must be signed by both parties.
  2. Any such document that serves as evidence of the mediation settlement.

The authority whose ratification is sought for enforcement shall then expeditiously consider the enforcement application. Further, there may be cases in which the authority can reject the enforcement of the settlement. Those circumstances are as follows:

  1. In any case where the parties were under some incapacity, or the settlement agreement was rendered null and void due to some unavoidable circumstance.
  2. The settlement agreement has been modified, or have the terms of such a settlement be rendered not binding. 
  3. In any case, where granting relief would be against public policy or the relief would be contrary to the terms of the settlement agreement.
  4. Further, the enforcement can be rejected in case there was a conflict of interest that became apparent on the part of the mediator—basically, showing that the mediator was impartial. 

Important Provisions 

The Convention constitutes 16 Articles that lay down the provisions required to be adhered to, to avail mediation. Some important provisions are:

  1. The scope of application (Article 1); this Article lays down the requirements that must be fulfilled for parties that wish to avail enforcement of a settlement under this Convention. The requirements are:
    1. The parties to the settlement agreement must have businesses in different states.
    2. The state in which the parties have their places of business should either be in a place where they perform a substantial part of their business or the place where the subject matter of dispute has arisen.

It also lays down the settlements that do not come under the ambit of the agreement.

  1. Personal, family, employment, inheritance issues.
  2. Any settlement agreement that has arisen out of a court’s judgment and is enforceable as a judgment in that state where it was pronounced.
  3. Settlements that have been recorded as an arbitral award. 
  4. Requirements for reliance on settlement agreement (Article 4), which basically implies its enforcement, as has been previously discussed. 
  5. Further, it is also important to keep in mind the grounds for refusing to grant relief as under Article 5 of the Convention.
  6. The fact of a parallel application implies that the existence of a settlement made through an arbitral award or a judgment (Article 6).
  7. The treaty also allows signatories to have their reservations with respect to the application of the treaty. They may choose whether or not they want a particular section to apply to their country in specific. 

Implications of the Convention 

The Convention has come into force at the right time, considering the need for speedy and cost-effective methods of dispute resolution. The pandemic has impacted civil litigation in such a way that parties are forced to look for and resort to alternative methods of dispute resolution. 

The Singapore International Mediation Center (SIMC), in May 2020, gave rise to a SIMC Protocol. This protocol aimed to provide a swift and inexpensive route for the resolution of commercial disputes during the pendency of the Covid-19 virus. This system would be introduced to expedite the mediation process through virtual means. Further, it also aimed to organize the mediation settlement process within ten days of filing an application for settlement through mediation. 

The UK Government Cabinet Office also strongly encouraged the use of alternative means of dispute resolution such as this. Further, even the Scottish government is seeking to integrate the mediation system within their domestic system of dispute resolution as a responsible means to attain civil justice in these times of need. 

Further, for the first time in years, the LCIA has noticed the need for an amendment of their rules with respect to mediation. The Convention has, therefore, created a whirlwind of change in the atmosphere surrounding mediation, further facilitating the growth of mediation globally by making it more accessible and cost-efficient for its users. 

This Convention, therefore, has served as an effective means to promote mediation globally. Further, it not only provides the machinery to facilitate settlement but also lays down provisions for its enforcement. 

The pandemic has urged more and more states to ratify this treaty and therefore assures that it will become a means that will be available to jurisdiction across the world. 

Challenges 

Despite its advantages, there are certain challenges that the implementation of the Convention may face. 

Considering that the settlement by mediation has to be enforced under domestic law poses a threat to the confidentiality of the mediation agreement between the parties. The crux of any mediation agreement between parties is the fact that it is confidential in nature. This enforcement procedure may cause some hurdles in carrying out the process in the first place, considering that the mediator may show reluctance to carry out such a settlement. 

Further, the Convention is not yet globally ratified and accepted. This means that mediation may be rendered useless if there is no domestic mechanism to enforce it. 

Moreover, there is an absence of rules and regulations that regulate the conduct of mediators. This lack of international standards of regulation may serve as a hurdle. The mere fact of self-regulation on the mediator’s part cannot be depended on without a written set of regulations. 

Some concerns may also be raised regarding the enforcement of domestic law in terms of the solution that is suggested by the mediator. For instance, if the solution suggested by the mediator goes beyond the ambit of the court’s rules, the enforcement will be rendered null and void, and the parties will ultimately have to resort to arbitration or litigation for resolution. 

The success of the Convention can only be determined when it becomes completely harmonious with the local laws of any specific jurisdiction. In any case, where the local laws do not agree with the mediation convention, its implementation will become impossible. 

As of March 2020, the UK, Australia and the EU remained absent from the signing of the treaty. These major countries remaining absent from the treaty may serve as an impediment to the countries conducting business with these countries since it will bar them from utilizing the mediation process for settlement. 

KSA’s Ratification 

Saudi Arabia signed the treaty on 7 August 2019. However, it only ratified it on 5 May 2020. Saudi had certain reservations with respect to the enforcement of the Convention wherein it was declared that the treaty would not apply to settlement agreements that were signed by government agencies or any other person acting on behalf of the government agency. 

There are around 53 signatories to the treaty, which implies that the treaty is an operation to any agreement signed between parties that reside within the territory of these states. 

In the wake of the Covid-19 pandemic, it has become especially difficult for parties to conduct litigation proceedings because of a lack of funds. This lack of funds pushed Saudi to adopt the Convention so as to provide businesses with a cheaper, cost-effective medium of dispute resolution. 

Further, by further promoting cross-border conflict settlement, the Convention is expected to further improve the efficiency and efficacy of global trade. It recognizes that the use of mediation results in considerable advantages, such as minimizing cases where a conflict contributes to the termination of a contractual partnership and, in effect, creates major savings in the administration of justice by States.

In line with the Convention, Saudi has also launched a national Covid-19 Emergency Mediation Program by the Saudi Center of Commercial Arbitration (SCCA). This program basically allows parties to enforce their international mediation settlement agreements. 

This program also acts as a way to facilitate both international as well as domestic mediation. The SCCA has further, even reduced mediation fee in line with the economic crisis due to the pandemic; it also allows parties to conduct mediation proceedings on a virtual basis. 

 

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