On August 7th, 2019, the Singapore Convention’s coming into existence was celebrated with a grand signing ceremony. As most readers will know, the Convention provides a mechanism for the simple execution of settlement agreements reached in international commercial mediations. At the time of writing of this article, the treaty is signed by no less than 53 countries, and on September 12th 2020 it entered into force for the first six of those to ratify. The expectations are high among the Convention’s proponents. The hopes are that this treaty will make it much easier for international corporations to choose mediation to solve their conflicts and see mediation develop into an equally popular method for dispute resolution as arbitration currently is.
The EU was closely involved in the treaty negotiations, but to date has not signed it. The Netherlands – my home country – only attended the negotiations as an observer, and does not seem to seriously consider acceding. In this article I will address the most significant objections that I’ve heard the Convention’s Dutch critics put forward. These firstly concern the Convention’s fundamental notion that executorial strength is granted to an “ordinary” contractual agreement. This notion does not easily rhyme with the principles of the Dutch or the European legal system. Furthermore, the absence of international norms concerning the mediator’s qualifications and the mediation process is also perceived by some as a shortcoming. I will explain why I think these legal ‘deficiencies’ will only lead to practical problems on the rarest of occasions.
Considering (a) the Convention’s specific and limited focus and applicability; (b) the fact that the treaty mechanism can be made to match with the Dutch and European legal system if it is signed with a reservation; and, (c) the Convention’s possible future significance for the development and use of mediation, I believe that accession deserves serious attention and consideration by the Dutch government and the EU.
There are a few notable and novel aspects to the workings of the Convention, its basic ambition, and the manner in which it rhymes with the European and Dutch legal system.
Under (the current) Dutch law, the parties to a mediated settlement agreement can, under a few conditions, take simple steps to have their agreement recorded in a notarial deed, court judgment or the minutes of a court hearing. The agreement thus takes the form of an enforceable order, which, due to European legislation, is also recognized in other EU member states. However, if it proves necessary to enforce a ‘normal’ private settlement agreement, then the parties will need to claim compliance in a full-fledged court procedure on the merits.
For Dutch lawyers, the most “innovative” aspect of the Convention is that it allows for one of the parties to unilaterally enforce a private settlement agreement (reached in an international commercial mediation). The requirement that the agreement, upon the request of both parties, is recorded in a notarial deed or court judgment, would thus be eliminated for this specific kind of settlement agreements. This variation is not currently regulated in European law or the Dutch legal system. If – or when – the Netherlands or the EU accede to the Convention, a procedure will need to be set up for this purpose.
This would however raise a number of questions, because why exactly would a private agreement, which would normally be governed by contract law, deserve the same legal force as a judicial decision or notarial deed? And why would this privilege not also be extended to settlement agreements reached in a domestic mediation, or to settlement agreements that were reached without the help of a mediator?
The response to those question could be: the privilege would only be extended to a clearly delineated category of cases that concern commercial, and therefore mainly financial, interests. In that specific kind of cases it can be complicated for the parties to effectively ensure enforceability of their settlement agreement in another manner, since this may need to concern more than one legal system. Furthermore, it should be considered that it will not be unusual for the typical parties in these cases to close international contracts in their normal business operation, and that they will almost always be assisted by lawyers. It is therefore safe to presume that they are very well capable of protecting their interests in a mediation.
Moreover, countries (or regional organizations such as the EU) may accede to the Convention with the reservation that the Convention will only be applicable if and to the extent that the parties have agreed to this. If applicable with that reservation, the Convention would fit comfortably with the Dutch legal system – which already gives parties the option to record their settlement agreement in an enforceable title – as well as with the European Mediation Directive. That Directive states in article 6.1.:
‘Member States shall ensure that it is possible for the parties, of for one of them with the explicit consent of the others, to request that the content of a written agreement resulting from mediation be made enforceable. The content of such an agreement shall be made enforceable unless, in the case in question, either the content of that agreement is contrary to the law of the Member State where the request is made or the law of that Member State does not provide for its enforceability.”
One might take note that the Convention would not be applicable if a settlement agreement is recorded in a judicial document or arbitral award, and is therefore already enforceable.
The Convention does not prescribe standards concerning the mediator’s expertise or the mediation process. Some apparently consider this a shortcoming that amounts to inadequate party protection – since in theory even a random passerby could take the role of a mediator. Moreover; parties with malicious intentions could easily pay someone to sign their settlement agreement as if he or she were the mediator, in order to bring this agreement under the scope of the Convention.
From what I understand, the negotiating parties at the time made a conscious decision not to try to regulate the person of the mediator, in order not to over-complicate the Convention and not to compromise party autonomy. And there is indeed much to be said for that idea, since, as mentioned, the parties in international commercial mediations will virtually always know what they are doing, and they will be advised by lawyers. It is likely that these parties for instance agree, or have already agreed before, that the International Chamber of Commerce should administer their mediation. In that event there is a fair chance that the parties will request an institute like the International Mediation Institute to propose an international commercial mediator from its panel, who will handle the mediation in accordance with the ICC Mediation Rules. It is, in brief, almost unthinkable that an unexperienced or unqualified mediator will be asked to take on the case.
The concern for abuse of the Convention for felonious means seems equally unfounded. One could speak of such abuse if the parties could surreptitiously use the Convention to give effect to an improper agreement. However, the Convention is only relevant after a dispute has developed between the parties over the performance of contractual obligations. If those obligations cannot bear the light of day, it is highly unlikely that the parties will get it into their heads to bring the matter before a judge. And even if they were to do so, permission to execute will not be granted if this would be contrary to domestic law or public policy.
