The United Nations Convention on International Settlement Agreements Resulting from Mediation (under UN custom referred to as the ‘Singapore Convention’) was formally signed in August 2019. Canada is not one of the initial signatories to the Convention, which was previously approved by the UN General Assembly.
The Convention sets requirements for reliance on settlement agreements, standards for enforcing the agreements, and grounds for refusing to grant relief.
It applies specifically to settlement of “international” commercial disputes. It does not apply to consumer disputes. Nor does it apply to family, inheritance or employment matters.
The Convention also expressly does not apply to settlement agreements that have been recorded as arbitral awards or approved by a court.
Supporters are hoping the Singapore Convention will give businesses confidence to settle international disputes through mediation – that it will increase global acceptance and enforcement of mediated settlements, particularly in states with different legal social and economic traditions. It is intended to function similarly to the 1958 New York Convention on enforcement of arbitral awards, which was a catalyst for modern international commercial arbitration.
The Singapore Convention allows a party to a dispute to invoke the Convention to prove the matter has been resolved, if another party continues to contest the matter. It creates a positive obligation on member states to enforce settlement agreements, subject to their own rules of procedure and under the conditions laid down in the Convention. Those conditions include providing written proof that mediation took place and a copy of the signed settlement agreement.
Critics say the Convention may impose additional burdens in states such as the United States, Canada, and other western jurisdictions which already have well-established commercial mediation traditions. For example, Article 4 of the Convention requires evidence that a settlement agreement “resulted from mediation” such as attestation by the mediator or an administering body.
Some US mediators have expressed concern that having the mediator sign or attest the settlement agreement could open them up to being called as witnesses and compromise the confidentiality of the mediation process, if the settlement terms are later contested.
This is a particular risk given the potential grounds for refusing enforcement of a mediated agreement set out in Article 5, which says the local authority may refuse to grant relief if specific listed conditions are met.
These include incapacity of a party, invalidity of the settlement agreement, the terms of the agreement are not clear or cannot be performed, or the relief sought is contrary to the terms of the settlement agreement. One can easily see how enforcement disputes may involve the validity or interpretation of the settlement agreement or even whether the document actually settles all of the matters in dispute, especially if those are the only grounds for refusing enforcement under the Convention.
Article 5 also opens the door to a challenge on the basis of a “breach by the mediator of standards applicable to the mediator or mediation” (without stating what those standards might be), or a “failure by the mediator to disclose to the parties circumstances that raise justifiable doubts as to the mediator’s impartiality or independence.” These are the kinds of tests that have caused all sorts of mischief with post-award arbitrator challenges in international arbitration.
Others have argued that mediation settlement agreements are not “enforceable” in the same way as an arbitration award and questioned the need for the Convention at all. They argue that settlement agreements are simply contracts and can be enforced in the same way as any other contract. Claims that terms are unclear or cannot be performed, for example, are contract interpretation problems, not an enforcement problem. This may be true in common law countries, but not necessarily in other legal regimes. The whole purpose of the Convention is to try to bridge that gap.
The initial response to the Convention has generally been positive, with many of the world’s largest economies, including the United States, China, India and many Asian countries, signing on the first day. (The Convention will come into force 6 months after it has been formally ratified by three of the signatories – and in individual states 6 months after those states have ratified.)
Others, including the Canada, the UK, Australia and the European Union, have not yet signed. If Canada does accede to the Convention, each of the provinces may still decide whether to opt in or not. If Canada does join, it should benefit Canadians involved in international commerce by helping them enforce mediated settlement agreements in other member states and by giving their commercial counterparts confidence that such agreements will be enforced here.