The Singapore Convention on Mediation (the Singapore Convention) is an international treaty that will make mediated settlement agreements for international commercial matters enforceable across borders. This is good news for businesses all over the world as people can have more confidence in entering settlement agreements assisted by a trusted third party instead of pursuing costlier and more time-consuming legal proceedings. More than anywhere else, Asia will stand to benefit if Asian countries collectively sign up to the Singapore Convention.
Why is mediation important?
The recognised benefits of mediation include the involvement of a third party neutral to facilitate negotiations between the parties, a high percentage of successful settlements commonly reached within a day or two, and the ability to preserve and enhance the relationships of the parties involved. In contrast, arbitration or litigation could take years before an outcome is known and could also lead to acrimony and breaking down of relationships.
Mediation is uniquely consistent with Asian sensibilities. Despite the many different cultures that make up Asia, the principles underlying mediation – harmonious community living and peaceful resolution of conflict – are common threads linking them together. Yet, we have often been so caught up in the tradition of enforcing our individual rights that this heritage has been lost.
Singapore is an example of how mediation had to be re-learnt by a modern society. Historically, traditional forms of mediation were prevalent, where respected Chinese, Malay and Indian community leaders brought disputants together to settle matters amicably. Over time, as urbanisation dispersed traditional communities and education led to increased awareness of legal rights, disputes burgeoned and the Singapore courts faced a growing backlog of cases. In the 1990s, the judiciary and government led a mediation movement that introduced institutional mediation in the courts, the community and the commercial marketplace. This cleared the backlog of cases in the courts and promoted a more resilient and harmonious society.
In the international commercial context, mediation can help to quickly and effectively resolve cross-border business disputes. One of my favourite mediation stories involves two joint venture partners from different Asian countries. Their joint venture was profitable but both companies ended up in court after a personal quarrel between their respective managers got out of hand. The mediation concluded with the directors of both parties agreeing to continue with the joint venture under renegotiated terms, with special arrangements being made for the feuding managers. If this dispute had played out in court or arbitration, it is likely the joint venture would have ended.
We can expect more international business deals in the region with trade initiatives such as the ASEAN Economic Community, China’s Belt and Road Initiative, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. We can concomitantly expect disputes that will arise when these deals run into problems. A quick and cost-effective solution that allows for business continuity is needed and mediation fits the bill.
How can the Singapore Convention help mediation and Asia?
More can be done to encourage the use of mediation in the international commercial context to facilitate cross-border business. Despite the well-known benefits of mediation, mediation of international commercial disputes remains uncommon in Asia as compared with arbitration. Research suggests that this is largely due to the lack of enforceability of mediated settlement agreements. Enforceability appears particularly important to Asians, who appear to prioritise certainty and enforceability of outcomes over increased efficiency in commercial dispute resolution.
The timing of the Singapore Convention also coincides with developments in the two largest Asian economies of China and India, and the two major Asian financial centres of Hong Kong and Singapore, that demonstrate a willingness to enact and amend legislation as well as implement policies to support commercial mediation. Examples include the offering of mediation as an option in the China International Commercial Court, which heard its first case at the end of May this year, India’s 2018 amendment to the International Commercial Courts Act that made mediation mandatory before starting a commercial suit, Hong Kong’s announcement of eBRAM.hk, an internet-based dispute resolution platform incorporating mediation that is targeted at Belt and Road disputes, as well as Singapore’s enactment of a Mediation Act in 2017.
The Singapore Convention could be a real boost for mediation in Asia and bring actual use of mediation in line with the favourable perceptions mediation enjoys.
How will the Singapore Convention work?
Just as the New York Convention provided a framework for the recognition and enforcement of arbitral awards, contributing to the popularity of arbitration, the Singapore Convention can do the same for international mediation. States Parties to the Singapore Convention must enforce an international mediated commercial settlement and allow a party to invoke such a settlement as a defence, upon the competent authority being supplied the signed settlement and evidence that it resulted from mediation.
States Parties may only refuse relief on exhaustive and limited grounds that include: incapacity of a party to the settlement; a serious breach of applicable standards by the mediator without which the party would not have entered into the settlement; a failure by the mediator to disclose circumstances that raise justifiable doubts as to the mediator’s impartiality or independence without which failure the party would not have entered into the settlement; and where relief will be contrary to public policy.
Without the Singapore Convention, enforcing mediated settlement agreements internationally is a costly and complex endeavour fraught with uncertainty. The Singapore Convention provides a simple framework that provides a straightforward, efficient and predictable path to enforcement.
Given the benefits of the Singapore Convention, it is hoped that Asian countries will widely support it, and, together, usher in a brighter future for Asian dispute resolution.
Ms Eunice Chua is the Chief Executive Officer, Financial Industry Disputes Resolution Centre, Singapore, and a Research Fellow of the Singapore Management University.