UK government consults on whether to sign the Singapore Convention on mediated settlements

The UK government yesterday launched a consultation seeking views on whether the UK should sign the Singapore Convention.  The consultation closes on 1 April 2022.

The Singapore Convention

More formally known as the United Nations Convention on International Settlement Agreements Resulting from Mediation (full text here), the Convention came into force in September 2020.  It provides a framework for a global enforcement regime for settlement agreements resulting from mediation of international commercial disputes, broadly akin to the 1958 New York Convention for the enforcement of arbitral awards (though with some significant differences).  In essence,  jurisdictions that ratify the Convention agree to recognise and enforce a mediated settlement agreement that falls within the Convention's scope, avoiding the need for the enforcing party to obtain a court judgment for breach of contract and then attempt to enforce the judgment in the foreign jurisdiction (unless the agreement can be converted into an arbitral award).

For details of the the Convention's key provisions, including where it will apply, see:

• our earlier post here
• posts by Jan O’Neill (Professional Support Lawyer in our London office) on Practical Law's Dispute Resolution Blog discussing the Convention’s potential impact, and practical considerations for mediating parties.

Background  -  the UK position

When the Convention was launched to much fanfare in August 2019, the record-breaking 46 initial signatories included several of the world’s largest economies – notably China, the US and India. Since then the roll call has expanded to be currently 55 signatories, including the addition last year of two leading regional economies, Brazil and Australia.  To date, nine countries have completed ratification and become member states of the Convention.

However, very notable absences from the signatory list are the UK and all the EU member states.  It has been suggested that the EU's absence is at least partly due to complexities around whether the EU members should sign the Convention as a block or individually, which is complicated by internal EU politics.  But of course since the UK left the EU on 1 January 2021 it has had full competence to enter into international agreements in its own right. Given that the UK has long been recognised as one of the most 'mediation-friendly' jurisdictions globally, its relative silence as to its intentions regarding the Convention for over two years has not gone unnoticed. It has given rise to some speculation internationally as to what that might mean for the future of the Convention and whether the lack of engagement is due to specific concerns or hostility toward the Convention - or even reflects a more general lack of support for mediation currently in the UK.

The latter suggestion in particular is unfounded  -  in fact the opposite is true. The past few years have seen a rapidly growing momentum within the UK government and civil judiciary toward further increasing the role of mediation and other ADR both within and outside the justice system. (A snapshot of the key developments in the UK is set out in this recent post.)

Our view has been that the most likely explanation for the delay is not any governmental or industry objection to the Convention in principle, but simply a matter of priorities within a government agenda dominated for several years by the demands of Brexit and the pandemic. That can be understood given the fact that (as noted below) the UK joining the Convention is likely to have only a modest impact in terms of substantive legal rights  -  at least compared to the private international law treaties concerned with court jurisdiction and enforcement of judgments (such as the Hague and Lugano Conventions), which are central to commercial parties' contractual decision-making and on which industry has pressed the government for post-Brexit clarity.

The consultation document now bears out the view that the UK government is in favour of signing the Convention.  In particular, a major policy document released earlier this week makes clear that the government is politically positioning the ability to sign the Convention as one of "The Benefits of Brexit" (at p52): "(it will) provide an opportunity for the UK to take a more active role on the global stage on Private International Law matters and to ensure that our pre-eminent legal services sector maintains and cements its global position as a world leader in mediation and more broadly."

What difference will it make if the UK signs?

With regard to (i) UK-based mediated settlements being enforced elsewhere and (ii) the UK courts enforcing foreign-based mediated settlements, the UK becoming a member of the Convention is unlikely to have a major impact on the substantive position as to whether or not such agreements could be enforced. This is because:

(i)    As we have previously discussed, the Convention applies to mediations conducted anywhere in the world, not just within jurisdictions that have ratified it.  So settlements resulting from mediations conducted in the UK are already enforceable under the Convention (if they fall within scope) in the jurisdictions that have ratified it.  That will continue to be the case irrespective of whether the UK joins.

(ii)   English courts would already generally be amenable to enforcing a settlement agreement resulting from a foreign mediation if it met the criteria described the Convention, albeit that that would be via the indirect and time-consuming route involved in enforcing a judgment for breach of contract.  So it could be expected that, at least in many cases, the difference if the UK was a party to the Convention would be the ability to obtain enforcement more quickly and easily via the Convention's streamlined procedure, rather than whether enforcement was possible at all.

However, even if the Convention's impact in the UK is likely to be more modest than in some other jurisdictions (whether or not it signs), it does provide opportunities for UK parties and has the potential to alter the cross-border dispute landscape.

In particular, it opens up the potential to enforce settlements in jurisdictions where previously enforcement (via a court judgment) would have been difficult or impossible for any reason.  If membership of the Convention continues to grow, particularly through ratification by major signatories such as the US and China, mediated settlement agreements could feasibly come to hold a greater enforcement potential than court judgments in a growing range of circumstances. That will be particularly the case if the future take-up of the Hague Convention on Choice of Court Agreements (2005) and the Hague Judgments Convention (2019) remains modest.  For example, given that the US has still not ratified the former (despite having signed it in 2009), if it ratifies the Singapore Convention that may mean that a party holding a mediated settlement agreement (from the UK or anywhere else) may be better placed to enforce in the US than it would be with an English or EU court judgment for the same relief. The same applies to the majority of the other 54 Singapore signatories who are also not Hague Convention states.

The Convention's wider importance

Of course, as the consultation recognises, commercial parties failing to honour settlement agreements reached through mediation is in fact quite uncommon in practice, at least compared to court judgments and arbitral awards. So the number of cases where the Convention needs to be relied upon may be relatively small.  However, it is widely acknowledged that the potential benefits of the Convention extend beyond the technical enforcement mechanism.  Globally there still remains much variability in understanding, experience and willingness to use mediation.  An important part of the Convention's value will lies in its potential to provide reassurance and confidence in the mediation process. There are strong hopes that the existence of an international enforcement regime, akin to the widely known New York Convention, will be pivotal in boosting the credibility and status of mediation as a reliable option for commercial parties in international disputes.

In view of that, there is force to the argument that, even if the UK joining the Convention would not in reality have substantial legal impact, doing so is important as a matter of perception –   to give assurance to foreign parties that the English courts will enforce mediated agreements, show support for commercial mediation and encourage other jurisdictions to join the Convention (given the potential benefits that holds for UK parties).   Certainly, failure to do so would be perceived internationally as surprising and potentially undermine the UK's promotion of its position as a pre-eminent modern disputes hub.

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Further reading on mediation:

• Our toolkit on Improving Conflict Management provides detailed insights and guidance for those wanting to improve the way their organisation uses mediation and other ADR within their dispute management
• Our series of ADR Practical Guides provides guidance on various aspects of preparing for and conducting mediations