Category: Uncategorized

Estimated reading time: seven minutes.

It is not rare to see international treaties and agreements being named after a certain place – Treaty of Paris, Kyoto Protocol, Warsaw Pact, just to name a few. But few would imagine Singapore, the Southeast Asian city-state nicknamed the “Little Red Dot”, appears in the title of one such documents. Several months ago, this did happen.

I decided to do some research on my own when a piece of news caught my attention: “New UN mediation treaty to be named after Singapore”.
A quick glance into this article reveals that a new United Nations treaty on mediation is to be named after Singapore, which will further establish Singapore as a key player in resolving international business disputes.

Remarked by Law and Home Affairs Minister K. Shanmugam as putting Singapore “on the map for thought leadership in international trade laws”, this agreement is definitely going to bring about great changes – to both Singapore and the international community.

A U.N. treaty named after Singapore – that definitely sounds interesting enough to me; plus, I have been studying in Singapore for three years – hey, why not explore something related to Singapore in my very first post?

So, in two articles, I’m going to introduce to you the Singapore Convention on Mediation, which will be referred to as the Convention, and talk a bit more about the stories behind this potential “game changer” – what is its history? What impact is it likely to bring about? And what challenge is it likely to encounter in the future? Hmm, that definitely is a lot of things to explore; but let us begin by asking some basic questions, like the following:

What is the Convention about?

Created by the United Nations Commission on International Trade Law (UNCITRAL), the sole focus of this convention is on the enforcement of mediated settlements, making it easier for businesses to enforce mediated settlement agreements. By simplifying the enforcement processes for mediation, the Convention will add credibility to mediation as an international dispute resolution process, making it the most ideal option whenever there is a dispute, thus improving cross-border trade.

Well, the statement above is a very “condensed” version of what is actually happening; to paint a clearer picture, let us unpack some of the basic terms – well first, what are business disputes, anyway?

International business disputes are, by definition, major disagreements between businesses on matters such as the terms of a contract that binds both parties. This makes business disputes different from other types of international disputes, which involve issues like territory, maritime rights, and human rights, and efforts of the International Court of Justice (ICJ) are usually needed to resolve the disputes. For example, ICJ was involved in ruling the Nicaragua v. United States case, which concerned the United States’s covert war against Nicaragua.

Can commercial disputes be resolved through ICJ? Before answering, let’s look at the set of goals that ICJ aims to achieve: to settle, in accordance with international law, legal disputes submitted by States; and to give advisory opinions on legal questions referred to it by authorized UN organs and specialized agencies; in other words, private firms have to find their own ways out! Put into the international context, this presents us with the lack of certainty in settling business disputes and the widespread concern regarding the enforcement of agreements if the two parties have negotiated a term.

This, is when mediation kicks in to provide the solution.

Why is meditation so good?

Mediations aim to resolve conflicts and disputes through the use of specialized communication and negotiation techniques, and is done by the assistance from a neutral third party – straightforward, isn’t it?

But hey, it’s not like that mediation is the only way to resolve a dispute, right? There are, of course, several other methods of resolving such disputes, like arbitration and litigation, which are known as jurisdictional processes. Why then, does mediation receive greater attention than its alternatives? To answer this, let us first take a closer look at the aforementioned alternatives, and see how are they different from mediation.

Arbitration is a hearing process in which parties bring their dispute to someone for a decision. When two parties in a dispute agree to go into arbitration, both agree to be bound by the ruling of the arbitrator, who will hand down the decision on how to settle or resolve the dispute – in essence, an arbitrator acts as a judge. This is different from mediation – a facilitation, negotiation process in which a trained mediator works to bring the parties to an agreement.

Litigation, on the other hand, is generally seen as the last resort when arbitration or mediation is unsuccessful. In this method, the disputes are submitted to the court which has the jurisdiction over it – it could be the country of the one who is filing the case, or that of the respondent. Most businesses try to avoid litigation as much as possible: compared to arbitration, litigation usually takes more time; in addition, they can be far costlier, and definitely more stressful.

Compared to these two alternative measures, mediation presents us with clear benefits on these two aspects: time and cost, and control over the outcome.

Mediation generally resolves a dispute more quickly than one that is resolved through trial; one also pays less to attend a mediation than a trial. In an international dispute, there are additional expenses associated with engaging foreign legal and technical specialists, translation, travel and various other costs. As Professor Nadja Alexander from Singapore Management University remarks, “when courts make a decision, we expect there to be one winner and one loser… but once we take into considerations of the broken business or personal relationships, opportunity costs and crippling legal fees, you end up with two losers.”

Perhaps the best thing is that mediation could lead to better outcomes for the parties involved – they can decide for themselves how they would like to settle the dispute, say, what terms they would like to arrive at. The mediator will focus on helping the parties to find solutions that will fulfill their needs; the mediation process is also flexible and more informal, providing more opportunities for interaction between the two parties, and with the mediator. As a result, one may arrive at any creative solution without being strictly bound by the law.

