On August 7, 2019 a new horizon dawned for international commercial mediation. Forty-six nations signed a United Nations sponsored agreement in Singapore. It was the United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as The Singapore Convention.”i Among those nations were the United States, China, India and Saudi Arabia. The Convention addresses disputes involving international commerce. It signals the growing use and considerable potential for mediation on a world wide scale. This is significant for Texas. As a sovereign country, Texas would be the 10th largest economy on Earthii. With $315 billion in exports in 2018, 90 percent handled by small businesses, whatever affects international commercial disputes impacts Texas.
The fundamental concept of the Convention began in 1958 with the signing of the New York Convention. That concept is the obligation of contracting nation states to give effect to private agreements emerging from alternative dispute resolution. The New York Convention deals only with arbitration. In that role “the New York Convention has had an impact beyond that which its drafters intended.”iii The result was has been characterized as “the most effective instance of international legislation in the entire history of commercial law”iv.
Whereas the New York Convention did this for arbitration of international commercial dispute, the Singapore Convention when fully implemented is designed to do so for mediation of such disputes. The purpose of the Singapore Convention is quite simple: to promote mediation in resolving cross-border commercial disputes.v
The range of disputes covered by the Convention is defined by three words: mediation, international and commercial. It is further defined by four types of disputes specifically excluded from the Convention. They are disputes involving consumer transactions, family matters, employment situations, and inheritance.
For the Convention, mediation is a process “whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person or persons . . . lacking the authority to impose a solution upon the parties to the dispute.”vi This assumes the role of mediation as already typically assumed for mediation in the United States. For example, for the Convention the term “mediation” does not include a dispute resolution whereby a judge in the role of a mediator is also involved in deciding the dispute in ongoing litigation.
Logically, as we see in the purpose of the Convention, the dispute must be international. This is determined at the moment the mediation is concluded and depends on the identity of the parties.vii Typically this means the parties have their respective businesses in different national jurisdictions. However, this is not an absolute standard. For example, even if two opposing companies are located in the same nation state, the dispute can qualify as international if the location where the mediated resolution occurs differs from either the state where the settlement is to be performed or in which the subject of the resolution is most nearly connected.viii
The word “commercial” appears in several places in the convention. For clarity the Preamble begins with “The Parties to this Convention, Recognizing the value for international trade of mediation as a method for settling disputes in which the parties in dispute request a third person or persons to assist them in their attempt to settle the dispute amicably, . . ”ix For comparison, in the New York Convention which is also intended for commercial disputes, the term “commercial” is not specifically defined yet should be seen in equally broad terms.x Further clarity in the Singapore Convention is provided by the exclusions.
To prevent the range of covered disputes extending beyond the commercial field, the Convention explicitly excludes certain types of issues. These include consumer transactions.xi The consequence of this is the exclusion of the vast area of online transactions.xii Other excluded disputes are family law matters, inheritance, and employment disputes.xiii Obviously only time will tell as to the reach of such exclusions. For example, is a contract dispute over stock options between a company and a former executive a subject for commercial or employment law? Is a prenuptial agreement that determines the fate of a company a commercial dispute or a family matter?
Beyond specific excluded areas of law, the Convention also excludes settlement agreements that have been approved by a court and are enforceable as a judgment in the State of that court. Though this type of situation will most likely be rare, it was a significant issue for the European Union during negotiations preceding the final Convention draft. The EU was concerned with possible overlap of the Singapore Convention and the Hague choice of court convention.xiv Although this exclusion was included to entice the European Union to sign the Singapore Convention, neither the EU nor any EU member states have yet done so.
