On 25 February 2020, Singapore and Fiji deposited their instruments of ratification for the Singapore Convention on Mediation (the “Mediation Convention”) signed on 7 August 2019. The Mediation Convention is slated to enter into force six months after the deposit of the third instrument of ratification, acceptance, approval or accession by a signatory state. All it takes now is for a third state to ratify for the six-month timeline to commence.
Accordingly, earlier this month, Singapore passed the Singapore Convention on Mediation Act 2020 (the “Convention Act”), which gives effect to the Mediation Convention in Singapore. Thus, parties should already familiarise themselves with the features of the Convention Act to be able to take full advantage of them in their strategic decision-making once the Mediation Convention comes into force.
Why This is Important
Senior Minister of State, Ministry of Law and Ministry of Health, Mr Edwin Tong S.C. said, “Many businesses rely on litigation or arbitration to resolve their cross-border disputes. With the Convention, more businesses can now choose to rely on mediation with the knowledge that agreements resulting from mediation can be enforced more readily by the courts of the contracting parties to the Convention.”
The new Singapore Convention on Mediation Act expands the scope of reliefs available in Singapore for a party to an international settlement agreement. It is a bold step forward for international mediation as a dispute resolution mechanism option, particularly for parties involved in high-value, cross-border transactions, and complements the existing established dispute resolution mechanisms of international arbitration and litigation. It provides international parties with the assurance that they can rely on their international settlement agreements to be recognised and enforced in Singapore.
Salient Features of the Singapore Convention on Mediation Act 2020
The Singapore Convention on Mediation is widely regarded as a milestone in international mediation by promoting the creation of a global network of State parties who are bound to enforce settlement agreements as a result of mediation. We have previously discussed the Mediation Convention in a separate note here.
The Convention Act directly implements the Convention and also includes provisions which harmonizes it with the existing Singapore Mediation Act 2017 (the “Mediation Act”).
Under the Convention Act, an international settlement agreement (an “ISA”) is an international agreement resulting from mediation and concluded in writing by the parties to the mediation to resolve a commercial dispute. An agreement is considered international if: (1) at least two parties have their places of business in different states, or (2) the state in which the parties have their places of business is different from either the state where the ISA is to be substantially performed or the state in which the subject matter of the ISA is most closely connected.
Similar to the Convention, the Convention Act applies to commercial disputes. Hence, it does not apply to settlement agreements concluded to resolve disputes arising from transactions engaged in for personal, family, or household purposes; or those relating to family, inheritance or employment law.
The Convention Act allows parties to an ISA to:
- record the ISA as an order of the court, for purposes of enforcing that ISA in Singapore. An ISA which has been recorded as a court order may be enforced in the same manner as a judgment given by the High Court, and may be relied upon by the party who made the application to record by way of defence, set-off or otherwise in any court proceedings; and
- invoke the ISA in court proceedings in Singapore covering the same dispute, to prove that the matter has already been resolved. This can be done by either invoking the ISA itself, or invoking the court order which recorded the ISA as described above.
The Convention Act clarifies how it will apply vis-à-vis the existing Mediation Act. The Mediation Act also allows parties to make an application to the court to record their mediated settlement agreement (an “MSA”, as defined therein) as an order of the court. Under the Mediation Act, however, the application to record the MSA must be with the consent of all parties to the agreement, and generally filed within 8 weeks after the MSA is made. The Convention Act preserves the option of the parties to a settlement agreement (where the applicable criteria are met) to select either the mechanism under the Convention Act or that under the Mediation Act to enforce their settlement agreement.
Points to Note in Preparing Your Settlement Agreement
For parties involved in a dispute who are considering mediation, the Convention Act provides some handy guidelines when preparing an international settlement agreement, to ensure that an application to record the ISA as an order of the court or to invoke the same is not denied.
Formal reqirements
- Ensure that the ISA is signed by the parties
- Have the mediator either sign the ISA or sign a separate document indicating that the mediation was carried out
- Where applicable, request for an attestation by the institution that administered the mediation
Substantive requirements
- Ensure that all parties to the ISA have capacity to enter into it
- Confirm that the ISA is valid under the law to which it is subject
- Ensure that the terms of the ISA are final and binding, or will be final and binding at the time the court application is made
- Draft the obligations under the ISA in clear and comprehensible terms
- Check that nothing in the ISA is contrary to the public policy of Singapore and that the subject matter of the dispute is capable of settlement by mediation in Singapore
Do note that, if there was any serious breach by the mediator of the applicable mediation standards during the mediation proceedings, or if there was a failure by the mediator to disclose circumstances that would raise justifiable doubts about his or her impartiality and independence, and had the mediator made such disclosure, a party would not have entered into the ISA, then the court may also refuse to grant the application to record or invoke the ISA.
Mapping your Dispute Resolution Strategy
Parties would need to consider a wide range of factors when mapping out their dispute resolution and dispute management strategy, particularly in high-value, cross-border transactions. These factors include a party’s risk appetite, its network of business relationships, the available practical enforcement options, and potential costs.
The Mediation Convention and the Convention Act work hand in hand to strengthen international mediation as an option for parties managing their commercial disputes, alongside international arbitration and litigation. Parties may also consider a combination of these mechanisms, such as the Arb-Med-Arb procedure, wherein parties who have commenced an arbitration may subsequently engage in mediation. A settlement agreement concluded under this procedure may then be recorded and enforced as an arbitral award.
A copy of the Convention Act is available here.
Eversheds Harry Elias International Arbitration Group
Eversheds Harry Elias is committed to providing its clients with cost-efficient and effective solutions. We regularly provide advice on complex international commercial disputes. We have extensive experience in advising and successfully representing multinational entities and our team is comprised of trained and experienced litigation, mediation and arbitration advocates. As a full-service Singapore law firm, we have full rights of audience before all tiers of Singapore Courts and are well placed to advise and support our clients in arbitration and mediation-related court applications.
If you would like to discuss further, please contact:
Francis Goh
Partner, Eversheds Harry Elias
Head, International Arbitration
Principal Mediator, Singapore Mediation Centre
Specialist Mediator, Singapore International Mediation Centre
Certified Mediator, Singapore International Mediation Institute
francisgoh@eversheds-harryelias.com
+65 6361 9835
Janice Lee
Foreign Legal Associate, Eversheds Harry Elias
janicelee@eversheds-harryelias.com
+65 6361 9821