On the 7th August 2019 the Singapore Convention on Mediation, also known as the ‘United Nations Convention on International Settlement Agreements Resulting from Mediation’ was signed by 46 countries at the official signing ceremony in Singapore. The convention provides a mechanism for parties in a mediation agreement to enforce it in the courts of any country that is a member of the convention.
This landmark convention formalised the enforceability of mediation agreements, as a result it will make mediation as a form of cross-border commercial dispute resolution more attractive. Due to its time and cost-efficient process, mediation allows for an affordable alternative to traditional litigation or arbitration methods.
Singapore Convention on Mediation
What is the Singapore convention on mediation?
It is an international agreement set to formalise settlement agreements made by mediation. This convention is pivotal to international mediation and will bring mediation as a form of alternative dispute resolution to the same status as arbitration and litigation.
“The Singapore convention recognises the value for international trade of mediation as a method for settling commercial disputes in which the parties in dispute request a third person to assist them in their attempt to settle the dispute amicably” - United Nations Convention on International Settlement Agreements Resulting from Mediation
It ensures agreements made between traders become binding and enforceable in accordance with the convention’s regulations. Before the enactment of the Singapore Convention on Mediation, cross-border mediation agreements did not have an efficient and harmonised framework to follow. It was due to this limitation that the United Nations developed the Singapore Convention on Mediation.
Reasons for the creation of the Singapore convention
1. An effort to popularise mediation as a form of alternative dispute resolution.
This chart shows the choice of dispute resolution mechanism preferred.
Image: International Dispute Resolution Survey: Currents of Change 2019 Preliminary Report, Singapore management University
International commercial dispute resolution mechanism of choice by a large majority of respondents between 2016 and 2018 fell on arbitration. This is followed by litigation, hybrid mechanisms involving arbitration, and finally mediation.
The Singapore Convention on Mediation was created to increase the use of mediation in international commercial disputes.
2. Create an internationally recognised expedited enforcement mechanism for mediation agreements.
Unlike users of arbitration, people who use mediation did not rank enforceability very high on the international dispute resolution survey. One explanation for this statistic would be, at the time of drafting mediation agreements, the world lacked an internationally recognised expedited enforcement mechanism for it.
Unlike arbitration which is governed by the international New York convention guaranteeing its enforceability, or litigation where decisions are issued by local judges, mediation lack the sense of security users need to be sure their commercial mediation agreement can be enforced internationally.
The Singapore Convention on mediation aims to be the remedy to that problem by providing a standardised regulatory framework on international mediation. This in turn will allow mediation to become a mainstream dispute resolution option.
The primary goals of the convention are to
When a commercial dispute with cross boarder element arises, parties can choose from one of three dispute resolution methods; litigation in the courts, arbitration or mediation.
Arbitration is the most popular international commercial dispute resolution method followed by litigation according to the ‘International Dispute Resolution Survey’ issued by SMU.
When parties agree to go into arbitration, they are bound by the outcome of the decision made by the impartial arbitrator. The decision is internationally enforceable in 159 countries because of the ‘Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York convention 1958)’.
The objectives of the New York convention are to provide a common legislative standard for the recognition of arbitration agreements and the enforcement of foreign and non-domestic arbitral awards. The ancillary aim is to deny access to court proceedings in contravention of an arbitration agreement.
For an easier understanding of the Singapore convention on Mediation, think of this convention as the equivalent of the New York convention on arbitration but for mediation.
Litigation is the process of bringing a claim, called a lawsuit, before a court to enforce a particular right. Lawyers will present arguments on both sides before a judge to decide. It involves many complex legal procedures; therefore, it is arguably the most expensive and time inefficient dispute resolution method.
The choice to use litigation as a mechanism for dispute resolution depends on the complexity of the case and whether or not specific expertise is required.
For example, two parties from different countries disputing about goods located in another country will have to address difficult questions of legality, what laws apply, and the enforcement of foreign judgments. In this situation international arbitration may be a better choice due to the expertise of the tribunal, normally consisting of experienced professionals.
Alternatively, litigation is recommended where a dispute arises from corrupt institutions and therefore require impartial (neutral) judgement.
The signing of the Singapore Convention on Mediation last week will improve the confidence of parties using mediation as an alternative to litigation or arbitration as a mechanism to resolve international commercial dispute. This confidence comes from the prestige and trust an internationally recognised expedite enforcement mechanism connotes.
Widening the scope of ADR options will improve access to justice and the rule of law worldwide.
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