The Singapore Mediation Convention offers hope to businesses looking for an alternative to time-consuming litigation in overburdened courts. Amar Sundram reports
A recent article headlined “Trust Deficit” in a leading Indian financial newspaper pointed out that modern economies are complex webs of interdependence that are held up by regulations, contract law and much else, but most importantly, by an intangible glue – trust. The article went on to quote a recent increase in scams carried out at companies and by businessmen in India.
Trust is an important criterion in the overall development of any country’s economy and once it is dented it spoils the economic environment and slows down growth. From a legal point of view, once the trust is broken, especially in a commercial contract, the differences and disputes are required to be resolved in a timely and cost-effective manner.
Recently, Tata Trust published its India Justice Report 2019, which mentions that the average case pendency in subordinate courts is five years. The judiciary remains a low priority in budget allocation with, nationally, India spending only 0.08%, while all states combined (excluding the central government) spending 0.54% of their total expenditure on the judiciary in 2015-16. Each of the 18 large and mid-sized states had high court judge vacancies of above 25%, i.e., one in every four sanctioned high court judge positions has not been filled. At a macro level, in 27 states and Union Territories, there is just one subordinate court judge for more than 50,000 people. It becomes clear, therefore, that court litigation for resolving differences and disputes in a commercial contract is not the most prudent solution.
In this scenario, the signing of the United Nations Convention on International Settlement Agreements Resulting from Mediation on 7 August 2019 in Singapore is a positive first step. This Singapore Mediation Convention has so far been signed by 51 countries including India, the US, China and South Korea, while the UK, the EU and Australia have yet to sign. This Singapore Convention, as it is known, is intended to facilitate the enforcement of settlement agreements that have been entered into with the assistance of mediation. The resolution was adopted by the UN General Assembly on 20 December 2018, and it is worth noting the important opening statements in the preamble to the convention, where parties to the convention: