The UN Convention on International Settlement Agreements Resulting from Mediation, or best known as the Singapore Mediation Convention was signed on 7 August 2019 in Singapore by 46 UN members, including countries like Malaysia, United States and China.
The Singapore Mediation Convention which is modelled on the New York Convention aims to facilitate international trade disputes through mediation as an alternative and effective method of dispute resolution. This also means that businesses can rely on mediation to resolve disputes or to enforce a settlement agreement.
Key features of the Singapore Mediation Convention
The Singapore Mediation Convention generally applies to settlement agreements resulting from mediation which concerns international commercial disputes, i.e:
- At least two parties to the settlement agreement have their places of business in different States; or
- The State in which the parties to the settlement agreement have their places of business is different from either the State in which a substantial part of the obligations under the settlement agreement is performed, or the State with which the subject matter of the settlement agreement is most closely connected
The convention allows for a settlement agreement to be enforced directly by the courts of the signatory country. This is beneficial in the event assets are located in different jurisdictions; for example, if a party is seeking to enforce a settlement agreement against a Singapore company who owns assets in both Singapore and the US, that party can apply directly to the Courts of Singapore or the US to enforce that settlement agreement. The Courts of those countries are obliged under the Convention to act expeditiously and to enforce a settlement agreement in accordance with its rules of procedure. The key benefit is that the enforcing party can apply directly for enforcement, instead of first having to sue the other party in Court to obtain a judgment for breach of the settlement agreement.
However, the Singapore Mediation Convention does not apply to certain settlement agreements (e.g: those which have been recorded and enforceable as an arbitral award). The Singapore Mediation Convention would also not apply to any settlement agreement arising from transactions engaged for personal, family or household purposes or relating to family, inheritance or employment law.
In order to rely on settlement agreements to seek relief under the Singapore Mediation Convention, it must be satisfied that the settlement agreement must be signed by the parties and there is evidence that the settlement agreement was resulted from mediation (e.g. mediator’s signature on the settlement agreement).
It is also provided in the Singapore Mediation Convention that the competent authority is to act expeditiously when considering the request for relief. However, there are also instances where the authority may refuse to grant relief, such as:
- A party to the settlement agreement was under some incapacity;
- The settlement agreement sought to be relied upon is null and void or not binding according to its terms or has been subsequently modified;
- The obligations in the settlement agreement have been performed or is unclear;
- Granting relief would be contrary to the terms of the settlement agreement.
Effect of the Singapore Mediation Convention
The Singapore Mediation Convention will only enter into force 6 months after 3 States have acceded and ratified the Convention. Unless numerous States ratify the Convention, it may provide little practical benefit. However, it is anticipated that the Convention would be widely accepted given the increased prominence of mediation in commercial disputes.
It would thus be exciting to see the impact of Singapore Mediation Convention on the alternative dispute resolution (ADR) landscape, particularly in Malaysia.
This article was written by Donovan Cheah with assistance from Natalie Ng (pupil in chambers). Donovan is an advocate and solicitor of the High Court of Malaya. He is a Fellow at the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and the Asian Institute of Alternative Dispute Resolution. He is also a registered foreign lawyer with the Singapore International Commercial Court.
Donovan & Ho is a law firm in Malaysia. Our practice areas include employment law, dispute resolution, tax advisory and corporate advisory. Have a question? Please contact us.