ENFORCEMENT OF INTERNATIONAL MEDIATED

• Citation: (2019) 31 SAcLJ 572
• Author: Eunice CHUA LLB (National University of Singapore), LLM (Harvard); CEO, Financial Industry Disputes Resolution Centre; Research Fellow, School of Law, Singapore Management University.
• Publication year: 2019
• Published date: 01 December 2019
• Date: 01 December 2019

1 Because mediated settlement agreements are entered into voluntarily by the parties instead of imposed on them by a third-party ruling, they have a higher chance of performance compared with court decisions.1 Nevertheless, the parties may still wish to or find it necessary to create an enforceable agreement, for example, if the obligations agreed on are far in the future or if the parties have some specific need for reassurance whether for financial, emotional or other reasons. Additionally, the parties may be wary of the temptation to delay or

refuse performance or changes in circumstances that could affect compliance.2 This need for enforceability is probably most acute in the international mediation context, where parties from different cultures and jurisdictions may not necessarily have a long-standing or robust relationship of trust. Complications in the enforcement of international mediated settlement agreements further add to the uncertainty and transaction costs of resolving an international dispute through mediation.3

2 For these reasons, many proponents of mediation see enforceability as a missing piece that could have a significant impact on the use of international mediation.4 This view is supported by a large number of empirical research studies. In the Global Pound Conference Survey conducted from 2016 to 2017, delegates were asked about the areas that would most improve commercial dispute resolution. The top choice (51%) was the use of legislation or conventions that promote recognition and enforcement of settlements, including those reached in mediation.5 A survey published in 2016 and conducted by Stacie Strong showed that enforcement of international mediated settlement agreements was perceived as significantly more difficult than domestic mediated settlement agreements.6 When asked to indicate whether they thought the existence of an international convention concerning the enforcement of settlement agreements arising out of international commercial mediations would encourage parties in the respondent's

home jurisdiction to use mediation, a majority of 74% of the respondents thought that such an international instrument would encourage mediation.7

3 Building on Strong's survey, another survey adopting the same methodology had 84% of respondents selecting “yes” when asked whether they would be more likely to use or increase use of mediation in a cross-border dispute with another party or multiple parties of different jurisdictions if a uniform global mechanism was in place similar to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards8 (“New York Convention”) to enforce a settlement agreement reached in the mediation process.9 In a 2014 survey conducted by the International Mediation Institute, 90% of respondents agreed that the absence of any kind of international enforcement mechanism for international mediated settlement agreements presented a major impediment or was at least one deterring factor to the growth of mediation as a mechanism for resolving cross-border disputes, and 93% indicated they would be likely to mediate a dispute with a party from a country that ratified an international convention on the enforcement of mediated settlements.10

4 The desire to promote enforceability of international mediated settlement agreements has been expressed and considered in the United Nations Commission on International Trade Law (“UNCITRAL”) before, including during the preparation of the UNCITRAL Model Law on International Commercial Conciliation 200211 (“the Model Law”). Many “practitioners had put forward the view that the attractiveness of conciliation would be increased if a settlement reached during a

conciliation would enjoy a regime of expedited enforcement”.12 The UNCITRAL also expressed that it was “generally in agreement with the general policy that easy and fast enforcement of settlement agreements should be promoted”.13 However, due to the great variance in the methods of achieving enforcement of settlement agreements between legal systems, the Commission ultimately left the issues of enforcement, defences to enforcement and the designation of authorities from whom enforcement could be sought to applicable domestic law. Accordingly, Art 14 of the Model Law provided that:

If the parties conclude an agreement settling a dispute, that settlement agreement is binding and enforceable … [the enacting State may insert a description of the method of enforcing settlement agreements or refer to provisions governing such enforcement].

