On 3 May 2023, the UK signed the Singapore Convention on Mediation, a step which is hoped will have a positive impact on international trade and disputes across UK borders, and shows the increasing emphasis on the use of mediation in the UK.
What is the Singapore Convention?
The Singapore Convention is an international treaty created by the United Nations Commission on International Trade Law (UNCITRAL). The Convention, along with the amended UNCITRAL Model Law adopted in 2018, provides a framework for the enforcement of international settlement agreements resulting from mediation.
Usually, in order to enforce a settlement agreement that is subject to English law and jurisdiction, the enforcing party will need to commence legal proceedings against the defaulting party for breach of contract (which may involve arguing the case on the merits), obtain a judgment/award and then enforce this.
The Singapore Convention, like the New York Convention for enforcement of arbitration agreements, provides that eligible mediation agreements are directly enforceable in the courts of member states akin to a domestic judgment. This avoids the need for parties to bring a claim for breach of contract as mentioned above and instead gives disputing parties confidence that settlement agreements can be easily enforced across borders under a uniform set of rules.
The Singapore Convention applies to settlement agreements that: (i) are international, (ii) relate to commercial disputes and (iii) have resulted from mediation. The agreement will be international if at least two parties have their place of business in different states. If the parties have businesses in the same state, the settlement agreement may still be considered international if obligations under the agreement are to be carried out in a different state or if a different state is closely connected with the subject matter of the dispute.
What is the current status of the Convention?
The Singapore Convention came into force in September 2020. As of June 2023, 56 countries have signed the Convention, of which 11 have also ratified.
The Convention will enter into force in the UK 6 months after it has been ratified, which will first require the UK Government to pass new legislation to implement the Convention. We expect that the Convention will come into force in the UK at some point during 2024.
What impact will the convention have in the UK?
The UK’s signing of the convention should be a welcome development for many of our clients who are involved in international trade and disputes across UK borders. Under the Convention, enforcement of mediation agreements should become an easier, faster and less costly process than it is at present.
This is also yet another step emphasising the prevalence of mediation in the UK. Litigants in the UK are increasingly encouraged to use mediation to resolve their disputes before having recourse to the courts and a party that refuses to consider or engage in mediation is likely to face costs sanctions in any ensuing court proceedings.
The Ministry of Justice recently issued a consultation paper on increasing the use of mediation, including making mediation mandatory in some types of cases. The paper as a whole is indicative of the growing emphasis on mediation for all disputes before the courts in the UK. A further sign of the times, the UK Commercial Court Guide now no longer refers to “Alternative Dispute Resolution”, but to “Negotiated Dispute Resolution”, which is seen as part of the process, as opposed to being optional/alternative. We have also been seeing more and more contracts that require mediation (or other forms of dispute resolution) to take place before formal proceedings are commenced.
We leave you with the UK Government’s own words, describing the decision to sign the Convention as “a clear signal to our international partners that the UK is committed to maintaining and strengthening its position as a centre for disputes resolution and to promote the UK’s flourishing legal and mediation sectors.”