The UNCITRAL Convention on Enforceability of Settlement Agreements Resulting from International Commercial Mediation
INTRODUCTION At its forty-seventh session (New York, 7-18 July 2014), the UNCITRAL agreed that the Working Group should consider the issue of enforcement of settlement agreements resulting from international commercial mediation proceedings. The task was to report on feasibility and the possible form of work in that area. 1
Support has been expressed for possible work in this area. So far, we have recognized that the use of mediation/conciliation “results in significant benefits, such as reducing the instances where a dispute leads to the termination of a commercial relationship, facilitating the administration of international transactions by commercial parties and producing savings in the administration of justice by States.” 2In an effort to complement this growing recognition, UNCITRAL previously developed two important instruments which aimed at harmonizing international commercial conciliation: the Conciliation Rules (1980) and the Model Law on Conciliation (2002). They form the basis of an international framework for conciliation. These instruments were built on the axis of a general policy that 'easy and fast enforcement of settlement agreements should be promoted. 3
At its sixty-second session, the Secretariat of the Working Group did receive several comments from states on the need; the status of settlements; possible exceptions; and the technical feasibility of this new convention. Here, I will collectively summarise the questions underlying possible harmonized solutions.
On the Principle of Preparing a Convention
Is there a substantial difference between an agreement resulting from mere negotiation and an agreement resulting from mediation that would justify why such an agreement would be enforceable under different terms and conditions than a “simple” agreement, and if yes: what exactly makes that difference? The initial reaction is that there is no fundamental difference. Their legal nature doesn't change, they remain agreements subject to the rules of contract law. Therefore, it's seems rather unjustified granting mediated settlements expedited enforceability because the same could be said for agreements reached via simple negotiations.
In addition, it seems rather unclear what the project really aims for. Is it :
a) introduction of conditions under which a State has to declare an international commercial settlement agreement resulting out of mediation or conciliation to be enforceable (like a uniform or model law), or
b) about declaring an agreement that has been made enforceable in one State to be enforceable in another State (private international law?), or
In any event, the conditions for enforceability would have to be spelled out in detail. For this purpose, the 1958 New York Convention is also being looked at as a model for work in relation to mediated settlement agreements. However, the implications for a regime akin to the New York Convention in the field of mediation is yet to be discussed in detail.
The Content of such of Convention
The proposal highlights that convention should apply to international settlement agreement, resolving commercial disputes, as opposed to other kinds of disputes. Therefore, the scope would be limited to commercial agreements between businesses only; e.g. the consumer contracts, labour contracts would have to be excluded from scope.
The exclusion is advocated because in agreements like the ones related to consumer or labour law serious conflicts would arise since, such laws generally aim at protecting the interests of weaker parties. If those problems have to be tackled (and it is unclear whether any solution would be possible), the instrument might become overly complex and difficult to use. Therefore, such restrictions proposed are likely to generate its acceptability amongst states.
Formal and Substantive Requirements for Mediated Agreements
The proposal has suggested that the convention should provide:
a) certainty regarding the form of covered settlement agreements, for e.g., agreements in writing, signed by the parties and conciliator etc.
b) party autonomy to tailor the extent of applicability of the convention in settlement agreements.
Grounds of Refusing Enforcement
The mediated settlement, being in the nature of an agreement, is subject to the principles of contract law and therefore, the validity of a settlement agreement may be challenged under such principles. More than that, the challenges are being thought of both, procedurally and substantively:
a) Requirements of due process, as suggested, must be respected if a mediated settlement is to enjoy expedited enforcement . However, difficulty lingers since mediation is relatively an informal process. Nevertheless, there can be a number of requirements that can be regulated such as the impartiality and independence of the mediator(s)/conciliator(s), the equal treatment of the parties, and in particular in case of an evaluative process: the right to be heard on any fact or circumstance on which the mediator/conciliator bases his or her evaluation (which raises the question of conditions for using techniques such as a caucus). Therefore, violation of substantial procedural rights should, in principle, be a ground for refusing enforceability of the agreement.
b) Violation of public policy is an obvious ground for refusal of enforceability. The principles of international public policy may well be borrowed from international arbitration which has spent many years on the anvil.
Interaction with Contract Law
A mediated or conciliated settlement agreement is not an award or an award on agreed terms but, remains an agreement between the parties and thus, is subject to the rules of contract law. The questions that concern us are an interaction between the content of the agreement, its validity and enforceability. So, if the agreement is (partially) invalid under substantive law, or if the parties decide to modify it, what effect should this have on the enforceability, and by which mechanisms can these effects be implemented?
As briefly outlined above, the Working Group has a complex set of concerns to address keeping a note that national legislation is diverse and no dominant trend can be identified. However, it is appreciable that States tend to adopt legislation on mediation and provide various solutions for enforcement of settlement agreements. The diversity of approaches towards that special objective of enforcing settlement agreement might show favour towards considering harmonization.