The options for implementation may be available to the various signatories to the Convention depend on their respective legal and political structures. In the United States the possibility exists that the Convention could be self-executing whereby it would apply without any implementing legislation.xv In the Medellin case, the Supreme Court “held treaties to be self-executing when the textual provisions indicate that the President and Senate intended for the agreement to have domestic effect.”xvi A reading of the Singapore Convention reveals no such textual language. On the other hand, in his dissent in Medellin Justice Breyer wrote that the treaty being considered by the Court and the binding effect on American courts of the International Court of Justice, was self-executing. He wrote “I believe the treaty obligations, and hence the judgment [of the ICJ], resting as it does upon the consent of the United States to the ICJ’s jurisdiction, bind the courts no less than would an act of the [federal] legislature.”xvii Furthermore, long before the Medellin case, in Foster the Court said “Our Constitution declares a treaty to be the law of the land. It is, consequently, to be regarded in courts of justice as equivalent to an Act of the Legislature, whenever it operates of itself without the aid of any legislative provision.”xviii Considering the characterization by some commentators of the Medellin as “notoriously muddled” and the rarity of cases dealing with this issue, the possibility of self-execution is more than mere speculation though not definite.xix
Of course, the Convention can also be implemented through federal legislation. This was what happened for the New York Convention. Chapter Two of the Federal Arbitration was enacted for this purpose.xx
In 1987 the Texas Legislature enacted a statute encouraging mediation.xxi Today, the use of mediation, not least of which for commercial disputes, in the United States has grown to the point that universities from Harvard to Stanford to the University of Texas and the University of Houston offer training in the subject. In addition to a perceived lack of appropriate experience by lawyers, a primary obstacle to the use of mediation in international commercial disputes is the lack of a legal framework dealing with enforcement.xxii Most likely these two obstacles are connected. Lawyers have less opportunity to develop the expertise due to lack of a legal framework to facilitate international commercial mediation. The Singapore Convention lays out a path to remedy the situation. It is a signal that growth is inevitable and is a light on the horizon ushering in a new dawn for the mediation of international commercial disputes.
ii Newsweek Magazine, June 11, 2016.
iii Kaytaz Eker, Harmonizing Role of the New York Convention, Abstract Thesis for the degree of Doctor of Philosophy, Queen Mary University of London, School of International Arbitration, 2018.
iv Mustill, M. Arbitration: History and Background”, Journal of International Arbitration, Kluwer Law International, Vol 6, Issue 2, 1996 p. 49
v Interventions of the United States and Belarus, in UNCITRAL Audio Recordings: U.N. Comm’n on Int’l Trade Law, 48th Session, July 2, 2015, 9:30-12:30
vi Singapore Convention Article 2(3)
vii Working Group II (Arbitration and Conciliation), 63rd Session, Sept. 7, 2015
viii Singapore Convention Article 1(1).
ix Singapore Convention Preamble.
x Timothy Schnabel, The Singapore Convention on Mediation, 19 Pepperdine Dispute Resolution Law Journal 1, 2019, page 22.
xi Singapore Convention Article 1,2(a).
xii Ronald A. Brand, Party Autonomy and Access to Justice in the UNCITRAL Online Dispute Resolution Project, 10 Loy. U. Chi. Int’l L. Rev. 11, 36 (2012).
xiii Singapore convention Article 1, 2(b).
xiv Formally known as the Convention of 30 June 2005 on Choice of Court Agreements
xv Robert E. Dalton, Judicial Enforcement of Treaties: Self-Execution and Related Doctrines, 100 Am. Soc’y Int’l Law Pro. 439, 442 (2006).
xvi Medellin v. Texas 128 S.Ct. 1346, 1364 (2008)
xvii Id 1375.
xviii Foster & Elam v. Neilson 27 U.S. 253, 314 (1829)
xix Timothy Schnabel, Implementation of the Singapore Convention: Federalism, Self-Execution, and Private Law Treaties, American Review of International Arbitration, 2019, draft Footnote 72
xx 9 U.S. Code Chapter 2 – Convention on the Recognition and Enforcement of Foreign Arbitral Awards, §§201 et seq.
xxi Tex. Civ. Prac. & Rem Code §154.023.
xxii Veronika Vanisova, Current Issues in International Commercial Mediation: short Note on the Nature of Agreement Resulting From Mediation in the Light of the Singapore Convention, page 4, Prague Working Paper Series, Charles University, March 11, 2019.