The Singapore Convention: UK decides that the time is right
On 2 March 2023, the Ministry of Justice published the UK Government’s response to the consultation on the United Nations Convention on International Settlement Agreements Resulting from Mediation, known as the Singapore Convention. This concluded that now is the right time for the UK to become a party. Although not an unexpected announcement, and with work still to be done in terms of devising the domestic framework to implement the Convention, this is nonetheless a positive step which looks to enhance the efficacy of mediation in the UK.
The Singapore Convention
The Convention, discussed in our previous Perspective, was adopted by the United Nations in December 2018 and creates a framework for the enforcement of international mediation settlement agreements, avoiding the need for court proceedings to enforce the agreement reached in the mediation.
It enables a party to a settlement agreement to apply to the courts of a state which is a party to the Convention to enforce the terms of that settlement where the settlement agreement is in writing and:
- results from a mediation. There must be either an agreement between two or more parties which have their place of business in different states; or
- the place of business of the parties to the agreement is different from either:
- the state in which a substantial part of the obligations of the settlement agreement is performed; or
- the state with which the subject matter of the settlement agreement is most closely connected.
The Convention does not cover settlement agreements which are enforceable as a court judgment or those which are recorded in an arbitral award. Settlement agreements resulting from mediation in non-commercial matters, such as those involving employment, inheritance and family matters are also outside the scope of the Convention.
State parties to the Convention are obliged to recognise and enforce agreements falling within the ambit of the Convention, subject to specific and limited grounds for non-enforcement. In this way, the Convention removes uncertainty from the enforcement stage, thereby making mediation a more workable and cost-effective form of dispute resolution.
The Convention has been largely well-received, with 55 signatory states (ten of which have fully incorporated the Convention into local law).
Legal and practical impact
The UK Government has said that it will sign the Convention as soon as possible. Following that, ratification of the Convention will take place once all necessary implementing legislation has been passed to facilitate the Convention’s smooth operation in the UK. The Convention will then come into force in the UK six months after the UK has deposited its instrument of ratification with the UN Headquarters in New York.
Once in force, the UK courts will directly enforce settlement agreements resulting from mediations held anywhere in the world, without the enforcing party needing to commence proceedings for breach of contract in respect of the paying party’s failure to comply with the settlement agreement. That should include mediations held within the UK itself, if the dispute qualifies as “international” under the Convention. As the Convention is not reciprocal, settlements resulting from UK mediations are already enforceable under the Convention in its members’ states in any case.
Work remains to be done to devise the domestic framework to implement the Convention. According to the UK Government’s announcement, the UK will not rely on either of the two permissible reservations under Article 8 of the Convention. This means that the UK courts will not require parties to ‘opt in’ by expressly agreeing that the Convention will apply. The UK Government does propose, however, to allow parties to opt out of the Convention by expressly excluding wording to that effect in their settlement agreements, in accordance with Article 5(1)(d) of the Convention. In relation to the second permissible reservation under Article 8, the UK has confirmed disputes involving UK government entities will not be excluded.
More generally, given that several of the Convention’s provisions are either ambiguous or intentionally flexible to allow enforcing courts to adopt different approaches, there is some level of unpredictability as to how the UK will choose to implement the Convention. This includes the extent to which an enforcing court will engage with a dispute over the interpretation of the settlement agreement. In addition, it is not yet known how settlement agreements will be treated where they arise from settlement discussions commenced in mediation but where the agreement is reached later. It is common in the UK that a settlement takes place after (and, in a number of cases, some time after) the mediation day. In such circumstances, it is unclear whether enforcement may be challenged on the grounds that the settlement did not occur in mediation.
Those tasked to devise the domestic framework will be considering these questions and giving thought to the extent to which it will be appropriate to interpret the Convention’s provisions or leave it to the UK courts to determine certain questions in individual enforcement decisions.
The Convention will likely be a useful tool for claimants where a party is attempting to walk away from a settlement agreement resulting from a mediation in circumstances where enforcement would otherwise be difficult given the location of assets. That said, the Convention may have less of an impact in the UK than might be expected because it is relatively uncommon for settlements reached through mediation to need enforcement action at all. It is also true to say that the mediation-friendly UK courts are already amenable to enforcing such settlements, albeit via more cumbersome proceedings for breach of contract.
While a minority of respondents to the MoJ’s consultation of 2022 thought there would be limited benefits in the UK becoming party to the Singapore Convention, the majority were in favour of the UK becoming a party now. While critics say signing the Convention is unnecessary, it is an obvious step for the UK to take in line with its push in recent years to increase the use of alternative dispute resolution and to integrate it to a greater extent into the civil justice system.
The UK’s ratification of the Convention will signal the UK’s ambition to remain a global leader in the disputes world and maintain the UK’s position as an attractive centre for dispute resolution. It will also further enhance the credibility of UK-based mediators and allow the UK to contribute to the interpretation of the Convention’s provisions through court judgments.
UK Government response to the UN on International Settlement Agreements resulting from Mediation
The Singapore Convention