REUTERS | Vivek Prakash

Arbitration, mediation, and the Singapore Convention on Mediation

The New York Convention is regarded as one of the key drivers behind the success of international arbitration. More than 60 years after the adoption of the New York Convention, will the Singapore Mediation Convention make similar strides for mediation?

Arbitration and mediation are both popular alternative means of resolving cross-border commercial disputes, and each have their distinct features.

In arbitration, parties agree to submit their disputes to one or more arbitrators who render an award based on the applicable law, that typically falls under the supervision of the national court where the arbitration is seated. While the process is flexible, it does employ some of the key skeletal features of the litigation process. An arbitral award is binding on the parties and is valued for the relative ease of enforcement via the New York Convention. In contrast, mediation is a consensus driven approach to dispute resolution, which allows parties to agree to creative solutions with the assistance of a third party facilitator. Mediation is non-binding unless and until the parties agree terms of settlement. However, unlike arbitration awards, there is currently no internationally accepted regime for the enforcement of mediated settlement agreements. Notwithstanding, the appetite for mediation has been gaining traction globally.

Arb-Med-Arb

A desire to combine the flexibility of mediation with the ease of enforcement in arbitration has driven the promotion of multi-tiered mechanisms that combine the use of mediation and arbitration (commonly known as Arb-Med-Arb). Several common law jurisdictions, such as Canada, Hong Kong, Malaysia, Singapore, Australia, and civil law jurisdictions like China and Vienna have incorporated legislative infrastructure that facilitates the combined use of mediation and arbitration. A number of arbitral institutional rules have done the same. Of note is the Singapore International Arbitration Centre (SIAC) and the Singapore International Mediation Centre (SIMC), which are the only institutions to offer a model clause and a protocol for what they dub “Arb-Med-Arb” proceedings. In SIAC’s Arb-Med-Arb process, a dispute is first referred to arbitration, but forks to mediation on part(s) or even the entirety of the dispute. Any mediated settlement is to be referred back to the tribunal hearing the dispute, and recorded as a consent award which is generally regarded as enforceable under the New York Convention. If mediation is unsuccessful, parties would continue with the arbitration proceedings.

The main selling point of Arb-Med-Arb is its ability to overcome challenges with enforcing a mediated settlement and the incorporation of conciliatory negotiation away from legal and fact detail. Not ironically, it has drawn criticism for the same reason, that is, being a mediation in disguise, and an abusive attempt to legitimise what would otherwise be an “unenforceable” mediated settlement. There have also been concerns with the risks against neutrality and confidentiality arising from an arbitral tribunal that engages in settlement facilitation in the same set of proceedings. Academics question how consent is properly obtained in each of the separate caucuses. They also question the burden it imposes on the supervisory court that is charged with determining the enforceability of “arbitral awards” that are products of “create your own alternative dispute resolution” regimes. In practice, the adoption of Arb-Med-Arb is still in its early days.

With the recently approved Singapore Convention on Mediation, this could all change.

The Singapore Convention on Mediation

For the past five years, an UNCITRAL Working Group has been working on an international instrument to enhance the credibility and enforceability of international settlement agreements. On 26 June 2018, UNCITRAL approved the final draft of the United Nations Convention on International Settlement Agreements Resulting for Mediation (the Singapore Convention). The Singapore Convention is due to be signed on 7 August 2019, and will come into force six months after it has been ratified by at least three UN member states.

The Singapore Convention offers a streamlined procedure for the expedited enforcement of all mediated settlements in cross-border commercial disputes worldwide. The intention is to provide a regulatory foundation that bolsters the credibility and value of mediation as an alternative method of resolving cross-border commercial disputes.

The Singapore Convention’s key mandate (the international recognition and enforcement of mediated settlement agreements) is set out in Article 3. It calls on all signatories to enforce settlement agreements falling within the scope of the Convention; and allows all interested parties to “invoke the settlement agreement” where “a dispute arises concerning a matter that a party claims was already resolved”.

Articles 1 and 4 set out the scope of mediated settlements and the requirements that must be met in order for parties to qualify for Article 3 relief. In essence, there must be proof of a settlement agreement concerning a cross-border dispute that resulted from mediation in the presence of a mediator.

Article 5 sets out the grounds on which the competent authority of a signatory jurisdiction may refuse to enforce a settlement agreement. Article 5 includes grounds that also exist under Article V of the New York Convention, for example where relief would be contrary to public policy (Article 5(2)(a)), or where the dispute is not capable of settlement (Article 5(2)(b)). Additional grounds under Article 5 account for the features of the mediation process and settlement agreements. For instance, relief may be refused under Article 5(1)(e) if there was “a serious breach by the mediator of standards applicable to the mediator or mediation”, or under 5(1)(c) where “the obligations in the settlement agreement have not been performed, or are not clear or comprehensible”.

Impact on ADR landscape and on the future of med-arb

The Singapore Convention could alter the alternative dispute resolution (ADR) landscape in at least two ways.

First, it could lead to an increased use of mediation as an ADR mechanism for international commercial disputes. Mediation is already popular in established centres of mediation like the UK, US and Singapore. Outside these jurisdictions, many state-led institutional initiatives have introduced legislative infrastructure to facilitate its adoption. The development of an internationally recognised regime for the recognition and enforcement of mediated settlement agreements could accelerate this growth.

Second, the Singapore Convention could mark the end of the Arb-Med-Arb clause and protocol. As mentioned previously, the main incentive of these multi-tiered mechanisms was to harness the conciliatory nature of mediation alongside the certainty that arbitration awards afford. With the Singapore Convention, these differences are tapered. The criticism directed at Arb-Med-Arb being an abusive attempt to legitimise an “unenforceable” mediated settlement arguably loses its warrant. Commercial parties who have a preference for resolving their differences by amicable, non-adversarial processes might opt for pure mediation.

All this is mere speculation. The impact of the Singapore Convention will very much depend on whether states choose to embrace it in the same way they have with the New York Convention. Given that mediation is more popular in some jurisdictions than others, support for the Singapore Convention might mirror the same disparity. In any event, as the applicability of the Singapore Convention requires adoption into every ratifying state’s domestic laws, it will be some time before the impact of the Singapore Convention may be accurately determined.

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