Get to Know: The Mediation Center Trends
Mediation is a well-known method of alternative dispute resolution (ADR) that is often preferred among international parties. Disputing parties have more control and flexibility around proceedings as appointed mediators facilitate discussions with no adjudication power. Many proponents credit this flexibility and control, as well as its confidentiality, as fundamental to mediation being more cost and time effective than arbitration or litigation.
However, when offered as an alternative for cross-border disputes, many parties, while encouraged by the many benefits of mediation, raise concerns regarding the enforcement of settlement agreements signed as a result of mediation. Unlike arbitration, which has the New York Convention on the Recognition and Enforcement of Arbitral Awards (the “New York Convention”), whereby over 170 jurisdictions have agreed to enforce arbitral awards originating from other ratifying countries, parties could ignore mediation agreements and depending on where they are domiciled, opposing parties would lack significant recourse or remedies except to pursue breach of contract litigation or arbitration, if so agreed.
The UN Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Convention”) addresses these issues by providing a framework similar to the New York Convention. Finalized in July 2018 and entered into force in September 2020, there are (as of 3 August 2022) 10 ratified jurisdictions and 55 signatories. As the Singapore Convention is in its early stages of enforcement, it is understandable that it will take time for other countries to sign or ratify it. However, major economies, such as the European Union and the United Kingdom, have yet to sign, while the United States and China have signed but have yet to ratify.
For smaller yet still significant players, such as Hong Kong and Thailand, that have not yet signed on to the Singapore Convention, there are many discussions ahead to determine whether or not they will become parties to this international treaty on mediation.
Origins of the Singapore Convention on Mediation
For the reasons discussed above, the United Nations Commission on International Trade Law (UNCITRAL) acknowledged the need for a harmonized international framework for mediation at its session in July 2014. Discussions surrounded how to streamline and clarify the mediation process so that enforcement would not have to rely on a contract law, which may then face the conflict of law issues. Then, it tasked its working group on dispute settlement (WGII) to consider the enforcement of mediation settlements and agreements. With contributions from over 80 member states and over 30 NGOs, WGII was set to evaluate relevant issues and develop solutions, including a treaty, model provisions, and texts. After six sessions, the UN Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Convention”) was adopted, along with the UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation, in July 2018. The signing ceremony for the Singapore Convention was then held in Singapore the following year, in August.
Forty-six countries, including such leading economies as the United States, China, India, Singapore, and South Korea, signed on that first day. Nevertheless, for a convention such as this to come into force, at least three countries must ratify it first. Singapore and Fiji were the two first in February 2020, followed by Qatar in March 2020. As per UN rules, the Singapore Convention then came into force six months later, on 12 September 2020. As previously mentioned, there are 55 signatories and ten ratified parties to the Singapore Convention.
Summary of the Singapore Convention
The Singapore Convention is similar to the New York Convention. Essentially, it provides for the enforcement of international mediation agreements. Specifically, it covers commercial disputes where the involved parties’ business domiciles and/or the location of the business in question are in different states. The Singapore Convention does not cover settlement agreements that can be considered judgements or arbitral awards. Still, parties can call on convention states to enforce the agreements or use the agreements to defend themselves against a claim already resolved in them. The idea is that parties would not have to sue for breach of contract in a relevant court to seek enforcement in participating jurisdictions.
Nevertheless, the Singapore Convention does allow relevant courts and authorities of convention states to refuse enforcement on specific grounds, including if parties were incapacitated, if the agreement is non-binding or inoperative under governing law, if mediators committed actionable breaches, or if enforcement would be against that jurisdiction’s public policy.
Interestingly, the Singapore Convention does not “domicile” agreements. That means that a member could be obligated to enforce a mediation settlement that originated from another country that is not a member state. So, even though Thailand is currently not a party to the Convention, international mediations from Thailand could be enforceable in Singapore as a jurisdiction involved in the settlement. Nevertheless, the Convention also allows member countries to only enforce settlement agreements where the involved parties agree to apply the Convention.
