Singapore Convention On Mediation 2019: Embarking On A New Era In Alternative Dispute Resolution.

Legal News & Analysis - Asia Pacific - Singapore - Dispute Resolution

19 August, 2019

 

On 7 August 2019, Singapore hosted the signing ceremony for the "Singapore Convention on Mediation", which is the first United Nations treaty to be named after Singapore. Since the United Nations General Assembly passed the resolution on 20 December 2018, there have been mixed reactions from the public to the introduction of this Convention.

 

What can we expect from the Singapore Convention on Mediation?

 

Enforceable Mediated Agreements

 

Unless provided for by legislation or otherwise,[1] one of the current challenges is that the mediated agreements usually have to be enforced in the same way as any other contract. That is to say, a claim will have to be brought against the non-conforming party on the basis of the mediated agreement, i.e. a contract, and in accordance with the dispute resolution mechanism set out in the mediated agreement. Although suing on a mediated agreement is relatively straightforward (given that the complex legal and/ or factual disputes would have been addressed and subsumed under the mediated agreement), it is still a hassle to have to commence a claim either in the courts or by arbitration in order to enforce a mediated agreement against the defaulting party.

 

Currently, the Arb-Med-Arb process in Singapore administered by the Singapore International Arbitration Centre ("SIAC") is a potential option to avoid the issue described above.[2] In this process, an arbitration is first commenced, but parties will subsequently attempt to resolve the dispute by mediating at the Singapore International Mediation Centre ('SIMC") in accordance with the SIAC-SIMC Arb-Med-Arb Protocol. If mediation results in a settlement, the parties may be able to enter a consent arbitral award on the terms agreed at the mediation. Such an award could then be enforceable in the 159 member states of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. There is however the risk (albeit negligible)  under this procedure that a Tribunal may refuse its discretion to enter into such award despite the parties' request[3].

 

The Singapore Convention on Mediation would be a welcome change for those with difficulties enforcing a mediated agreement.  It allows mediated agreements to be enforced directly by the competent authority in any of the member countries to the Convention.[4]

 

It also allows a party to the mediated settlement to rely on the mediated agreement, in a member country to the Convention, to prove that the matter has already been resolved.[5] Under the Convention, mediated agreements could be used as a form of deterrence against spurious or frivolous subsequent proceedings which an innocent party would otherwise have no choice but to spend good monies defending.

 

Increased Awareness of Mediation

 

With the on-going hype about mediation, awareness about using mediation as an alternative dispute resolution tool will inevitably be heightened. Jurisdictions which do not already use mediation may be encouraged to carefully consider how mediation may be effectively deployed for resolving disputes.

 

For example, commercial mediation has not taken off in a big way in the Middle East where local circumstances have made it a challenging alternative dispute mechanism to use – persons with the requisite authority are required to attend the mediation, there is a general shortage of trained professionals to administer the mediation etc. However, in the UAE, interest in mediation has recently sprouted on the ground with the UAE Federal Law Number 17 of 2016 being passed for the establishment of mediation and conciliation centres for civil and commercial disputes and a wider range of mediation training courses being offered including by the DIFC Academy of Law and the Chartered Institute of Arbitration.

 

What is required to ensure mediation takes root is however not only better awareness of mediation as an effective alternative dispute resolution mechanism, but in parallel, an adaptation and customization of mediation to suit local needs. It could be that in jurisdictions especially where complex and prolonged disputes have traditionally been required to be fought out "tooth and nail", people may find that mediation is actually a good alternative that could be culture-appropriate, cost effective, allows better control over the outcome and is good for preserving commercial relationships especially where commercial considerations such as future partnering opportunities are aplenty in the jurisdictions which are fast growing their economies and infrastructure.

 

Greater Use of Mediation Internationally

 

The Singapore Convention on Mediation is also expected to provide a uniform and efficient framework which encourages harmonization of the enforcement of mediated agreements internationally. This will then give businesses greater certainty that mediated settlement agreements can be relied upon to resolve cross-border commercial disputes. The potential for the use of mediation in international projects may thus develop exponentially alongside a continuously growing global economy.  

 

Countries who sign up to the Convention early will therefore likely be seen as the leaders in this new era of (alternative) dispute resolution, which are committed to enhancing the dispute resolution options available to projects which it or its businesses participate in.

 

A New Era of Alternative Dispute Resolution

 

With the growth of international trade and projects which see diverse global participation, the Singapore Convention on Mediation is timely to provide a vote of confidence and to increase credibility for the "teeth" that mediation could have in terms of enforceability. However, this can only grow if the number of member countries to the Convention grows to a substantial number. This remains to be seen.

 

The Singapore Convention on Mediation has been touted as the mediation-equivalent of the widely acclaimed New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. We therefore look forward to what the Convention will bring to not only the mediation arena, but also how it could change the dispute resolution preferences around the world in the near future.

 

Clyde & Co

 

For further information, please contact:

 

Prakash Pillai, Partner, Clyde & Co

prakash.pillai@clydeco.com

 

 

[1] For example in Singapore, where a mediated settlement agreement may be recorded as an order of court pursuant to Section 12 of the Mediation Act 2017.

[2] Note that the Singapore Convention on Mediation will likely not be applicable to settlement agreements which are recorded and enforceable as an arbitral award, such as in the case of a settlement agreement reached through an SIAC-SIMC Arb-Med-Arb process.

[3] See paragraph 9 of the SIAC-SIMC Arb-Med-Arb Protocol which provides that "In the event of a settlement of the dispute by mediation between the parties, SIMC shall inform the Registrar of SIAC that a settlement has been reached. If the parties request the Tribunal to record their settlement in the form of a consent award, the parties or the Registrar of the SIAC shall refer the settlement agreement to the Tribunal and the Tribunal may render a consent award on the terms agreed to by the parties."

[4] See Article 3(1) of the United Nations Convention on International Settlement Agreements Resulting from Mediation.

[5] See Article 3(2) of the United Nations Convention on International Settlement Agreements Resulting from Mediation.