5 Following the Model Law, the next attempt to achieve some success in harmonising the enforcement of international mediated settlement agreements took place at the regional level in the European Union (“EU”). In the EU Mediation Directive,14 Art 6 obliged member states to enforce a written settlement agreement resulting from cross-border mediation if all parties so requested and left the member states to implement this obligation based on procedural mechanisms of their choice. Unfortunately, the success of the EU Mediation Directive has been limited.15 A study requested by the European Parliament's Committee on Legal Affairs has observed that the EU Mediation Directive has done little to solve the “EU Mediation Paradox” – “Despite its proven and multiple benefits, mediation in civil and commercial matters is still used in less than 1% of the cases in the EU.”16 The broad formulation of Art 6 has also led to not only the procedure but also the issues surrounding enforcement, including available defences to

enforcement, being left to the domestic law of each of the EU member states.

6 Enter then the Convention on International Settlement Agreements Resulting from Mediation17 (“Singapore Convention on Mediation”), which was adopted by the United Nations General Assembly on 20 December 2018. It signifies remarkable progress in the international community's acceptance of mediation as a dispute resolution mechanism and a desire to see its use grow. Completed within four years despite the many sceptical views expressed at the first proposal for such a convention at a meeting of UNCITRAL Working Group II,18 the Singapore Convention on Mediation will allow parties to enforce an international mediated settlement in signatory states directly, akin to how the New York Convention allows the recognition and enforcement of foreign and non-domestic arbitral awards. It addresses the key issues surrounding the enforcement of international mediated settlement agreements but stops short of prescribing an enforcement procedure.19

7 Although reception to the Singapore Convention on Mediation has been warm,20 it will take time before there are enough signatories to make a significant impact on the practice of international businesses. The New York Convention, now lauded as the most significant instrument in international arbitration, had 80% of the countries in the

world as signatory states as at 2018.21 However, it should be remembered that “the international business community's penchant for international arbitration developed relatively recently”,22 and its influence expanded gradually as the number of signatory states grew at an average rate of between two and three states each year.23

8 Additionally, for countries deciding whether or not to become a signatory to the Singapore Convention on Mediation or for potential users deciding whether to opt out of it if given the option, which is a possibility permitted by Art 8 of the Singapore Convention on Mediation, it is important to be aware of what the alternatives are. This article discusses these alternatives, taking into account common law, civil law and other international instrument approaches to enforcement. It focuses on three generally available options to enforce international mediated settlement agreements: (a) as an order of a domestic court; (b) as a consent arbitral award; and (c) through notarisation.24

I. Enforcement as an order of court

9 If the mediated settlement agreement was arrived at after a court action had started, it is possible in many jurisdictions to have the court record the settlement agreement as a consent order of court, which is generally regarded as a final judgment of the court.25 Exceptionally, domestic law may permit the courts to enter a judgment based on the mediated settlement agreement without starting a civil action. Examples include Ontario, Canada, where the Commercial

Mediation Act 201026 permits the registration of a mediated settlement agreement with the Superior Court of Justice and for the agreement to have the same force and effect as if it were a judgment of the court; the Philippines, where s 17 of the Philippine Alternative Dispute Resolution Act27 allows the parties to deposit a mediated settlement agreement with the appropriate clerk of a Regional Trial Court and for the court to summarily hear a petition if a need to enforce the mediated settlement agreement arises; and Singapore, where parties may make an application to court to have their mediated settlement agreement recorded as an order of court subject to certain conditions being satisfied under s 12 of Singapore's Mediation Act.28

10 Nevertheless, even if some expedited procedure is available for a mediated settlement agreement to take the form of a court order, there remains the difficulty of international enforcement because a court in another country is usually not obliged to recognise the foreign court's judgment unless there are pre-negotiated obligations to enforce in place, whether in the form of a multilateral or bilateral agreement.29 The discussion in this part examines the enforcement of mediated settlement agreements that take the form of a foreign court judgement or order under international treaties, regional or bilateral treaties and under principles of domestic law. It concludes that although there is promise in multilateral treaties for the...