Michel Kallipetis QC was the International Academy of Mediators (IAM) representative at the drafting of the Singapore Convention. He provides a brief overview of the Convention and some analysis from a mediator’s perspective
The Grand Ballroom of the Shangri-La Hotel in Singapore was the proud setting for the momentous occasion on 7 August 2019 when the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention) was signed by no less than 46 states. It was a spectacular conclusion to three years’ work and consultation by UNCITRAL’ s Working Group II. Since then six other states have also signed. Notable signatories are the US, China, Russia and India; notable absentees at the moment are the UK, Canada, Australia and the EU. The Convention will come into force six months after three states have ratified the Convention. At the time of writing, two states have ratified the Convention: Singapore and Fiji. The Singapore Convention responds to the demand from a growing body of mediation users for an enforcement mechanism applicable to mediated settlement agreements in cross-border disputes. It is to be hoped that the UK, once untrammelled by the provisions of the European Union Treaty signed in Maastricht, will feel able to join the major economic trading nations and sign the Convention.
UNCITRAL perceived a need from the international business community for an enforcement mechanism for mediated settlement agreements in international (or cross-border) disputes akin to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. Understandably the Working Group II delegates modelled their earlier discussions on the New York Convention for the enforcement of arbitral awards. Thus it was hardly a shock that during a ‘debate’ on the Singapore Convention at an international mediation industry event, one of the panellists dismissed it on the basis that the ‘whole document resembled the New York Convention and was redolent of arbitration rather than mediation’. The speaker focused on article 5 and the Grounds for Refusing Relief, and was particularly critical of articles 5.1(e) and (f). He expressed his view that these articles were apposite to the setting aside of an arbitral award and therefore had no relevance to mediation and ought not to be a basis for a challenge to a consensual settlement of an international commercial dispute.
At first blush a cursory reading of the Convention might justify this observation. It was apparent to the experienced mediators who attended the Vienna and New York Working Group II discussions that many of the delegates did not appear familiar with mediation in practice and were approaching this project as if a mediator were akin to an arbitrator. This explains why a great deal of time was spent discussing ‘traffic lights’ disqualifications, bias, undue influence and all the fascinating issues with which the arbitration world has become obsessed in recent years! However, those drafting the articles had chosen their words with care, and this initial judgement was hasty.
The Convention applies to an agreement resulting from mediation and concluded in writing by parties to resolve a commercial dispute (settlement agreement) which, at the time of its conclusion, is ‘international’. International is defined as the situation where at least two parties to the settlement agreement have their places of business in different states; or the state in which the parties to the settlement agreement have their places of business is different from either:
(i) The state in which a substantial part of the obligations under the settlement agreement is performed; or
(ii) The state with which the subject matter of the settlement agreement is most closely connected.
The Convention does not apply to settlement agreements arising out of transactions for family, personal or household purposes or relating to family, inheritance or employment law, nor to court-approved settlement agreements enforceable as a court judgment or arbitral awards.
‘The Singapore Convention responds to the demand from a growing body for an enforcement mechanism for mediated settlement agreements in cross-border disputes.’
A party seeking to enforce a settlement agreement must produce to the competent authority:
(a) The settlement agreement signed by the parties; and
(b) Evidence that the settlement agreement resulted from mediation, such as:
(i) The mediator’s signature on the settlement agreement;
(ii) A document signed by the mediator indicating that the mediation was carried out;
(iii) An attestation by the institution that administered the mediation; or
(iv) In the absence of (i), (ii) or (iii), any other evidence acceptable to the competent authority.
As experienced mediators will appreciate, this last requirement was the subject of some protracted and, at times, heated debate. Most mediators will not sign a settlement agreement for fear that such an act might indicate approval of or participation in the settlement agreement. However, those representing civil law jurisdictions were adamant that some verification was essential if the settlement agreement was going to be enforced without any scrutiny by a court. More fanciful concerns were voiced that dishonest parties could fabricate a settlement agreement and immediately seek to enforce the agreement with seizure of goods, bankruptcy, etc. In the end the provisions of sub-paragraphs (ii) to (iv) provide a sensible solution to allay experienced mediators’ fears and proved the necessary formality for court procedures.
The most vociferous debates in the Working Group meetings were concerned with the provision of article 5 – the defences to enforcement. The usual defences relating to incapacity, illegality, unenforceability, completion or satisfaction are standard and unremarkable. The most startling are those to be found in article 5 (1) (e) and (f). Article (e) provides for a defence where there was a serious breach by the mediator of standards applicable to the mediator or the mediation without which breach that party would not have entered into the settlement agreement. Article (f) provides for a defence where there was a failure by the mediator to disclose to the parties circumstances that raise justifiable doubts as to the mediator’s impartiality or independence and such failure to disclose had a material impact or undue influence on a party without which failure that party would not have entered into the settlement agreement.
The genesis of these provisions is to be found in the record of the long discussions in Vienna and then in New York. The report of the Working Group II on the progress in Vienna in September 2016 summarises the conflicting views on the question of relieving a party from its obligations on the basis of misbehaviour or non-disclosure by the mediator. Many of the arguments advanced reflected the approach adopted internationally in respect of arbitral awards where allegations of impropriety or bias by the arbitrator called the validity of an award into question. In Vienna it was decided to leave the question open to the next session in New York, in February 2017.
At the end of the Wednesday afternoon session in New York, Michel, as the IAM representative, put forward a draft for both (e) and (f) which highlighted the essential differences between arbitration and mediation, which some of the arguments being advanced had failed to recognise. The mediation community appreciates the fundamental distinction between an arbitrator deciding the issues between disputants and a mediator facilitating the parties to achieve their consensual solution. Whereas bias, improper behaviour, or a non-disclosed personal interest might affect an arbitrator’s decision to the detriment of one party, such behaviour by a mediator can only be relevant if it vitiates a party’s consent to a settlement. Bearing in mind that the Convention is expressly designed for international commercial disputes, in which the parties are invariably represented by lawyers and experts, parties wishing to resile from the agreement on the grounds that they were forced to consent by the mediator should seek redress against their lawyer. Their lawyer is there to protect their interests, guide their decisions, and ensure their consent to the settlement was informed and genuine. It is hard to imagine a lawyer putting forward a credible argument that the mediator’s behaviour was so egregious that it overrode the lawyer’s advice and the party’s consent to a settlement. However, some delegates were under instructions from their respective governments to ensure that any defences against enforcement included protection for individuals who are disadvantaged by an unfair, biased, or misbehaving mediator. Some accommodation had to be reached.
Following further debate in New York, the following principles were established by all present: 1) any alleged breach or failure had to be material; and 2) materiality was to be judged objectively; and 3) the party seeking relief had the burden of establishing that such breach or failure vitiated their consent to the settlement agreement from which they were seeking to resile. A careful reading of the provisions will reveal the inherent unlikelihood of a successful defence being mounted by a party suffering from ‘settlors’ remorse’ where that party is an international commercial organisation and took part in a mediation with the usual team of lawyers, experts and advisers which is the norm for international commercial disputes.
‘The second hurdle that the resiling party needs to overcome is to prove to the tribunal that the failure to disclose had a material impact or undue influence on them.’
Every mediator who engages in international commercial mediation subscribes to a code of conduct or a code of ethics which is usually identified in the Mediation Agreement under which the parties and the mediator have agreed to operate. Several codes were recognised, and there are currently discussions to try to establish a uniform code of conduct for mediators. However, this is not without difficulty given the different approaches by some countries to defining the style of mediation, diverse constraints placed upon mediators, and cultural variations, let alone the fact that mediation as a flexible process needs to adapt to the needs of the parties. Until an acceptable universal code of conduct or ethics is established, mediators performing under the Singapore Convention should identify the applicable code of conduct or ethics in their mediation agreements.
In summary therefore, to mount a successful defence under article 5 (1) (e), a party has to satisfy the relevant tribunal that there was a serious breach by the mediator of standards applicable to the mediator or the mediation without which breach that party would not have entered into the settlement agreement. The agreement on the adjective was after much discussion where views ranged from such tests as ‘any breach’, ‘egregious breach’, ‘material breach’, and ‘unacceptable breach.’ The adjective was needed to introduce an objective assessment of the gravity of the alleged breach in order to avoid claims that are fanciful, immaterial, and subjective. ‘Without which breach that party would not have entered into the settlement agreement.’ These words encapsulate the essential feature that the burden of causation is on the party seeking to resile from a Settlement Agreement.
The requirements of article 5.1(e) are cumulative. If a party can surmount the first two hurdles on standards and serious breach, the party still must prove that in spite of being represented and presumably advised by their lawyers and experts, the behaviour of the mediator caused them to consent to a settlement against their will.
To succeed under article 5 (1) (f), the party has to satisfy the court that there was a failure by the mediator to disclose to the parties circumstances that raise justifiable doubts as to the mediator’s impartiality or independence and such failure to disclose had a material impact or undue influence on a party without which failure that party would not have entered into the settlement agreement. ‘Justifiable’ introduces an objective assessment for the relevant tribunal to apply and places the burden of satisfying that test on the party seeking to resile from a settlement agreement. In the Working Group II the discussions had ranged from such tests as ‘any doubt’, ‘serious doubt’, and ‘significant doubt’, to ‘unequivocal doubt’. ‘Justifiable’ is a clever adjective because it imports the concept of a judicial determination and rules out arguments based on a subjective assessment by the party seeking to raise it. The second hurdle that the resiling party needs to overcome is to prove to the tribunal that the failure to disclose had a material impact or undue influence on them. ‘Material’ requires a sufficient element of judicial determination to elevate the complained effect above the trivial. ‘Undue influence’ is a well-established legal concept to ensure an objective judicial conclusion.
‘… [W]ithout which failure that party would not have entered into the settlement agreement’: As with Article 5.1(e), the cumulative effect of the requirements of Article 5.1(f) imposes a further hurdle to overcome by the party seeking relief. The party needs to prove that the failure to disclose vitiated their consent to the settlement agreement One can imagine that a court might conclude that the consent was not informed and grant relief only where it is satisfied that the conduct complained of amounted to undue influence or which had a material impact upon the parties and presumably also the minds of their legal and professional advisers.
The initial scepticism of many experienced mediators might be assuaged once the key words and safeguards against abuse in articles 5.1(e) and (f) are properly understood. Certainly, the implications of these two sections should be recognised by lawyers representing parties in a mediation. Experienced mediation advocates will, as a matter of course, satisfy themselves that their client understands the terms of any settlement and that any consent is informed and genuine. If enforcement of the settlement agreement is governed by the Singapore Convention, these sound lawyer responsibilities will be all the more important, and will need attention by lawyers for all the parties to minimise the possibility of challenges under either articles 5.1(e) and (f).
Lastly the argument over whether the Convention should be ‘opt in or opt out’ was compromised in article 8, which provides for both options. Thus 8 (1): ‘A Party to the Convention may declare that it shall not apply this Convention to settlement agreements to which it is a party, or to which any governmental agencies or any person acting on behalf of a governmental agency is a party, to the extent specified in the declaration.’ And 8 (2): ‘A Party to the Convention may declare that It shall apply this Convention only to the extent that the parties to the settlement agreement have agreed to the application of the Convention.’
Whether the Singapore Convention will become as commonplace as the New York Convention only time will tell.
Michel Kallipetis QC, Independent Mediators