Enforcement of Certain International Settlement Agreements Made Easier
7 August 2019
Author: Helen Lehto
At the time of writing, representatives from various nations have gathered in Singapore to sign the brand new United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as the “Singapore Convention on Mediation”. Once entered into force, the Convention will likely have a significant impact on the enforcement of certain international settlement agreements.
In the past, there has been no equivalent to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly known as the “New York Convention”) which specifically would apply to the enforcement of international settlement agreements. Because of this, practices concerning enforcement of settlement agreements on an international scale have varied, and it has generally been much more complicated to enforce international settlement agreements than to enforce an international arbitral award.
The Singapore Convention on Mediation aims to address this issue by obliging each state that is party to the Convention to enforce a settlement agreement in accordance with its rules of procedure, provided that the conditions laid down in the Convention are adhered to.
However, the Convention does not apply to all settlement agreements. For the Convention to apply, the settlement agreement in question must “result from mediation“, be concluded in writing by parties to resolve a commercial dispute, and the agreement must be “international” at the time of its conclusion, meaning e.g. that the parties to it have their place of business in different states. Settlement agreements such as those which have been approved by a court and are enforceable as judgments in the state of that court, as well as settlement agreements enforceable as arbitral awards, also fall outside of the scope of the Convention’s application.
For the settlement agreements that the Convention does apply to, it is important to note that the Convention sets out certain formal requirements for reliance on such agreements, which should be taken into account at the time of mediating and drafting the agreement. These include signing the agreement, as well as obtaining some form of confirmation that the settlement agreement in question is the result of the kind of mediation defined in the Convention. Parties should also be aware of the grounds on which enforcement of an international settlement agreement may be refused, which are also laid out in the Convention.
Hannes Snellman’s dispute resolution team is following the developments in this field closely and looks forward to seeing the effects of the Singapore Convention on Mediation in practice.