Following only modest engagement with its consultation of the UK legal sector, the UK Government announced that it will sign the United Nations’ Convention on International Settlement Agreements Resulting from Mediation (the Singapore Convention). The Singapore Convention was negotiated and drafted through the UN Commission for International Trade Law (UNCITRAL) and is designed to provide a framework for the recognition and enforcement of mediated settlements.
The Singapore Convention is a multilateral treaty which enables a party which has entered into a mediation to enforce the resulting cross-border mediated agreement in any country that is Party to the Convention, without needing to commence an action for breach of contract (at present in the United Kingdom any mediated settlement only has the status of a contract).
By joining the Singapore Convention, the UK will reaffirm its position as a hub for international dispute resolution, signal the UK’s commitment to Alternative Dispute Resolution and increase the credibility of UK-based mediators, thereby promoting the wider use of mediation as an internationally recognised and viable option for commercial dispute resolution.
Joining the Convention will also provide certainty on the enforceability of international commercial settlement agreements. Due to the non-reciprocal nature of the Convention, mediated settlement agreements that are within the scope of the Singapore Convention are already enforceable in states that are parties to the Convention.
When does the Singapore Convention apply?
The Singapore Convention will apply when:
The settlement agreement was concluded after the Convention had been entered into force in the state concerned;
The settlement agreement results from a mediation;
The settlement agreement is concluded in writing, which includes settlements concluded electronically; and
The dispute is international in nature, i.e.:
at least two parties to the settlement agreement have their places of business in different states; or
the state in which the parties have their places of business is different from either the state in which the substantial part of the obligations under the settlement agreement is to be performed or the state with which the subject matter of the settlement agreement is most closely connected.
Parties who wish to apply to have their settlement agreement enforced under the Singapore Convention will have to supply documents to the competent authority of the state in which
they wish enforcement to take place, including the settlement agreement signed by the parties and the mediator, and evidence that the settlement agreement resulted from mediation, also signed by the mediator.
When the Singapore Convention does not apply:
The Singapore Convention does not apply to settlement agreements:
Relating to family, inheritance or employment law, or consumer transactions;
That have been approved by a court or concluded in the course of proceedings before a court and are enforceable as a judgment in the State of that court; or
That have been recorded and are enforceable as an arbitral award.
Grounds for Refusing enforcement:
The competent authority of the state in which any settlement agreement is sought to be enforced may refuse enforcement under the Singapore Convention on any of the following grounds:
A party to the settlement was under some form of incapacity;
The settlement agreement is technically ineffective, is not binding or not final, or has been subsequently modified;
The obligations in the settlement agreement have already been fulfilled or are not clear or comprehensible;
The settlement agreement sought to be relied upon is null and void, inoperative or incapable of being performed;
Granting relief would be contrary to the terms of the settlement agreement itself;
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;
There was a failure by the mediator to disclose circumstances that raise justifiable doubts as to his or her impartiality or independence and that failure had a material impact or undue influence on a party which would not otherwise have entered into the settlement agreement;
It would be contrary to the public policy of the state where enforcement is sought (for example, fulfilment of the underlying contract would amount to fraud or would be otherwise illegal); or
The subject matter of the dispute is not capable of settlement by mediation under the law of the state where enforcement is sought.
Potential problems with the application of the Singapore Convention
Problems could arise, for example, in relation to global inconsistencies in mediator standards, and questions of confidentiality. Different approaches to mediation confidentiality could potentially pose a risk of the ‘veil of confidentiality’ being lifted by foreign enforcing courts beyond the limited circumstances expected by parties mediating in the UK.
There could also be a risk of enforcement being refused on the grounds that the settlement did not result from mediation (e.g. when the settlement agreement was not signed until some time after the mediation).
Further uncertainties could arise in relation to the extent to which an enforcing court will be able to engage with a dispute over the interpretation of a settlement agreement, particularly where the parties attempt to put forward different interpretations.
Reservations under Article 8 of the Singapore Convention
The UK Government has announced that it will be not relying on the two reservations under Article 8 of the Singapore Convention.
The UK will not apply the first reservation at Article 8(1)(a) which would (if it were to have applied) have the effect of excluding any mediated settlement agreements involving the UK Government.
The UK will also not apply the second reservation at Article 8(1)(b) which would (if it were to have applied) have the effect that the Singapore Convention would not apply automatically to mediated settlement agreements, but only where the mediating parties specifically agree to opt in to the Singapore Convention applying.
The Singapore Convention will therefore be applicable in principle to all commercial cross-border mediated settlement agreements.
Opt-Out
It should be noted that parties will still be able to opt-out of the effect of the Singapore Convention if they wish to do so, by explicitly stating in their settlement agreement that the Convention should not apply.
Signatories
Since the Singapore Convention opened for signatures on 7 August 2019, 55 countries have signed it, including the United States, China, India, Malaysia; and 10 countries have ratified it: Singapore, Fiji, Qatar, Saudi Arabia, Belarus, Ecuador, Georgia, Honduras, Turkey, Kazakhstan. The Singapore Convention first came into force on 25 February 2020 (upon its ratification by three 3 states).
It is remarkable that on 7 August 2019, 46 countries signed the Singapore Convention. This represents the highest uptake for the first day of any UN trade convention. However, the European Union has not signed the Singapore Convention. It seems this is because the question of whether individual EU member states or the European Union will sign has yet to be resolved.
Next Steps
The UK Government says that signing the Singapore Convention will represent, “a clear signal to our international partners that the UK is committed to maintaining and strengthening its position as a centre for dispute resolution and to promote the UK’s flourishing legal and mediation sectors.”
The UK Government has confirmed that it will sign the Convention as soon as possible. Ratification will take place once the necessary implementing legislation and rules have been put in place. The Convention will come into force in the UK six months after the UK has deposited its instrument of ratification at UN Headquarters in New York.
Laytons ETL’s Comment
Joining the Singapore Convention will enhance the UK’s attractiveness as a place to do business, as well as its reputation as an international dispute resolution centre. However, in any international dispute, it remains important for parties to seek appropriate legal advice to ensure that their interests are protected, particularly in the context of any mediation where a settlement agreement could fall within the ambit of the Singapore Convention.
