On August 7, 2019, the United Nations Convention on International Settlement Agreements Resulting from Mediation. This text had been approved by the United Nations General Assembly on December 20, 2018. To know and value this Convention, ten basic questions should be asked:
1-Why is the Convention so important?
It is perhaps the most important international instrument to date regarding mediation. It aims to emulate what was the very successful New York Convention of 1958 for arbitration awards. This, without a doubt, is waiting too long.
46 States have initially signed the Convention, although it requires subsequent ratification, acceptance or approval. Of all of them, the United States, China and India stand out. Due to its proximity to Spain, Chile, Colombia, Honduras, Paraguay, Uruguay and Venezuela can be highlighted from the Latin American sphere. From Europe outside the Union, the participation of Serbia, Montenegro, Georgia, Ukraine and Turkey can be mentioned.
On the contrary, the most important absence is that of the EU. In my opinion, and despite the doubts expressed as an “excuse” for not initially signing the Convention, the EU would have sufficient competence to accede to the Convention on behalf of the Member States. The absences of the United Kingdom, for a post-Brexit scenario, and Russia are also significant. In general terms, other G7 countries, such as Japan or Canada, have not signed the Convention either.
2-What is your background?
The Singapore Convention is a treaty in the strict sense, requiring States or the EU to sign, accede, ratify, accept or approve it. It is part of what is called "hard law." However, UNCITRAL, the United Nations Commission on International Trade Law, also amended its Model Law on mediation in 2018, to introduce a chapter on the effectiveness of settlement agreements resulting from commercial mediation. It basically provides the same as the Convention, but it is done in a Model Law that is part of what is called "soft law." That is, this Model Law is not directly applicable. It is not an agreement. So what is it? It is a reference so that, when States legislate, they can find international standards. States will enact internal acts that can take this Law as a model, adapt it to their needs and modify it according to their interests.
In summary, UNCITRAL offers two paths to deepen international commercial mediation: the path of signing a Convention that becomes directly applicable and binding; or the path of legislating at the domestic level following the Model Law as a reference.
3-What subjects does it apply to?
The Singapore Convention basically applies to the execution and effectiveness of private, written, international agreements resulting from mediation in commercial matters. This means:
- First, it is an agreement written (Electronic communications with a lasting record are used for later consultations, as is the case with email). It is important to keep in mind that an agreement serves private, without the need to upload it to a public document. This implies an important paradigm shift.
- Second, it is an agreement resulting from mediation, understood in a broad sense and including conciliation, provided that the third party cannot impose a solution. Intrajudicial or arbitration mediation agreements are excluded if they serve as a judgment or award.
- Third, it is an agreement international either by the parts or by the object. For the parties, they must have their establishments most closely linked to the controversy in different States. If a party does not have an establishment, it will be their habitual residence. By object, the agreement is international if a substantial part of the obligations derived from the transaction agreement must be fulfilled abroad (even if the establishments of the parties are in the same State). Also, if the object of the transaction agreement is more closely linked to a foreign State.
- Fourth, it is an agreement on matters commercial, excluding agreements on family, inheritance, labor and consumer relations.
4-In which States will the Convention apply?
We will have to be attentive to the States that ratify, approve or accept this Convention as of August 2019. The initial signature is not enough. Once ratified by a State, it will apply it to all international transaction agreements resulting from commercial mediation. It will be irrelevant that the place where the agreement was concluded, the nationality and establishment of the parties and the mediator, etc., correspond to States that have not signed the Convention. There is, therefore, no obligation of reciprocity. But, above all, it will be irrelevant whether the agreement is in a public document or not. In this way, it is irrelevant whether it has been protocolized by the authority of a State party or not.
At any time, States can formulate two reservations. The first, its non-application to transaction agreements in which the State or one of its organizations is a party. The second, the reservation of application of the Convention only to cases in which the parties to the transaction agreement so state.
5-From what moment does it apply?
From the ratification of three States, six months will be counted before they begin to apply it. For subsequent countries that ratify the Convention, they will also wait six months. The Convention applies only to settlement agreements signed after its entry into force.
6-How is it related to other instruments?
The Convention does not prevent the application of other rules if they are more favorable to achieving execution. That is, if the Convention does not allow the agreement to be executed because its rules are not met, the parties could invoke another instrument that would allow such execution. They could also invoke the legislation of the destination State.
7-How does the Convention work?
The Convention regulates the execution of transaction agreements. But one of its great virtues is that it also applies to the effect of res judicata, to demonstrate that the difference has already been resolved without the need for a judicial procedure. A procedure that, if started later, should be archived.
8-What procedure to follow to execute transaction agreements?
The Convention does not regulate any procedure to give effect to the agreements. It simply refers to the legislation of the destination State where the agreement is to be enforced.
However, the Convention does regulate some issues. In addition to speed being mandatory, it regulates how the agreement must be presented, an important issue given that no public deed is required. Thus, they must be presented: transaction agreement signed by the parties; evidence that the settlement agreement was reached as a result of mediation (for example: mediator's signature on the settlement agreement, mediator's statement, institution certification or any other acceptable evidence); any document required by the authority; and translation into the official language of the destination State.
The decision on the execution of the agreement may be postponed or guarantees for its execution may be required if judicial or arbitration proceedings on the transaction agreement are pending. Also, the measures requested for execution may not be adopted if they are contrary to, or are not compatible with, the transaction agreement.
9-What will be controlled in the transaction agreement?
The most complex regulation of the Convention is that relating to the conditions that the agreement must meet to be enforceable in the destination State. In this regard, different variables must be taken into account: ex officio controls by the authorities of the destination State and controls at the request of the party affected by the execution.
- Ex officio:
- The agreement is not recognized if it is contrary to public order in the destination country.
- The agreement is not recognized if the difference cannot be resolved through mediation in the destination State.
- At the request of the party:
- Controls are established over the parties, so that the agreement is not enforceable if the incapacity of one of the parties is proven.
- Controls are also articulated over the mediator. Thus, the agreement is not recognized if the mediator incurred a serious breach without which the agreement would not have been made; or if conflicts of impartiality or independence were not revealed and this had a material impact on the agreement or exerted an influence without which said agreement would not have been concluded.
- Finally, controls are enabled on the agreement itself, which is not recognized if: the agreement is void, ineffective or impossible to legally comply with (according to the law chosen or the one considered applicable); the agreement is not binding, final or has been subsequently modified; or its object has already been fulfilled or is not clear or understandable.
10-What will be the success of the Convention?
The initial involvement of the United States and China is quite encouraging. For its part, apart from certain initial doubts, I believe that the EU, as a regional integration entity, has sufficient competence to adhere to the Convention and bind its member states and, therefore, Spain.
However, the priority application of EU law would always be protected. In these conditions, Will the EU ratify the Convention? This is the question that remains in the air. It is a Convention far from the European conception of mediation, but, in relations with third States, it is better than nothing. Much to gain and little to lose? Wow, there are already eleven questions.
Dr. Ángel Espiniella Menéndez
Professor accredited to Professor of Private International Law
Expert in international commercial mediation
