The Singapore Convention on Mediation: A New Tool to Enhance Cross-Border Dispute Resolution

Introduction

As discussed in a prior article , international commercial mediation is a process of negotiation between companies in which a neutral facilitator (the mediator) attempts to help the companies amicably resolve a dispute without the need for time-consuming and costly litigation or arbitration. Mediators do not decide which company wins or loses a dispute (as a judge does in litigation or an arbitrator does in arbitration), but rather try to facilitate settlement discussion between the companies. International commercial mediation is a voluntary process, and as such it is non-binding unless and until the companies sign a settlement agreement to resolve their dispute.

But what happens if the companies sign a settlement agreement and then one company changes its mind and does not comply with the agreement? Is there a way the other company could enforce the settlement agreement?

Of course, companies are well advised not to sign a settlement agreement unless they intend to comply. At any rate, the answer currently is that the other company likely would have to use litigation or arbitration and claim for breach of the settlement agreement. Besides the time and expense involved, any such arbitration or litigation might potentially lead to examining the substantive issues in the underlying dispute, which is precisely what the mediated settlement had sought to avoid.

In the future, however, companies may be able to rely on an alternative mechanism to enforce the settlement agreement: the United Nations Convention on International Settlement Agreements Resulting from Mediation (“Singapore Convention on Mediation” or “Convention”) (See https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/EN/Texts/UNCITRAL/Arbitration/mediation_convention_v1900316_eng.pdf ). Below we discuss the content and status of the Singapore Convention on Mediation.

What is the Singapore Convention on Mediation?

The Singapore Convention on Mediation is an international treaty that provides a framework for a “competent authority” (typically courts) of a country that is party to the Convention to recognize and enforce settlements that result from international commercial mediation. Similar to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) ( June 30, 2020 ZeLo journal ), the Singapore Convention on Mediation is intended to support cross-border commercial activities by facilitating the enforcement of international mediated settlement agreements.

Specifically, the Singapore Convention on Mediation applies to settlement agreements that are made “in writing” and result from a mediation which was conducted to resolve an international commercial dispute. The term “commercial” is of course broad; the Convention excludes from its scope only disputes involving consumer transactions for personal, family, or household purposes and those that relate to family, inheritance, or employment law. Separately, settlement agreements that are enforceable as a court judgment or as an arbitral award also are excluded from the Convention’s applicability.

In addition, the Convention states that “international” means a dispute either (i) where at least two of the companies that are party to the settlement agreement have places of business in different countries, or (ii) where the country in which companies have their place of business is different from the country in which a substantial part of the obligations under the settlement agreement is performed or from the country with which the subject matter of the settlement agreement is most closely connected. 

Countries that ratify and thereby join the Singapore Convention on Mediation (see below) are obliged to enforce international mediated settlement agreements in accordance with their national rules of procedure and conditions set out in the Convention. The Convention will apply automatically, without companies that are party to settlement agreements having to “opt in.” However, the Convention contains a reservation provision that would allow ratifying countries to declare they will apply the Convention only if parties to a settlement agreement have so agreed.

As to requirements for the settlement agreement itself, the Convention stipulates that the agreement must be signed by all parties and show that it resulted from mediation by including the signature of the mediator, a statement from the mediator or institution that administered the mediation, or other evidence. Further, the competent authority reviewing the enforceability of a mediated settlement agreement may ask for a translation of the agreement if necessary and also request any document needed to verify compliance with the Convention.

Importantly, the Singapore Convention on Mediation also specifies limited grounds on which enforcement of a mediated settlement agreement may be refused. These grounds include if:

1. a party to the settlement agreement was incapacitated;
2. the settlement agreement is void or incapable of being performed under applicable law, is not binding or final, or has been subsequently modified;
3. the settlement agreement’s obligations have been performed or are unclear or not comprehensible;
4. granting relief would be contrary to the settlement agreement’s terms;
5. there was a serious breach of standards applicable to the mediator or mediation and without this breach a party would not have agreed to the settlement; or
6. the mediator failed to disclose circumstances giving rise to justifiable doubts about the mediator’s impartiality or independence and this failure to disclose led a party to enter into the settlement agreement.

The company claiming that the settlement agreement should not be enforced based on any of the grounds above has the burden of proof.

The Convention also provides for the possibility that a competent authority may refuse enforcement of a mediated settlement if it finds that the agreement is contrary to the public policy of the country where enforcement is sought, or if the subject matter of the dispute is not capable of settlement by mediation under that country’s laws.

In sum, the Singapore Convention on Mediation reflects a “pro-mediation” approach that is meant to prevent companies from avoiding enforcement of international mediated settlement agreements unless they can prove that one of the limited grounds for refusing to enforce applies.

What is the Status of the Singapore Convention?

The Singapore Convention on Mediation was adopted by the United Nations General Assembly in December 2018 and opened for signature by all countries on August 7, 2019 at a ceremony in Singapore. On that day, 46 countries, including the United States, China, and India, signed the Convention. As of early February 2022, 55 countries have become Convention signatories. Japan has yet to become a signatory and reportedly is examining whether any of its domestic laws may need to be amended in light of the Convention (see https://practiceguides.chambers.com/practice-guides/enforcement-of-judgments-2021/japan/trends-and-developments ).

※Updated on October 4, 2023
On October 1, 2023, Japan began the process to join the Singapore Mediation Convention. Japan is the 12th signatory country and the treaty will come into effect for Japan on April 1, 2024.

The Singapore Convention on Mediation requires each signatory country to ratify the Convention through enactment of national legislation in order for the Convention to be effective in that country. Singapore, Fiji, and Qatar did so as of March 2020, and by its terms the Convention entered into force six months later in those three countries. Since then six more countries have ratified the Convention (the Convention has entered into force in three of these countries and will do so in the other three by the end of June 2022) ( for a list of countries that have signed and ratified the Singapore Convention on Mediation, see https://www.singaporeconvention.org/jurisdictions ).

Practical Points and Conclusion

At present, application of the Convention is somewhat limited because it has been ratified in only nine countries. Despite that fact, however, and even though Japan has not yet signed the Singapore Convention on Mediation, international mediated settlement agreements (wherever these agreements have been made) involving Japanese companies may be enforceable in the ratifying countries where the Convention has entered into force.

Of course, the goal of such enforcement proceedings is to ensure compliance with the settlement agreement’s terms, for example, to compel a company that has agreed to pay money to do so. Therefore, as a practical matter, enforcement typically would be pursued in countries where a company has assets from which settlement amounts may be paid. As more countries ratify the Convention, its scope of practical applicability will expand.

This will take time, but the Singapore Convention on Mediation is still relatively new and it took the New York Convention a number of years before it became the effective tool for enforcing arbitral awards that it is today. In the words of George Lim, SC, current Chair of the Board of Directors of the Singapore International Mediation Centre: “If nations believe in mediation as a means to resolve disputes efficiently and effectively, there seems to be every incentive for them to sign and ratify the Singapore Convention immediately. Over 160 nations are signatories to the New York Arbitration Convention; global trade and investment will be boosted if all those nations now offer the same enforceability mechanism to international mediated settlement agreements.” (see https://imimediation.org/2020/07/21/7-keys-government-sign-ratify-and-implement-the-singapore-convention-on-mediation)

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Click here for the Japanese translation article.

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The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only. Readers of this article should contact an attorney to obtain advice with respect to any particular legal matter.