United States: New Convention Aims To Make Mediated Settlements An Attractive Means Of Resolution Of International Disputes . . . But Will It?

Last Updated: September 4 2019
Article by Gilbert Samberg

The United States joined 45 other countries on August 7, 2019 as the initial signatories of the UN Convention on International Settlement Agreements Resulting from Mediation (the "Singapore Convention"). Other notable vanguard signatories included China, India, South Korea, and of course Singapore. The aim of this Convention is to make mediated international settlement agreements as easily enforceable as international arbitration awards now are under the New York Convention. But is it likely to succeed? We think it could . . . to a degree.

The Singapore Convention applies to mediated settlement agreements, reached outside of judicial or arbitral proceedings, that are "concluded by the parties in writing," "resolve a commercial dispute," and are "international" in nature. The operative provision is that "[e]ach party to the Convention shall enforce a settlement agreement in accordance with its rules of procedure and under the conditions laid down in this Convention." Singapore Convention Art. 3(1). The Convention seeks to eliminate the need for a court to address all but a few enumerated defenses relating to the mediation process and the subject of the settlement. In principle, a breached qualifying settlement agreement should be enforced according to its terms more or less summarily by the national courts of a Convention country, rather than being considered merely the basis for a plenary proceeding for breach of contract.

However, the ultimate breadth of use of the Singapore Convention seems less than clear. One possible impediment to the success of the Convention is a consequence of the differences in (a) the arbitration and mediation processes, (b) the motivations for employing one or the other, and (c) their respective "products".

Arbitration is an adjudication in a private proceeding, and entry into that process generally signals the termination of a commercial relationship. The arbitrator has authority, by agreement, to resolve certain claims and defenses and to prescribe a remedy, much as a judge would. In most instances that remedy is likely to be money damages; less frequently, it might include an injunction against the continuation of specific conduct that is deemed wrongful. A continuing relationship of the parties is rarely in contemplation in an arbitral award.

Judicial involvement in the review of an arbitral award is limited to assessing (a) whether the adjudication process was corrupted by bias or interest or fraud; (b) whether the arbitrator exceeded his/her contractedly-authorized powers; and possibly (c) whether the arbitrator knowingly ignored well established determinative law. If the arbitration has "run amok" in any of these ways, then the losing party is presumed to have been prejudiced, and a court may vacate such an award. If, on the other hand, the court determines to confirm and/or enforce the award, the award remedy will very likely be consistent in kind with what a court would ordinarily order, and the local laws governing enforcement of the resulting judgment will be attuned to enforcing just such remedies.

Compare mediation -- a facilitated settlement negotiation with no adjudicator. The mediator has virtually no noteworthy "powers," as his/her job is merely to assist the parties in reaching a settlement. Any evaluation of the law and the facts is up to the parties, and they devise the "remedy" for their dispute(s). A mediation may produce an agreed remedy that looks a lot like an arbitral award -- perhaps involving a payment of money (although possibly with a structured payment schedule), perhaps including an agreement to cease specified conduct, and perhaps ending the commercial relationship. Enforcement of an agreed "plain vanilla" remedy of this sort could be expedited by reason of the Singapore Convention. A court's order of compliance with such settlement terms would produce a familiar-looking judgment, to be enforced by familiar means.

However, an agreed resolution of a commercial dispute could easily be significantly different -- for example, preserving a complex commercial relationship and/or requiring specified commercial conduct or "cooperation" for an extended period. In case of a breach, are national courts and applicable laws geared to enforcing specific performance of such terms, e.g., requiring a court to act as a monitor and umpire for an extended period? Courts in the U.S., for example, rarely order and are rarely required to enforce a judgment of specific performance in a commercial dispute, and they are even less often (if ever) required to enforce a judgment of specific performance in a commercial relationship over an extended period.