Moreover, in article 5.1. (e) and (f), the Convention does refer to the mediator’s conduct. As mentioned: a request for permission to execute may be denied if a party demonstrates that a serious breach occurred of the standards applicable to the mediator or the mediation, and that this breach was the reason why the party entered into an agreement he or she would otherwise not have signed. This is a heavy burden of proof. But first the question: how realistic is it that such a situation will ever arise?
As mentioned, the Convention is heavily inspired by the New York Convention, which bears similar provisions for arbiters. However, the role and competence of a mediator and those of an arbitral tribunal are of course qualitatively different. An arbiter takes a binding decision that is imposed to the parties, while the parties in a mediation can decide for themselves what kind of obligations they wish or wish not to include in their settlement agreement. The mediator does not determine the substantive outcome of case. The provisions that relate to an arbiter’s independence and impartiality are therefore of an entirely different relevance than similar provisions that apply to a mediator.
Furthermore, it should be assumed that in an international commercial setting, the lawyers involved will inform their clients to the consequences of contractual obligations before they accept these. It is therefore unlikely that a party will be contractually disadvantaged as a result of a mediator’s biases, or his or her exertion of undue influence on the process. It is much more likely that a mediator’s reprehensible behavior will simply result in a failed mediation.
A party who wishes to rely on article 5 sub 1(e) and/or (f) will need to meet a double burden of proof. He or she not only needs to establish the misbehavior, but must also proof that this misbehavior let him or her to commit to terms that he or she would normally not have accepted. In order to meet this requirement, a party may need to breach the norm of confidentiality. When and under what conditions will such a breach be justified? The response to that question differs across legal systems.
And more in general; the exact manner in which the different member states will apply the Convention is a point of uncertainty. Did the signing and ratifying countries indeed set up a solid procedure for the enforcement of mediated settlement agreements? Countries may choose to implement the Convention’s Model Law, but of course they may also design their own legislation. A disadvantage of the latter route, in particular if it is followed by many countries, is that this also compromises the Convention’s internationally uniform application.
How does the EU consider the Convention?
The EU was represented in the treaty negotiations by Mr. Norel Rosner, employed with the European Commission’s DG Just. In a panel discussion at the occasion of the signing ceremony in Singapore, he recounted that the EU had initially preferred a ‘soft law’-instrument – no treaty, but for instance non-binding model legislation that countries could adopt or merely use for inspiration. However, with the negotiations progressed, the EU became agreeable to the Convention’s ‘two-track’ approach of a treaty in combination with a model law – provided that a number of specific requirements would be met. That happened: article 1.3. ensures that there is no overlap between the application of the Convention and of other international instruments; article 5.1. (e) and (f) match with the EU’s view that there should be safeguards pertaining to the mediator’s conduct; and the EU had demanded that acceding states would be able to make the reservations in article 8. Rosner concluded his presentation by saying: ‘With the signing of the Convention, clear, distinct and complementary international instruments now exist for mediation, litigation and arbitration’
Nevertheless, the EU did not sign the Convention. Rosner explained that the EU first wants to thoroughly assess the instrument. That process had started in February of 2019 and would take a while – inter alia because the business community would also need to be engaged. The decision whether or not to accede would, according to Rosner, ultimately be a political one.
The International Mediation Institute’s Barbara Massuci was a delegate in UNCITRAL Working Group II. She thinks the EU did not want to accede yet because it wants to prioritize the development of its own Mediation Directive.
I believe that the EU’s acceding to the Singapore Convention would be a commendable and sensible step, and in any case one that deserves more serious consideration and transparent debate.
The Convention’s fundamental principle – that in some circumstances a private settlement agreement ‘deserves’ executorial force – does not fit easily with the distinction in Dutch law between ‘strong’ and ‘weak’ titles, such as private agreements. However, the Convention rhymes well with this system if it is ratified with the reservation of article 8.1.(b) – that it only applies if and to the extent that the parties to a settlement agreement have agreed to this. After all, Dutch law does already provide the parties to a settlement agreement with a simple way to ensure executorial force.
Opinions may differ on the precise circumstances or characteristics that justify the ‘promotion’ of a settlement agreement (reached in an international, commercial mediation) to an executorial title. Why and how would the fact that the settlement was reached in a mediation for instance contribute to the soundness and validity of thereof – presuming that priority was given to party autonomy? Perhaps the answer lies in the commercial nature of the agreement, and/or the knowledge and experience that the parties (and their lawyers) presumably brought to the negotiations.
The Convention will probably only rarely be rarely called upon, since compliance with a mediated settlement agreement is hardly ever problematic. However, the treaty’s significance is consequential: it responds to the international business community’s expressed want for a legal framework that can help ensure the enforceability of international mediated settlement agreements. For the EU this means that it can provide critical encouragement to European corporations that wish to opt for mediation, in particular in their trade relations with non-EU partners.
All the above is reason enough not to set the Convention aside because of perceived legal imperfections, but to instead carefully consider what can be done to give it effect. If the EU were to sign the Convention, this would send an important signal that mediation is an efficient and legally sound method of conflict resolution. And that signal is worth a lot for all who aspire towards a world in which parties do not hesitate to choose for mediation.
Review by: The Alternative Newsletter Editor, James Boskey Published by: The Institute for Conflict Analysis and Resolution, George Mason University, Fairfax, VA 22030-4444 (75pp 1998) Order at Amazon.comWhen one thinks...By Michelle LeBaron, Stephen Garon