‘Singapore Convention on Mediation Enters into Force’

Singapore Convention on Mediation, an international convention that aims to help businesses resolve cross-border disputes and further facilitate international trade took effect.

• Over the years, mediation has garnered recognition and preference in India, as the Indian legislature and courts have been inclined towards the development of Alternative Dispute Resolution (ADR) mechanism in the country, in line with the international standards.
• It also stems from the fact that commercial entities actively opt for procedures like mediationover litigation.
• Although mediation as a form of alternate dispute resolution is commonly used in India when settling family and civil law cases, active measures are being taken by different organs of the Government to promote mediation as a means of dispute resolution.
• In furtherance of same, India has taken various steps.
• The signing of the Singapore Mediation Convention, 2019(“the Convention”) comes as a welcome change. 
• On 7 August 2019, 46 countries signed the United Nations Convention on International Settlement Agreements Resulting from Mediation (2019 Singapore) (“the Singapore Convention”).
• As on September 1, the Convention has 53 signatories, including India, China and the U.S. 
• On September 12, 2020, the Singapore Convention comes into effect. 

Singapore Convention on Mediation

• Also known as the United Nations Convention on International Settlement Agreements Resulting from Mediation, this is also the first UN treaty to be named after Singapore.
  • Singapore had worked with the UN Commission on International Trade Law, other UN member states and non-governmental organisations for the Convention.
• It applies to international settlement agreements resulting from mediation.
• The Convention is an instrument to facilitate international trade and the promotion of mediation as an alternative and effective method of resolving trade disputes.
• It is also expected to bring certainty and stability to the international framework on mediation, thereby contributing to the Sustainable Development Goals (SDGs), mainly the SDG 16, i.e. peace, justice and strong institutions.

Applicability of the Convention

• The Singapore Convention can be resorted to only in case of an international commercial dispute, and specifically excludes disputes arising from personal, family, inheritance or employment matters.
• The convention also does not apply to settlement agreements that have been approved by a court or concluded in the course of court proceedings, and which are otherwise enforceable as a judgment.
• In addition, it does not include settlement agreements that have been recorded and are enforceable as an arbitral award.

The need

• Presently, a settlement agreement made in one country has no legal force in another.
• A party seeking to enforce a mediated settlement agreement in another country or multiple countries will have to commence legal proceedings in each country. This can be costly and time-consuming, especially for international settlement agreements.

Why mediation?

• In commercial disputes, mediation often proves to be the cheapest, quickest and the most confidential mode for dispute resolution.
• Often, corporates find themselves in a situation where they have multiple dealings with one another, and do not wish to spoil the relationship due to a disagreement in a particular transaction.
• Mediation is the answer as it helps to preserve business relationships. It also affords the parties greater control over the outcome, leading to a more commercially-sound resolution as opposed to a determination through an adjudicatory mechanism.
• Drawbacks: However, mediation, unlike arbitration or court litigation, suffers from a drawback.
  • Mediated settlements typically take shape in the form of a settlement agreement. This is unlike a court judgment or arbitral award, where a party could directly file for execution and/or initiate contempt proceedings.
    • Therefore, mediated settlements would generally be recorded in the form of court orders or consent awards.
    • This leads to unnecessary costs, delays and, in certain cases, to loss of confidentiality.
  • Therefore, there is a need for an international framework to enforce such settlement agreements.

India and mediation

India has had a long history of mediation.

• The Code of Civil Procedure, 1908, has long recognised the concept of mediation as an effective alternative dispute resolution.
• Mediation centres have been established in many districts and High Courts in India.
• The Mediation and Conciliation Project Committee—consisting of Supreme Court and High Court judges, and senior advocates—has taken the lead in evolving policy matters relating to mediation.
• The recently introduced Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018, prescribe the mechanism for convening a mediation before the institution of a commercial dispute.
• The Arbitration and Conciliation Act, 1996, provides a conciliation mechanism whereby the resultant settlement agreement has the status or effect of an award.

India’s obligations under the Convention

• Pursuant to Article 253 of the Constitution of India, the Parliament is required to promulgate a legislation in order to give effect to any international Convention.
• Consequently, India must enact a law that would govern the mediation mechanism in the country.
• An essential advantage of such promulgation is that it will aid the development of a formal structure to conduct mediations.
• Additionally, India is under an obligation to have adequate state machinery in place to ensure smooth functioning of the mediation process.
• In furtherance of the same, the Government has approved the establishment of New Delhi International Arbitration Centre (NDIAC) as a statutory body. NDIAC was proposed through the New Delhi International Arbitration Centre Act, 2019in order to-
  • Effectively manage ADR mechanisms in India
  • Conduct arbitration, mediation, and conciliation proceedings
  • Promote research and development in the ADR sector through seminars, conferences, training programs, etc.
  • Establish and maintain a permanent Panel of Arbitrators, and other committees for provision of administrative support to ADR facilities
  • Maintain records of grants provided by the Government

Significance of the Convention

• Effective enforcement: It will provide a more effective way for enforcing mediated settlements of corporate disputes involving businesses in India and other countries that are signatories to the Convention.
• Boost to ease of doing business: It would boost India’s ‘ease of doing business’ credentials by enabling swift mediated settlements of corporate disputes.
• Better cross-border trade: The Convention will surely improve cross-border trade by making it easier to enforce the outcomes of mediated settlement agreements, and save both cost and time for the parties. 
• Reduction of burden: This will promote mediation and could consequently reduce the burden on other forms of dispute resolution procedures.

Conclusion

The Singapore Convention is a positive development for mediation of crossborder disputes, and one which should enable easier enforcement of international mediated settlement agreements around the world. Again, forward planning is essential to an enforceable result, including an understanding of the requirements of jurisdictions where enforcement is sought, and express agreement by the parties to the approach to be adopted and implemented by the mediator.