The UN Convention on International Settlement Agreements Resulting from Mediation (commonly known as the Singapore convention on mediation), applicable to settlement agreements resulting from international commercial mediations was adopted by the United Nations General Assembly on 20 December 2018. Open for signing from 1 August 2019, the convention will come into force once more than three states have ratified it.
It is generally hoped that, in terms of enforcement, the Singapore convention will do for mediation what the 1958 New York Convention did for international arbitration. Currently, an international mediation settlement, unless it is provided for in the context of an arbitration, is enforced as a contract. However, as practitioners have expressed, the enforcement of a mediation settlement does not ordinarily run into the difficulties that an arbitration award may, because in a mediation both parties are amenable to a settlement.
Nonetheless, the convention may provide a fillip to mediation as a preferred mode of dispute settlement, particularly in the context of cross-border disputes.
Ambit of the convention
The convention defines mediation as “a process whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person lacking the authority to impose a solution upon the parties to the dispute”. Any settlement agreement in respect of which a court award or an arbitration award has already been passed, or an application or claim has been made has been excluded. Parties are also entitled to choose other modes of dispute settlement that are allowed under the applicable laws while considering mediation.
Enforcement of settlements
The convention provides the flexibility to the contracting state to appoint an authority for enforcement of the settlement, and such an authority is to act expeditiously while considering the request for relief. A party applying to such an authority for enforcement of the settlement has to furnish the settlement agreement along with proof that the settlement agreement was reached through mediation.
While mediation has been discussed for decades in India, we have seen a renewed interest in resolving disputes through mediation in recent years. There is an increasing number of initiatives to encourage parties to resolve disputes through mediation, from court-linked mediation centres with a high success rate to private mediation initiatives that are training mediators and resolving disputes across the country.
Pre-institution mediation had been made mandatory prior to the institution of a suit under the Commercial Courts Act, 2015, through an ordinance dated 3 May 2018, unless any urgent interim relief was requested. The Companies Act, 2013, also has an empanelled list of mediators to mediate company law disputes under section 442. All of these legislative initiatives need to be fully explored to push mediation as a viable alternative to mainstream litigation by every stakeholder.
The general statistical report by the Tis Hazari Courts, Delhi show that 94,058 cases were referred to mediation between 2005 and 2018, while 129,479 civil cases were instituted before the Tis Hazari district courts from just 2015 to 2018.
Meditation clauses in agreements
Drafting a mediation clause in commercial contracts could be beneficial for the parties concerned. This may be in the form of a negotiation-arbitration-mediation-arbitration or a negotiation-mediation-arbitration clause or a mediation-arbitration clause, depending on the circumstances. The convention also provides the option for contracting states to provide that the convention would apply only to the extent that the parties to the settlement agreement have agreed to the application of the convention.
This opt-in requirement means that parties should specify the convention as the preferred governing enforcing mechanism if a ratifying state so declares.
Impact of convention
If India ratifies the convention, it would have to enact corresponding legislative and administrative changes to constitute the authority as contemplated under the convention. Such a change would immediately give a much-needed fillip to mediation. It would be important to ensure that the authority under the convention is independent and can act in accordance with the goals and objectives of the convention. This, in turn, would, it is hoped, see the rise of institutional mediation and mediation as the first option to resolve disputes.
Poornima Hatti is a partner and Surabhi Rao is an associate at Samvad Partners.
Bengaluru | Chennai | Hyderabad | Mumbai | New Delhi
Bengaluru | Tel: +91 80 4268 6000
Chennai | Tel: +91 44 4306 3208
Hyderabad | Tel: +91 40 6721 6500
Mumbai | Tel: +91 22 6104 4000
New Delhi | Tel: +91 11 4172 6200