On 3 May 2023, the UK Government signed the Singapore Convention on Mediation. In this article, we look at what the Convention is, and what the UK becoming a signatory means for international trade and disputes across UK borders.
What is the Singapore Convention?
The Singapore Convention is a framework for enforcing international settlement agreements which result from the mediation of commercial disputes. Like its sister, the New York Convention, has done in the context of arbitration awards, the Singapore Convention is intended to facilitate international trade by giving parties confidence that, where they settle disputes, settlements can be easily enforced across borders using uniform rules.
Since the Convention opened for signature in August 2019, 56 countries have signed, including the United States, China, India and now the UK. However, a signatory only becomes a full party to the Convention following ratification. To date, the Convention has been ratified in 11 countries: it is already in force in Belarus, Ecuador, Fiji, Georgia, Honduras, Kazakhstan, Qatar, Saudi Arabia, Singapore and Turkey; and will enter into force in Uruguay in September 2023. The Convention will not enter into force in the UK until six months after it is ratified – which will first require the Government to implement the Convention through legislation.
How does the Convention work?
In signing the Convention, each state party commits to do two things: it commits to enforce eligible settlement agreements in its jurisdiction; and to allow a litigant to invoke a settlement agreement in a dispute which it says has already been resolved. The Convention does not require reciprocity, so state parties commit to enforce eligible agreements concluded in any jurisdiction, whether or not that state is also a signatory. The Convention applies to international mediated settlement agreements in commercial disputes:
- International – to qualify as international in nature, at least two parties to the settlement agreement must have their places of business in different states. Alternatively, if the parties have their place of business in the same state, the settlement may still be considered international if the obligations under the settlement are to be carried out in another state, or if another state is closely connected with the subject matter of the dispute.
- Mediated – the party invoking the Convention will also need to demonstrate that the settlement resulted from mediation. This could be evidenced in a number of ways, for example by having the mediator sign the settlement agreement.
- Commercial – the Convention applies to the settlement of commercial disputes. It does not apply where any party is a consumer, or to disputes involving family, inheritance or employment law.
- Written – the settlement agreement must also be in writing (which includes electronic communication).
What difference will the Convention make in the UK?
UK courts are generally supportive both of mediation, and upholding parties' agreements. Litigants and prospective litigants in the UK are encouraged to mediate their disputes rather than having recourse to the courts, and can be penalised for failing to consider mediation. For more information see our insight Do I really have to consider mediation? The Ministry of Justice is also consulting on increasing its use – including the possibility of making mediation compulsory in certain types of claims.
While mediation is very much encouraged, at present there are limited dedicated procedures for enforcing any resulting settlement. Prior to Brexit, the EU Mediation Directive made some provision for the enforcement of cross-border mediated settlement agreements between the UK and other EU member states. However, this has limited ongoing application from the end of the Brexit transition period on 1 January 2021. Currently therefore, a party seeking to enforce the terms of a settlement agreement in the UK will typically need to bring legal proceedings for breach of contract.
Once the Convention enters into force though, a party could instead apply to enforce a mediated settlement under the Convention. This effectively confers special status on mediated settlement agreements and sets a more streamlined procedure for their enforcement relative to other forms of contract. Since there are limited grounds on which enforcement can be refused under the Convention (including the high bars of unfairness, illegality, public policy or fraud), this is likely to mean enforcement of international settlement agreements under the Convention will be faster and more certain than is currently the case.
In addition, the UK has already indicated that in implementing the Convention, it will not avail itself of the two permissible reservations in the Convention, meaning that:
- The Convention will also extend to mediated settlements to which the UK Government is a party; and
- The Convention will be opt-out, not opt-in: if parties do not wish the Convention to apply to their settlement agreement, they can opt out, but they will need to make that express in the agreement.
The UK Government says the decision to sign up to the Convention will be "a clear signal to our international partners that the UK is committed to maintaining and strengthening its position as a centre for dispute resolution and to promote the UK's flourishing legal and mediation sectors".
When will the Convention enter into force in the UK?
Before the Convention enters into force in the UK, the Government will need to implement it through changes to legislation and court rules, and then deposit its instrument of ratification of the Convention. The Convention will enter into force six months after it is ratified, so entry into force is still some way off. However, the Government has indicated that it plans to take the necessary steps to implement and ratify as soon as possible.
To discuss any of the points raised in this article, please get in touch with Tom Price