The Best of Both Worlds: Resolving Disputes & Preserving Commercial Relationships
On 7 August 2019, Singapore became the first signatory of the United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as the Singapore Convention on Mediation. The treaty has since been signed by 46 member states of the United Nations including the United States, China and India.
What is Mediation?
Mediation is best described as a voluntary and confidential process in which the parties seek to find a practical solution to their dispute. The parties are guided in their decision-making process by a neutral third party, the mediator, who assists the parties in finding an agreeable solution.
It is, to a certain extent, the antithesis to more adversarial dispute resolution avenues such as a court action or an arbitration. It places the parties back in the driver’s seat by allowing them to voluntarily agree to resolve their dispute rather than a third party (i.e. a Judge or arbitrator) deciding for or against them.
Mediation before the Singapore Convention
Prior to the introduction and ratification of the Singapore Convention on Mediation, parties would generally have to go through the arduous task of first commencing court proceedings to sue on the mediated settlement agreement as a fresh cause of action, then obtaining judgment on the fresh action, and only thereafter commencing enforcement proceedings. This was seen as a major shortcoming of mediation.
To add to this, the party who obtained judgment in one jurisdiction but wished to enforce the judgment in a different jurisdiction where the judgment debtor had assets, was faced with the additional burden of spending time and money to have the judgment recognised in the foreign jurisdiction.
These onerous hurdles meant that mediation was a less attractive option for commercial parties to resolve their disputes.
Advantages of the Singapore Convention on Mediation
With the introduction of the Singapore Convention on Mediation, it paves the way for commercial mediation settlements to be enforced across borders, saving parties both time and money.
The treaty aims to save time and costs for parties by facilitating the enforcement of mediated commercial settlement agreements amongst the countries that are parties to the treaty. It allows the enforcing party to go directly to a court in a state party to seek enforcement rather than spending considerable time and resources to obtain a judgement for breach of contract on the settlement agreement, and then potentially having to apply for that judgment to be recognised in a foreign jurisdiction. That court must then enforce the settlement agreement in accordance with the state party’s rules of procedure and under the conditions laid down in the treaty.
This approach allows for parties to resolve disputes in an efficient and cost-effective manner whilst still taking advantage of the consensual and voluntary nature of mediation.