Mediation can be a quicker, cheaper, and more flexible process than court or arbitration proceedings. However, it has never attained the widespread recognition and acceptance of these two more formal methods of dispute resolution.
That may be about to change with the introduction of the Singapore Convention on Mediation, which paves the way for settlements reached by mediation to be recognized internationally.
Under the convention, parties who reach a settlement following a mediation anywhere in the world will be able to apply directly to the “competent authority” (most likely, the courts) of signatory states to enforce their agreement. Proponents hope it will make settlements resulting from mediation easier to enforce while promoting mediation as a mechanism for international dispute resolution.
However, while the convention has been widely welcomed, there remain a number of practical challenges to it achieving its laudable aims. Many of these stem from the absence of uniform standards of practice. Signatory states are instead permitted to enforce settlement agreements in accordance with their own local rules. This uncertainty could jeopardize the Convention’s success; after all, how long is a piece of string?
Formalities
The convention provides for the enforcement of a settlement agreement that results from mediation and relates to an international commercial dispute. It must be in writing and signed by the parties. The mediator must confirm that the settlement resulted from mediation by also signing the agreement or providing other proof that a mediation was carried out.
The need for these formalities risks the enforcement process falling at the first hurdle.
One of mediation’s main attractions is its confidential nature. Agreements between the parties and the mediator usually expressly prevent the mediator from revealing their part in the process. Some mediators may be reluctant to sign the settlement agreement, as to do so may be seen as endorsing an agreement in which they are supposed to remain neutral or as breaching their duty of confidentiality.
Other evidence will be needed to prove that the mediation did indeed take place.
Lack of Accepted Standards
Neither does the convention spell out who qualifies as a mediator for this purpose. There are no internationally accepted standards of conduct for mediators or mediations, and regulation is left to local law and practice.
In many jurisdictions, mediators must undergo training and be formally accredited. In others, mediators agree voluntarily to self-regulation. In yet others, however, there is no regulation at all.
Challenging Enforcement
This is particularly relevant since one ground on which a party may challenge enforcement under the convention is that there had been a “serious breach by the mediator of standards applicable to the mediator or the mediation,” without which that party would not have entered into the settlement agreement.
Although most parties agreeing to a settlement are unlikely to refuse to comply with it, commercial circumstances and financial pressures change. Parties may be looking for a way out.
The “standards applicable” to a mediator are a matter for local domestic law and potentially open to discussion and dispute. While doubtless most mediators conduct themselves to the highest principles, the lack of applicable standards could potentially provide a basis for challenge.
Practical Concerns
Concerns remain about how the convention will operate in practice, and much will depend on local implementation processes.
A major benefit of mediation is its ability to find inventive solutions to disputes beyond the payment of damages, such as laying down the basis for an on-going commercial relationship. Monitoring and enforcing such outcomes will be a challenge.
What if a court’s own rules of procedure do not permit the agreed solution? The onus is likely to be on the parties to self-monitor compliance with their agreement while local courts determine how to approach such situations over time.
U.K., Australia, EU Not Signatories Yet
For the convention to boost mediation, it needs actually to come into effect—46 countries signed the convention on launch day and a further five have signed since. However, it will only become operative six months after three signatories have ratified their involvement and so far, none has done so.
Signatory states reach from Afghanistan to Venezuela and include the U.S., Singapore, and China, all significant global commercial partners. The U.K. is not a signatory but should give serious consideration to signing up.
Mediation is already an accepted method of resolving disputes in the U.K., with about 10,000 commercial mediations held each year. Moreover, the U.K. courts have a duty to encourage disputing parties to attempt to settle their differences themselves. Facilitating enforcement of settlement agreements here would signal the U.K.’s commitment to mediation as an alternative to court or arbitration proceedings.
Other important economic states are also yet to join, including Australia and the EU. The participation of key global players is likely to be key.
Everything is Still Local
It is expected that the enforcement regime established by the convention will increase confidence in mediation among international parties and encourage parties from different jurisdictions to choose this method of alternative dispute resolution. However, the effectiveness of local legislation will be crucial to the convention’s success.
There is currently substantial leeway both in how mediations are conducted and how settlements reached are later enforced. Parties will still need to seek local advice on exactly how enforcement will take place in any given jurisdiction. While anything that encourages mediation has to be a good thing, the convention is not a panacea.
How long is a piece of string? Only time will tell.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Author Information
Jane Larner is counsel in Linklaters Dispute Resolution practice, specializing in commercial litigation.
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