The New “Singapore Convention”: An Overview of the Enforcement Regime for Mediated Settlements in International Commercial Disputes

    View Authors August 2019

    With the upcoming signing ceremony of the United Nations Convention on International Settlement Agreements Resulting from Mediation – known as the “Singapore Convention” – this article will set out a number of key takeaways from the new multilateral agreement, as well as the important provisions to keep in mind at both the contract drafting and post-dispute stages. 

    • A new tool is being added to the international dispute resolution regime and must be considered at the contract drafting stage when deciding whether to use multi-tiered or bespoke dispute resolution clauses best suited to your individual needs and business case. 
    • Post-dispute, parties might now give more serious consideration to agreeing to use mediation before proceeding to arbitration or litigation, as the case may be. 
    • Increased certainty on the enforceability of mediated settlement agreements by way of the Singapore Convention will likely bring with it a reduction in transaction costs in certain historically troublesome jurisdictions. 
    • Parties must be conscious of the prospective applicability of the Singapore Convention when entering mediated settlements and should consult with counsel on the potential need for asset tracing or other measures to ensure that any settlement agreement will be enforceable under the circumstances for each case. 

    The enforceability of international arbitral awards in more than 157 jurisdictions across the globe under the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) has long been one of the most attractive characteristics of arbitration – especially across the energy and construction industries. However, the lack of similar enforceability for settlement agreements reached through mediation has left the practice as a less commonly utilized tool, despite its recognized benefits, e.g., maintaining long-term business relationships and providing parties an outlet for ventilating emotional or legally inadmissible points in commercial disputes. 

    Instead, mediated settlements in most jurisdictions may leave the parties in the same situation they were in before the mediation, i.e., needing to enforce the settlement agreement as a contract in local courts. While many settlement agreements may be (and historically have been) converted into “consent decrees” by some local courts or “consent awards” by arbitral tribunals, those conversions leave parties beholden to court or arbitral processes, as they may only occur in an existing dispute and the parties have gone to either litigation or arbitration. Additionally, consent decrees may still leave the party with an issue due to the more limited breadth of the 2005 Hague Convention on Choice of Court Agreements, depending where your opposing party has assets.