United Nations Convention on International Settlement Agreements Resulting from Mediation

The United Nations General Assembly adopted the United Nations Convention on International Settlement Agreements Resulting from Mediation, which is also known as the Singapore Convention on Mediation, in December 2018, in light of the significant momentum that mediation has gained as an effective tool for settling disputes related to international trade. The primary objective of this Convention is to establish a unified framework for the recognition of international settlement agreements resulting from mediation and the method of their enforcement.

Scope of application and exceptions

Mediation means “a particular and confidential method or process in which a neutral third party (the mediator) assists two or more parties in the dispute to reach a mutually acceptable solution.” (1)

The Convention provides that its provisions apply to settlement agreements concluded after mediation proceedings have taken place between the parties, provided that such agreements are “international” at the time they are concluded.

A settlement agreement is deemed international if the places of business of at least two of the parties are in different States, or if the State in which the parties’ places of business are located is different from the State in which a substantial part of the obligations imposed under the settlement agreement is to be performed, or from the State most closely connected with the subject matter of the settlement agreement.

The aforementioned concept of place of business is consistent with current global commercial practices, and also takes into account the complex structures of international corporations in some cases. (2)

The Convention also identifies the types of settlement agreements that are excluded from its scope of application, which are the following agreements:

1. Settlement agreements concluded by a consumer for personal or family purposes.
2. Agreements relating to family, inheritance, and employment law.
3. Agreements that are enforceable as court judgments or arbitral awards, in order to avoid conflict with other relevant international conventions, such as the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), and the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters (2019). (3)

Obligations of the parties to the settlement agreement

The Convention obliges the States Parties to enforce settlement agreements and grants them the right to invoke them against third parties.

The Convention also grants each State the freedom to determine the appropriate procedural mechanisms to implement these provisions, in light of the conditions set forth in this Convention. (4)

Formal requirements for invoking the settlement agreement

The Convention stipulates certain formal requirements for invoking settlement agreements, which are as follows:

1. Submission of the settlement agreement signed by all of its parties.
2. Submission of proof that the agreement resulted from a mediation process (a certificate issued by the mediator, for example).
3. The competent authority is entitled to request any additional documents to verify satisfaction of the requirements.
4. The signatures of the parties and the mediator on electronic communications, if any.
5. The competent authority may request a translation of the settlement agreement. (5)

Due to the absence of a stable system for applying settlement agreements resulting from mediation, many parties used to apply them as a contract concluded between the parties, whereby the party harmed by its non-application resorted to the judiciary by filing a claim based on the breach of contractual terms. (6)

Grounds for refusing the application of the settlement agreement

The Convention restricts the authority of the competent entities in the States Parties to refuse the application of the settlement agreement within the following grounds:

1. Grounds relating to the parties: such as one of the parties lacking contractual capacity.
2. Grounds relating to the settlement agreement: such as the agreement being unclear or unenforceable, or not binding on its parties pursuant to its terms, or being modified after it was agreed upon.
3. Grounds relating to the mediation process: such as a serious violation undermining a party’s ability to participate in the mediation process, or the failure of the mediator to disclose information that raises serious doubts about his neutrality and independence.
4. Grounds allowing the court to refuse ex officio: if the enforcement of the agreement is contrary to the public order of that State, or if the subject of the dispute is not capable of settlement by mediation under the law of that State. (7)

Permissible reservations

The Convention allows any party thereto to express two main reservations, namely:

1. Excluding settlement agreements in which the State or any of its governmental bodies or any person acting on behalf of such bodies is a party.
2. Limiting the application of the Convention only to those agreements whose parties expressly agree to subject them thereto. (8)

The importance of these reservations lies in granting the States Parties to the settlement agreements a degree of flexibility that encourages them to become a party to this Convention.

Finally, it must be noted that the most significant issue facing the Convention is that it regulates the application of settlement agreements resulting from mediation, and not the agreement to resort to mediation itself. Consequently, it does not extend to the case where one of the parties breaches or refuses to resort to mediation in the first place — contrary to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), which regulates the enforcement of arbitral awards in addition to the arbitration clauses themselves. This necessitates incorporating such regulation into the Convention in the future. (9)

 

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Sources:

1. Prof. Dr. Sayed Ahmed Mahmoud and others, “Mediation as one of the amicable means of settling civil and commercial disputes and others” — A comparative study — Toward a mediation law in Egypt, a research submitted to the Conference on Drafting Contracts and Agreements and Their Impact on Arbitration, p. 424.
2. Report of Working Group II (Dispute Settlement) on the work of its sixty-eighth session in New York, from 5 to 9 February 2018, within the preparatory work for the United Nations Convention on International Settlement Agreements Resulting from Mediation, published on the official website of the United Nations, p. 6–7.
3. Article 1 of the United Nations Convention on International Settlement Agreements Resulting from Mediation, issued in December 2018. For further detail: Prof. Dr. Mohamed Salem Abu Al-Faraj, “The Singapore Convention: Mediation and International Investment Disputes” — An analytical study of the Convention and the challenges of mediation in investment disputes — Al-Majalla Al-Qanuniya, Faculty of Law — Cairo University, Khartoum Branch, p. 212 et seq.
4. Article (3) of the Convention.
5. Article (4) of the Convention.
6. David Tan, Prolegomena to the UN Convention on International Mediated Settlement Agreements Resulting from Mediation, Uniform Law Review, Vol. 27, Issue 1, March 2022, pp. 37–63.
   Prolegomena to the UN Convention on International Mediated Settlement Agreements Resulting from Mediation | Uniform Law Review | Oxford Academic.
7. Article (5) of the Convention.
8. Article (8) of the Convention.
9. Report of Working Group II within the preparatory work, previous reference, p. 15. And David Tan, previous reference, pp. 37–63.