Soft power and symbolism – not procedural need – should see the UK take a leading role in the UN's global enforcement deal for mediation
The UK Government is currently consulting on whether the UK should sign the UN Convention on International Settlement Agreements Resulting from Mediation, more commonly known as the Singapore Convention. The consultation closes on 1 April 2022.
The Convention establishes a framework under which member states recognise and enforce settlements of commercial disputes resulting from mediations conducted anywhere in the world (if they fall within scope). It currently has 55 signatories, including nine member states.
Since coming into force in September 2020, the Convention has been available to enforce settlement agreements resulting from mediations held in the UK (or anywhere else) in the Convention’s member states. However, it is only now many are considering the detail of how the Convention impacts UK-mediated settlements being enforced abroad and vice versa – and what difference it makes should the UK join up. Those issues are complex and extend beyond the Convention’s legal operation.
The key considerations are as summarised below. We believe they support a view the UK should:
- sign and ratify the Convention; and
- develop a supporting framework of domestic rules to clarify how the Convention will apply in areas where there is scope for different approaches.
The absence of an enforcement regime has not hindered UK mediation
In practice, it is rare commercial parties fail to honour settlements they have reached through mediation. The number of cases where the Convention will need to be relied upon may be relatively small.
Further, we do not believe the role of mediation in commercial disputes in the UK has been held back by the lack of a global enforcement regime. As has been recognised in various reviews in recent years, the uptake of mediation in substantial commercial claims is generally regarded as satisfactory. Most cases in the UK commercial courts are mediated at least once and, where they are not, the reasons are usually to do with whether a settlement can be reached rather than concerns about whether it could be enforced if necessary.
That is not to say the Convention could not be relevant to UK litigants’ decision-making around whether to mediate. However, the Convention cannot be said to be solving any existing systemic problem or be likely to substantially increase the proportion of commercial claims that are mediated.
The UK joining the Convention would be unlikely to make more settlements enforceable – but impressions are more important
In terms of legal impact, the UK signing the Convention is unlikely to alter whether a particular mediated settlement agreement being brought to or from the UK is enforced. That is because:
- Foreign jurisdictions that have ratified the Convention will be obliged to enforce relevant settlements resulting from UK mediations regardless of whether the UK is a member state.
- The UK courts applying local law would probably already enforce a settlement agreement (domestic or foreign) that met the criteria in the Convention – albeit via the indirect route of enforcing a judgment for breach of contract. The UK becoming a member state would in most cases be a procedural rather than substantive change. Of course, that procedural advantage may be viewed as valuable by many commercial parties, both domestically and abroad.
More importantly, the above legal position is not widely appreciated. That is no doubt partly because it is wrongly assumed the Convention only operates reciprocally among its member states, as is the case with most other legal enforcement treaties. The UK becoming a member state could therefore avoid any misperception that a settlement resulting from a UK mediation will be less readily enforced internationally than one from a mediation in a non-Convention state.
Wider benefits for mediation
The Convention has value beyond its technical operation in individual cases, and those benefits should not be underestimated.
While mediation is well established within the UK's commercial disputes landscape, there remains variability in its global use. The data collected from international participants at the Global Pound Conference series in 2016/17 identified an international enforcement regime for settlements as one of the most beneficial developments for commercial dispute resolution in the future.
Of course, even within the UK, a substantial proportion of parties in the commercial courts hail from jurisdictions where mediation is less well known. The UK having ratified the Convention could assist legal advisers in persuading such clients of mediation's benefits and of the substantive role it has in the UK commercial courts.
Supporting the Convention would convey globally:
- a formal recognition of mediation as a reliable option for resolving international commercial disputes, alongside litigation and arbitration;
- further reassurance to foreign parties that the UK courts are mediation-friendly and willing to enforce settlements (domestic or foreign); and
- encouragement for other jurisdictions to join the Convention.
Change from within
The Convention’s drafting has been kept deliberately high-level, allowing flexibility within member states as to how they apply the provisions. There are several aspects of the Convention where that flexibility could result in unpredictability for mediating parties, particularly given a foreign enforcing court could approach the issue from different legal and public policy norms.
Differences in legal systems and norms are, of course, inherent in the operation of any international enforcement treaty. However, the Singapore Convention is unusual as the foreign court will be considering and enforcing a settlement agreement directly, rather than enforcing the judgment of a court regarding the agreement. As a result, there may be an increased risk a foreign court could adopt an approach under the Convention that would be contrary to the current expectations of parties who mediate in the UK.
Given the small number of cases requiring enforcement under the Convention, the unpredictability around foreign courts’ approaches could prove inconsequential in the context of deciding the UK's membership.
However, the more important point is that any such issues will exist regardless of whether the UK joins. Given that UK-mediated agreements will continue to be enforceable in Convention member states, any perceived risks in this regard will not be avoided by the UK electing not to sign.
At individual case level, mediating parties with concerns could seek to avoid risk by including in their settlement agreement an express opt-out from the Convention (if that can be agreed). Such contractual opt-outs could be expected to be respected by enforcing courts. However, this would not be under any express opt-out provision in the Convention and would presumably rely on the enforcing court exercising its discretion to refuse relief where it contradicts the terms of the settlement agreement.
Unpredictability cannot be avoided by the UK remaining outside the Convention and is best mitigated by the UK influencing as a member state how provisions are interpreted and applied. The UK could do so by articulating its approach to the relevant provisions in the legislation or procedural rules by which the Convention is implemented in the UK and, to a lesser extent, through English courts’ enforcement decisions.
Such articulation of the English legal position would be useful for UK mediating parties if a foreign court was asked to enforce their agreement and needed to take into account the English context for the purpose of determining an issue under the Convention.
More importantly, the outlining of the UK’s approach could potentially influence other jurisdictions formulating their domestic rules or in individual enforcement decisions. In that way, the UK could take an active role in the global development of law and practice around the Convention. Such a role would align with the Government’s vision that joining the Convention would bolster the UK's status as a world-leading dispute resolution centre.
For further details of the Convention’s key provisions, see our earlier post here as well as articles by Jan O’Neill, Professional Support Lawyer in our London office, on Practical Law’s Dispute Resolution Blog discussing the Convention’s potential impact and considerations for mediating parties.