Why is there need for a convention to promote mediation?

Having seen what international commercial disputes are and what is mediation capable of, one would possibly expect businesses across the world to “naturally” favor mediation whenever conflicts occur. But in the current situation, parties would not automatically look to mediation as a means to resolve cross-border disputes – why is that? Why isn’t mediation receiving the level of attention it deserves, so that there exists a need for the Convention?

Well, firstly it is important to note that mediation is not a one-size-fits-all solution: when a certain party needs the Court’s decision on a legal issue, or when one of the key representatives is not willing to participate in mediation, or when an important decision maker wants public attention to be drawn to the dispute, mediation is clearly not the optimal choice.

Next, let’s consider an example: a mediated settlement agreement is regulated by the law of Germany, and requires one party – a multinational corporation with assets in a number of jurisdictions outside Germany – to pay a sum of money to another party. Should the corporation default on payment, will the other party be able to enforce a German contract outside of Germany?

At the end of the day, maybe the greatest concern that holds most of the parties back is the lack of enforcement methods – as illustrated in the aforementioned case. Currently, the use of mediation as a form of dispute resolution is frustrated by the fact that usually, parties can only enforce it in the same way as any other contract – which is, leaving the enforcement mechanism in the hands of the local jurisdiction. The worry comes from the fact that “there is no teeth and no guarantee that (the) settlement would be easily enforced”, pointed out by Ms. Sharon Ong, director of MinLaw’s policy advisory division.

Highlighting the keyword: enforcement – the need for such a convention stems from a widespread concern over enforcing settlements that have been reached through mediation.

At the Global Pound Conference series, delegates in Asia, Africa, the Middle East, and Latin America all expressed their desire for legislation or conventions to promote the recognition and enforcement of settlements. Many of those surveyed manage businesses and disputes across several borders, where legal regimes can vary from stable, tested and familiar to those that are only a decade old.

You might wonder now – so how does the enforcement process actually work?

The Convention will allow the enforcing party to go directly to a court in the country where enforcement is sought. That court will then enforce the settlement agreement, unless one of the limited grounds for refusing enforcement listed out in the Convention applies. Just as the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards, which provided common legislative standards for arbitration awards, the Convention will offer mediation settlements the same level of international recognition and enforceability.

“On the whole, the convention provides more certainty in using mediation to resolve disputes, making it a cheaper and faster option than before.” Said Ms. Natalie Morris-Sharma, MinLaw’s international legal division director.

Such certainty is even more critical as the pace of development intensifies through new trade treaties and investment, and massive initiatives such as the Belt and Road enhances the interconnectedness between districts, stimulating international trade. The Convention responds well to this demand and may hail an inflection point for the use of mediation in various developed and developing regions.

Conclusion

Singapore Management University has a public lecture series on mediation, titled “The Man in the Middle” – a rather vivid metaphor for the topic we are discussing today. We have explored the nature and benefits of mediation, discussed its challenge of lacking a proper enforcement mechanism, and hopefully, painted out a clear picture that illustrates the need for the Convention.

As the title of this article implies, the story isn’t finished yet – we still have much to explore between the “Little Red Dot” and mediation – why has Singapore made such a great contribution in promoting mediation? Join me in my next article to know more about the history of mediation in Singapore, why has Singapore been so supportive of it, and the impacts and possible challenges of mediation on the international stage.

See you then; take care 🙂

References

[1] The Singapore Mediation Convention: An Overview.
URL: https://www.globalpound.org/2018/07/12/the-singapore-mediation-convention-an-overview/
[2] Singapore Has Taken The Lead In Regulating Agreements To Mediate.
URL: https://www.globalpound.org/2017/01/16/singapore-has-taken-the-lead-in-regulating-agreements-to-mediate/
[3] International Disputes.
URL: https://www.globalsecurity.org/military/world/war/disputes.htm
[4] UN Documentation: International Court of Justice.
URL: https://research.un.org/en/docs/icj
[5] Ch. 03 Mediation, SINGAPORE LAW WATCH.
URL: https://www.singaporelawwatch.sg/About-Singapore-Law/Overview/ch-03-mediation
[6] New UN mediation treaty to be named after Singapore.
URL: https://www.straitstimes.com/singapore/new-un-mediation-treaty-to-be-named-after-singapore
[7] Article 14, UNCITRAL Model Law on International Commercial Conciliation (2018).
URL: http://www.uncitral.org/pdf/english/commissionsessions/51st-session/Annex_II.pdf
[8] Duncan Campbell, CROSS-CULTURAL CHALLENGES IN MEDIATION (2013).
URL: https://www.cedr.com/docslib/Cross_cultural_challenges_in_commercial_mediation_-DMC_paper-26Mar13.pdf
[9] Ultimate Guide to Resolving International Business Disputes.
URL: https://www.cleverism.com/ultimate-guide-resolving-international-business-disputes/
[10] Singapore Convention on Mediation.
URL: http://mediationblog.kluwerarbitration.com/2018/07/24/singapore-convention-mediation/