Significance of the Singapore Convention’s international mediation support
Many parties have expressed enforcement issues regarding mediation settlement agreements. However, surveys conducted in anticipation of the WGII’s deliberations revealed that there was a lack of knowledge and education about mediation that hindered selection mediation as a method of cross-border dispute resolution. Respondents were from the international commercial world, including in-house counsels, decision-making executives, and legal professionals. Nevertheless, the surveys did also show that these parties would be more amenable to mediation if there were an international convention in place to facilitate enforcement. Furthermore, there were indications that non-compliance rates were not that significant. Nevertheless, as pointed out above, the perception is that enforcement in cross-border mediation agreements is an issue.
Therefore, it could be argued that the Singapore Convention, while possibly not mitigating rampant non-compliance, could be a vital step toward promoting cross-border mediation. This would include reassurances and guidelines developed to international standards on par with the New York Convention, which is now a touchstone for international arbitration.
The international discussions in the ADR, legal and commercial worlds regarding the Singapore Convention could now spark awareness of cross-border mediation benefits, even among parties and transactions that may not yet be party to the Convention. Leading these discussions will no doubt be dispute resolution centers such as the Thailand Arbitration Center and international ADR professionals.
SCM in ASIA, ASEAN, and Thailand
In Asia, Singapore is the only country that ratified the Singapore Convention into force. China, South Korea, India, Sri Lanka, the Philippines, Malaysia, Laos, and Brunei signed the Convention, but that does not mean that they will enforce it. Nevertheless, it is a positive sign that all these nations do view mediation as a significant ADR method. In 2011, the International Institute for Conflict Prevention and Resolution surveyed in-house counsel and law firm attorneys in Asia and found that over 70% had a positive attitude towards mediation, with almost 80% claiming to have recently used mediation to resolve disputes.
It is important to remember that the Singapore Convention is only about two years old. The New York Convention only had around 20 ratifying parties after about the same period since it entered into force in June 1959. The US did not ratify until 1970, and China did not until 1987.
Nevertheless, many Asian countries have mediation laws in place, and some, such as China, prioritize mediation in dispute resolution. This includes Hong Kong and Thailand, countries that have yet to sign the Convention. However, with the ever-expanding cross-border nature of business in the region, including the ASEAN Economic Community, China’s Belt and Road initiative, and the Trans-Pacific Partnership, countries that have not signed or ratified the Convention may find it in their best interests to do so.
With the provisions to opt-out as well as the inclusion of mediation from non-member states, the Singapore Convention does require consideration, and a well-established mediation infrastructure, including clear laws and regulations, will benefit countries like Thailand.
Specifically, regarding Thailand, Mr. Pasit Asawawattanaporn, Managing Director of the Thailand Arbitration Center, extolled confidence that Thailand would sign and ratify the Singapore Convention. Thailand does have a firm foundation in mediation, with a history going back centuries. Today, there are several laws that govern and oversee mediation, describing in-court and out-of-court mediation proceedings, such as the Civil Procedure Code (Amended 1999) and the Dispute Mediation Act (2019). Nevertheless, there is a legislative process. After a government committee studied the Singapore Convention, it recommended that a new law would need to be enacted regarding international mediation. As of his presentation in 2020, the Office of the Judiciary was drafting a bill to codify the Convention’s provisions.
THAC is a world-class mediation center
As alternative dispute resolution (ADR) professionals around the world become more familiar with the Singapore Convention, dispute resolution centers such as the Thailand Arbitration Center (THAC) will play a key role in educating and assisting parties involved in cross-border business on its application. Even if Thailand is not yet a signatory, Thai parties could still avail themselves of the Singapore Convention, as discussed above. Therefore, THAC should be a significant resource for mediation, including on the identification of the most appropriate mediator with complete biographical and experiential details, as well as sourcing model or template language for a mediation clause or agreement.
THAC is a full-service dispute resolution center providing resources for alternative dispute resolution, including online dispute resolution, such as its proprietary TalkDD platform for e-commerce ADR matters. Located on Sukhumvit Road by Phromphong BTS station, THAC is easily accessible for parties traveling from local and international destinations. With fully equipped facilities and comprehensive administrative support available, THAC is ideal for both in-person and remote hearings. For more information about our ADR and ODR services for personal and business disputes, contact THAC at [email protected] or +66 (0)2018 1615.