Thu 01 Jul 2021

The Singapore Mediation Convention and Its Post Brexit impact on Scotland

You may not be alone in not having heard of the United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as the Singapore Convention on Mediation (the “Convention”).  Only now, with the UK having exited the EU, is it becoming more widely known in this country. 

The Convention is a framework relating to international settlement agreements reached at mediation. It was created to assist in the facilitation of international trade and the promotion of mediation as an alternative method of resolving cross-border trade disputes. The Convention ensures that settlement reached by parties at mediation becomes binding and enforceable in accordance with a harmonised procedure.

It was adopted by the UN in December 2018.  In August 2019 Singapore hosted a signing ceremony at which 46 countries signed up, including the US and China. Since then, an additional 8 countries have signed up, however, very notably, the UK, Australia and EU countries have not. The Convention entered into force on 12 September 2020, six months after the deposit of the third ratification instrument by Qatar, following Singapore and Fiji. The Convention has since been ratified by Saudi Arabia, Belarus and Ecuador.

Key features of the Convention

Countries that have ratified the Convention can enforce the terms of a mediated settlement agreement in that state, provided the settlement falls within the scope of the Convention. Generally, it applies to international commercial settlements.  Without this framework, a party wanting to enforce the terms of a mediated settlement would have to bring an action for breach of contract and subsequently seek to have the judgment enforced internationally.

In order to apply for enforcement under the Convention a party must supply to the competent authority the following under Article 4 of the Convention:

  1. The signed settlement agreement; and
  2. Evidence that the settlement resulted from mediation.

As Article 4 requires, parties must demonstrate that settlement was concluded in writing and that the settlement agreement was the product of mediation. Further, a settlement agreement will be deemed as “international” under the Convention if the parties are based in different states, or the dispute relates to work performed in a different country from where the parties are based. The dispute must also pertain to resolve a commercial dispute.

One of the primary objectives of the Convention is to give parties confidence in the mediation process. Time and cost savings are two great benefits involved in the use of mediation for resolving disputes, and therefore having this common approach should incentivise parties to adopt mediation as their preferred dispute resolution mechanism in cross-border commercial disputes.

Mediation in Scotland

Mediation is the process whereby parties attempt to resolve a dispute out with the court system with the assistance of an independent third party mediator, whose role is to aid parties in identifying the real issues in dispute, their main concerns and intentions. The mediator facilitates the mediation process by acting as a neutral body, outlining the potential options (and risks) parties have to resolve a dispute and assists parties in achieving a solution that both parties are content with, often one that is out with the bounds of what a court could do.

Mediation is already widely used as a form of dispute resolution within the Scottish civil justice system and the appetite for mediation continues to increase. Whilst a court cannot compel parties to resolve their issues through mediation, the process is frequently actively encouraged by the court system when it is available to parties. The overriding objective of mediation is to create a more cost-effective form of dispute resolution to both the parties and the court system, freeing up the courts’ time and budget to allow them to deal with cases that cannot be resolved at mediation.

Post Brexit Challenges

As noted above, the UK has not yet signed the Convention. This was believed to be because the UK benefitted from the EU Mediation Directive (Directive 2008/52/EC) until 31 December 2020, when the Brexit transition period ended. The purpose of the EU Mediation Directive was for the harmonisation of EU members through the imposition of minimum standards and rules across a range of matters. However, only a small number of changes to UK legislation were required due to mediation law and culture already being well established in the UK.

Article 69 of the Brexit Withdrawal Agreement sets out the circumstances in which EU law applies in the case of ongoing procedures, however on 1 January 2021, the 2011 Regulations that implemented the EU Mediation Directive were repealed.

With the UK’s exit from the EU, there is increased appeal for the UK to sign up to the framework. Many believe that it would be a good idea for the UK to sign and ratify the Convention as it would provide enhanced rights of enforcement of a wide range of UK-related mediated settlement agreements. Along with that, it would also aid in the acceptance of mediation as a form of dispute resolution and improve the world’s perception of the UK as a major mediation jurisdiction.  It remains to be seen whether this opportunity will be grasped.

How we can help

MacRoberts can assist clients with all aspects of commercial mediation and commercial dispute avoidance.  Please contact Julie Hamilton from our specialist Commercial Dispute Resolution team.

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