If a court, following its own rules of procedure, will not order such specific performance of settlement terms, what happens then? Could the court in effect amend the settlement terms by ordering the parties to engage an independent monitor and umpire (i.e., a private adjudicator)? Could it conduct a proceeding to determine an enforceable standard remedy for breach of contract -- e.g., money damages -- that is different from the terms of the settlement agreement? The Convention expressly provides that resort to its mechanism shall not be the exclusive means of enforcement of such an agreement. Id. Art. 7.

So it is fair to ask how much the Singapore Convention will expedite the ultimate resolution of a dispute in the event of a breach of a mediated settlement agreement. The answer may be that, except in the case of a plain vanilla settlement principally involving an exchange of money for a release, we don't know.

In any case, here are the Convention's principal details.

Scope of Convention's Applicability

A mediated settlement agreement that is to be recognized and enforced under the Singapore Convention must have the following characteristics: (i) it resolved a commercial dispute; (ii) it resulted from mediation; (iii) it is written; (iv) it is signed by the parties; (v) it is "international"; (vi) it does not concern certain excluded types of disputes, such as consumer or employment disputes, or family or inheritance disputes; and (vii) none of the other few grounds, enumerated in the Convention, to decline enforcement exist. Id. Art. 1. For example, other excluded settlement agreements are those that have been approved by a court, concluded in the course of proceedings before a court, or are otherwise enforceable as a court judgment or as an arbitral award. Id. Art. 1(3).

Defined Terms

For these purposes, "mediation" is defined broadly. See id. Art. 2(3).

A settlement agreement is "in writing" if it is recorded in any form, including electronically (with minimal qualifiers). See id. Art. 2(2). An electronic signature is permitted if specified conditions are satisfied. See id. Art. 4(2).

The "place of business" (or "habitual residence") of each of the parties to a settlement agreement, and the place in which the agreement is to be performed, are the principal determinants of whether the settlement is "international". See id. Arts. 1(1), 2(1)(a), 2(2).

Mediated Settlement Agreement as Basis for Claim or Defense in Accordance with Local Procedures

A qualifying mediated settlement agreement may be invoked under the Convention either for enforcement or as the basis for a defense. Id. Art. 3. When presented with a request for relief, the "competent authority" within a Convention country "shall act expeditiously," id. Art. 4(5), albeit "in accordance with its rules of procedure. . ," id. Art. 3(1). So too, a party invoking a qualifying settlement agreement as a defense, contending that a dispute has already been resolved by settlement, may do so only in accordance with the Convention country's rules of procedure.

Convention Defenses to Enforcement of Mediated Settlement Agreement

The party resisting enforcement of course has the burden of proof of grounds for a court's refusing to grant relief under the Convention. Id. Art. 5(1).

Like the New York Convention concerning arbitral awards, the Singapore Convention identifies limited grounds to decline summary enforcement of a mediated settlement agreement. See id. Art. 5. They concern the settlement agreement's (i) validity and enforceability under applicable law, (ii) finality, (iii) nature of terms, and (iv) prior performance. They also include severe misconduct of the mediator, provided it can be shown by the breaching/objecting party that it would not have entered into the settlement agreement absent that misconduct.

Finally, a court in a Convention country may decline to grant relief under the Convention (a) if granting such relief would be contrary to the public policy of that Convention country or (b) if the subject of the dispute is not settleable by mediation under the law of that Convention country. Id. Art. 5(2).

Commencing Proceeding Under Convention

When invoking the Convention, a party is required to supply to "the competent authority" of the Convention country: (a) the signed settlement agreement and (b) evidence that that agreement resulted from mediation. Id. Art. 4(1). Examples of such evidence are described in the Convention. See id. Art. 4(1)(b).

Ratification and Reservation vis-à-vis the Convention

Finally, in order to bring the Convention into effect, a signatory state must ratify it, and such ratification may be qualified by one or two permitted "reservations". See id. Art. 8. One such reservation, which would affect the breadth of application of the Convention substantially, would require an agreement of the parties to a mediated settlement agreement that the Convention applies in order for it to have effect. Id. Art. 8(1)(b).

Originally Published in Law360 (August 28, 2019)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions