India: Singapore Mediation Convention: A New Light At The End Of The Tunnel?

Last Updated: 8 August 2019
Article by Alok Vajpeyi and Gauri Bharti

The United Nations General Assembly adopted what is known as the United Nations Convention on International Settlement Agreements Resulting from Mediation ('Singapore Mediation Convention') on 20th December, 2018. It is scheduled for signature on 7th August 2019. This Convention is a first step towards making settled agreements in the realm of International Commercial Mediation enforceable and recognizable. The aim of this Article is to critically engage with the provisions of this Convention and examine its consequences on Dispute Resolution across the globe. In doing so, the authors have analyzed the potential of this Convention in offering to the general public a new hope to solve their disputes in a more efficient and inexpensive manner. The authors have also compared this Convention with the New York Convention on Recognition and Enforcement of Arbitral Awards that was enacted to make Arbitral Awards enforceable. Additionally, the authors have examined India's approach towards Mediation and its recommended approach towards the said Convention. Broadly, the objective of this Article is to attempt to understand how this Convention has the ability to tap into the unrealized potential of Mediation as an Alternative Dispute Resolution Mechanism.

Background

In 2014, when the United States proposed a Mediation Convention, there was a lot of debate on the subject matter and very little consensus. In February 2015, the United Nations Commission on International Trade ('the UNCITRAL') entrusted its Working Group II with the task of discussing this subject matter. While this move was warmly welcomed by most states, it only faced opposition from the European Union (EU). The EU was of the view that enforcement of mediated settlements should be left to domestic legislations and there is no need for an international one.[1]

Finally after three years of intense deliberation, in 2018 the first draft of the Singapore Mediation Convention was approved by the UNCITRAL. The Convention is scheduled to be open for signature on 7th August 2019. Before discussing the stipulations under the Convention, it's important to understand what Mediation entails as an ADR mechanism. Mediation is a process of negotiation which is carried out with the assistance of a third party, with no given structures and in which the parties enjoy great autonomy. It is moderated by a Mediator who cannot make decisions that would be rendered binding on the parties. Instead, the role of the Mediator is limited to a mere facilitator. It is the only the parties who play an active role in the settlement process.[2] Undeniably, the advantages of such a mechanism are several – greater autonomy, speedy disposal of dispute, efficiency, economical and affordable process, etc.[3] Yet, in spite of all these advantages Mediation has not been very successful in garnering the attention of the people, especially in the International domain. This is primarily because of one reason that is non-enforceability of mediated settlements. It is this flaw that the Convention seeks to overcome.[4]

The primary aim of the Convention is to make enforceable those agreements that have been settled by parties in the realm of International Commercial Mediation. Such a remedy in law was previously missing, which is of the biggest factors towards people avoiding to opt for Mediation as their dispute resolution mechanism. Prior to this Convention, there was no provision, which gave the parties an opportunity to enforce their settlement agreements, arrived through Mediation in a situation of breach of agreement. Therefore, if a settled mediated agreement were to be enforced in case of its breach, the only remedy that the aggrieved party would have would be to opt for Litigation or for Arbitration to have the agreement enforced. It must however be noted that this would be the scenario only in matters of International Commercial Mediation. Many states have domestic legislations that seek to enforce mediated settlements arrived domestically.

Analysis of the Convention

Article 1 of the Convention defines the scope of Application of the Convention.[5] The Convention has been made applicable to an agreement that is the result of Mediation. The agreement ought to be in writing and the dispute should be that of a commercial nature and should be international. Sub-sections 2 and 3 of the Convention are exclusionary in nature, in that they exclude certain kinds of agreements from being made enforceable under the Convention. These include agreements that pertain to 'personal, family, or household purposes'[6] or to 'family, inheritance or employment law.'[7] Furthermore, the Convention also does not apply to those agreements that are either approved by a Court or are enforceable as a Judgment in a court or as an Arbitral Award.[8]

To begin with, it must be noted that while the Convention only enforces agreements in Commercial disputes, the term commercial remains undefined both in the Convention and elsewhere. However, the Working Group II agreed that the term must be interpreted in the broadest manner possible.[9] As far as sub-sections 2 and 3 are concerned, the Convention aims to oust those disputes that involve personal, family or household issues from its scope. The rationale behind such an exclusion is that the Working Group II did not want to include those disputes in which the parties may not having a level playing field, thus having unequal bargaining power. Examples of such disputes are inheritance matters, in which one party may be able to dominate the other. If such kind of disputes were to be included in the scope of the Convention it would lead to the problem of States showing reluctance to sign the Convention.[10] This is because such situations might not be in consonance with the public policy of a particular State as it would amount to violation of certain core values of the State like equality, dignity, due process, etc.

In addition to this, the Hague Conference on Private Law is already in place for the enforcement and recognition of such foreign judgments that the Convention ousts from its scope. Over the years, the Hague Conference on Private Law has enacted several conventions, rules and protocols for the recognition and enforcement of foreign judgments. Thus, in order to ensure that there is no overlapping in the remedies of the Conventions and for the avoidance of possible conflicts, the Working Group II deemed it fit to incorporate these exclusionary provisions.[11]

Article 4 of the Convention[12] enlists the requirements for placing reliance on settlement agreements arrived through Mediation. The parties to the agreement ought to supply to the Competent Authority the settlement agreement signed between the Parties and also adduce evidence that the agreement resulted from Mediation. This could be proved either by obtaining the signature of the Mediator on the agreement, or submitting any other document that bears the signature of the Mediator, which provides that the Mediation was in fact carried out, or obtaining 'an attestation by the Institution that administered the mediation.' If the evidence is not available in any of these three forms, then the Parties may submit such evidence that may be acceptable to the competent authority. Sub-section 2 of Article 4 stipulates the instances in which electronic communication may be acceptable.

The basic requirement as contained in sub-sections 1 of Article 4 is thus that the agreement must be in writing. The agreement can however be submitted even in the Electronic form if it is accessible for reference as enshrined in Article 2(2)[13]. Article 4 lays great emphasis in demonstrating to the Competent Authority that the Mediation has in fact taken place. This has been adopted to ensure that no unilateral decision is taken which is sought to be enforced. In other words, this obligation is imposed to avoid any kind of fraud. Concerns have been raised in regard to the Mediator signing the agreement. The Mediators in the past have showed reluctance in signing the Agreement, as they do not want to risk displaying that they have played an active role in the Mediation, or are a party to the agreement.[14] These concerns have been taken care of in the Convention by allowing the parties to submit to the competent authority another document that simply bears the signature of the Mediator and states that the Mediation has in fact taken place.

Article 5 of the Convention[15] encapsulates grounds on the basis of which enforcement by a particular state may be refused. An aggrieved party may submit before the competent authority that they were under some incapacity at that time of settlement; or that the agreement is 'null and void, inoperative or incapable of being performed under the law to which the parties have validly subjected it to;'[16] or the agreement suffers from any infirmity such as is not clear or comprehensible; or that the Mediator has compromised on the standards applicable to the Mediator; or the agreement is contrary to the public policy of a state or the dispute is not capable of being settled by mediation under the Applicable Law.

The Convention thus envisages various safeguards to ensure that a consensus based mechanism is not taken for granted and is capable of being set aside or not enforced by the competent authority, should the need arise. Furthermore, the Convention accords reasonable opportunity to the ratifying States to set aside the agreement if it is contrary to its public policy of the State. It has also clearly enumerated that any dispute for example one being of criminal nature, cannot be fraudulently mediated and enforced under this Convention. However, it is pertinent to mention, that the Convention nowhere provides that the competent authority may exercise discretion and inquire if there are grounds of refusal are being fulfilled. It is only upon the application of one of the Parties that such an action is to be taken. This reflects the farsightedness of the members of the Working Group II, in that they tried to ensure that no delays in the enforcement arise owing to Article 5. If the competent authority would be granted discretion, once again the light at the end of the tunnel could be seen to be fading away and Mediation would be turning into a mechanism just like Litigation and/or Arbitration. Also, it must be noted that these grounds are not mandatory, but simply permissive and exhaustive.[17]

Article 6 of the Convention[18] provides for a remedy in an instance where a parallel application or claim is made in a mediated settlement, which is sought to be enforced under the Convention. In such a situation the competent authority may adjourn the decision and also order the defaulting party to furnish security. Article 8 of the Convention[19] allows for States to adopt the Convention with certain reservations.

The Working Group II has done a commendable job in the drafting of the Convention by showing their farsightedness and avoiding all possible conflicts that may result in Mediation also going down the same path as Litigation and/or Arbitration. Keeping the analysis of these provisions in mind, we can now consider the implications of this Convention.

Implications of the Convention on the Use of Mediation in the International Domain

Recalling what has been stated earlier, before the enactment of the Convention, there was one major obstacle that hindered the growth of Mediation as a preferred ADR mechanism for dispute settlement. This pertained to issue of enforcement of mediated settlements in the case of International Commercial Mediation. After the Singapore Convention, parties will have an option to have their Mediated Agreements enforced without having to go for either litigation or arbitration and hence Mediation may become an attractive dispute resolution mechanism.

In order to understand this better, we will first discuss some studies that have been conducted on the pros and cons of the various dispute resolution mechanisms like Litigation and Arbitration.[20] Litigation is amongst one of the most popular dispute resolution processes, and is opted by majority of the people across the globe. Some of the reasons for its popularity are that people possess knowledge about the same as opposed to other processes like Mediation, Conciliation, secondly, its binding value on all and the enforceability of the pronouncements of the Court, etc. However, recent trends indicate that Litigation is now fading away with more people turning towards other processes like Arbitration. The reasons for the same are increased backlog of cases, inefficiency and complexity of the procedures involved in Litigation, non-availability of speedy justice, expensive and unaffordable lawyers to help in the litigation process, etc.

Arbitration offered people a respite from these complex and technical procedures of the Court. It gave people a chance to settle their disputes through a process in which they would enjoy greater autonomy by having a say in the constitution of the adjudicating body, in choosing the governing law of their contracts, having their disputes resolved in a time bound manner, etc. The promises that Arbitration made to the people seem very appealing. However, these promises were short lived. The international community is no longer as happy with Arbitration because Arbitration has slowly started treading on the same path as Litigation, with more and more "rising costs, delays, and procedural formality."[21] A case in point is that of the example of India's Arbitration and Conciliation Act of 1996.[22] Indian Courts can be seen to be grappling with the issues of interpretation and defining the scope of the various provisions of the Act. Such issues then pose problems to the people, which in turn affect their choice of Arbitration as a mode of dispute resolution.

The general public therefore requires such a dispute resolution mechanism that would be bereft of issues of unaffordability, complex and technical procedures, delays in disposal, etc. It is in this background, that the Convention can be viewed as acting as a new light at the end of the tunnel. It offers to the par or to say business entities (given the fact that it's scope is only to encompass within its fold Commercial disputes)[23] an avenue that they can explore to avoid all of the abovementioned complexities and problems.

Apart from speedy, less expensive, and simpler procedure, Mediation also offers parties some other advantages. These include – (i) preservation of the relationship of the parties, since the process involves negotiation and is a consensus-based mechanism; (ii) greater autonomy; (iii) preservation of privacy and confidentiality concerns of the parties, in litigation and in some arbitration disputes, both privacy and confidentiality of the parties is compromised; (iv) in multiparty contracts, one issue that mostly arises is the question of joinder of parties. This issue can be resolved easily with Mediation considering that there is no definitive structure in place for the conduction of mediation.

In light of the abovementioned advantages, it is clear that the Convention given its simple procedural requirements is bound to have a positive impact on the International Mediation Regime globally.

Comparative Study with the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, commonly referred to as the New York Convention was adopted by the UNCITRAL to ensure that foreign and non-domestic arbitral awards can be made enforceable and recognizable.[24] Just like how before the enactment of the Singapore Mediation Convention, parties had no way of having their settlement agreements enforced (except by going for Litigation or for Arbitration), similarly parties were unable to have their Arbitral Awards enforced in the realm of International Commercial Arbitration. It is clear that there is a real nexus between the New York Convention and the Singapore Mediation Convention. The real difference is between the dispute resolution mechanisms they pertain to, the former deals with Arbitration, the latter with Mediation.

Apart from the difference in the dispute resolution mechanism, there is also a difference in the scope of Application of the two Conventions. The New York Convention nowhere explicitly provides that it only enforces Arbitral Awards in Commercial disputes and neither does it enumerate any exclusionary stipulations.[25] On the contrary, the Singapore Mediation Convention as already stated above, in Article 1 clearly defines the scope of the Convention and limits it to only Commercial disputes and also encapsulates certain exclusionary provisions.[26]

Second, for the purpose of enforcement, the New York Convention mandates the submission of the duly authenticated award as well as a copy of the Arbitration agreement existing between the parties.[27] Conversely, the Singapore Mediation Convention does not demand any agreement to Mediate as existing between the parties; it only mandates the furnishing of proof of the mediation having taken place.[28] This makes Mediation a more approachable method as opposed to Arbitration, as in the former there are no rigid obligations. The parties can opt for Mediation at any point in time, without having to contract first. Third, both the New York Convention and the Singapore Mediation Convention have provisions for setting aside. One striking difference in the setting aside provision of the two Conventions is that in the New York Convention one of the grounds available to the aggrieved party is non conformance to "due process."[29] The Singapore Mediation Convention on the other hand has no such stipulations.[30]

India's Approach Towards The Convention

The Union Cabinet chaired by Prime Minister Narendra Modi has approved the signing of the Singapore Mediation Convention.[31] While currently there may not be an independent legislation on Mediation in India the fact that Mediation is yet practiced in informal settings cannot be ignored. This pertains to the Panchayat System widely prevalent in the rural areas of the sub-continent.[32] Other than this, the Courts in India as per the Civil Procedure Code of 1908 vide section 89[33] and Order X (1A)[34] may direct the parties to a dispute to attempt to settle their dispute through Arbitration/Conciliation/Mediation. Sub-section 2(d) of s. 89 of the Civil Procedure Code[35] provides that if the dispute has been referred to Mediation, the Court shall effect a compromise and such procedure as has been prescribed shall be followed. This along with the Mediation and Conciliation Rules of 2004 (which suffer from several infirmities) are the only relevant provisions in law pertaining to Mediation in India.

The need for a domestic legislation can be felt from the importance ascribed to it in view of two steps taken by the Apex Court of India.[36] On March 5, 2019 the Apex Court directed the Government of India to inquire into the possibility of enacting a Motor Accident Mediation Authority in every district. This step was taken in view of the fact that the Indian Courts witness several road accident claims. Considering that the number of road accidents in India is extremely high, such a body could help in disposal of disputes in a more speedy and efficient manner without the Parties having to wait for several years to get justice. Another instance worth citing is the Supreme Court's act of referring the Ayodhya dispute to Mediation. Thus, it can be seen that the Court are in fact realizing the importance of Mediation.

With an ever-increasing backlog of cases and constant delays in the administration of justice, there is a well-found need for India to enact a domestic legislation on Mediation. Such legislation would aid in developing a formal structure for conducting Mediation in India. Since Litigation is not an attractive avenue anymore, and also the failure of Arbitration to meet the demands of the parties, a legislation on Mediation would go a long way. But in the process of enactment of such legislation, it is imperative that the legislators bear in mind that the legislation is not overtly technical and does not involve complex procedures. In addition to the enactment of legislation, there is also a need to spread more awareness about the advantages of Mediation amongst the masses and encouraging them to opt for it.

Perhaps, ratification of the Convention would give an incentive to India to enact such legislation along the lines of Model Law. Also, considering that India is slowly becoming a leading destination of foreign direct investment because of availability of plenty of human resource, it is important that the investors have a suitable remedy in law to settle their disputes.

Conclusion

The Convention makes several noteworthy promises to the commercial parties across the Globe and offers them a tool to settle their disputes in a much more time bound and amicable manner. This is a great step towards moving away from traditional ways of settlement of disputes and exploring other avenues that have lot to offer. Its success however depends how many States ratify the Convention. As the title of this article suggests the Convention is in fact a new light at the end of the tunnel!


[1] Timothy Schnabel, The Singapore Convention on Mediation: A Framework for the Cross-Border Recognition and Enforcement of Mediated Settlements, 19 PEPP. DISP. RESOL. L.J. 1, 60 (2019).

[2] Bryan H. Hulka, Dispelling the Myths of Modern Mediation, 21 Golden Gate U. L. Rev. (1991) available at https://www.mlaw.gov.sg/content/minlaw/en/news/press-releases/Press-Release-Singapore-Convention-on-Mediation-Opens-for-Signature-on-7-August.html

[3] Hulka, supra note 2.

[4] S. I. Strong, Beyond International Commercial Arbitration? The Promise of International Commercial Mediation, 45 Wash. U. J. L. & Pol'y 011 (2014) available at 
https://openscholarship.wustl.edu/law_journal_law_policy/vol45/iss1/7 at 27.

[5] Singapore Mediation Convention, Article 1.

[6] Singapore Mediation Convention, Article 1 cl. 2(a).

[7] Singapore Mediation Convention, Article 1 cl. 2(b).

[8] Id.

[9] Schnabel, supra note 1, at 22.

[10] Schnabel, supra note 1, at 23-24.

[11]Schnabel, supra note 1, at 25. pg 25.

[12] Singapore Mediation Convention, Article 4.

[13] Singapore Mediation Convention, Article 2 cl. 2.

[14] Schnabel, supra note 1, at 31.

[15] Singapore Mediation Convention, Article 5.

[16] Singapore Mediation Convention, Article 5 cl. 1(a)(i).

[17] Schnabel, supra note 1, at 42.

[18] Singapore Mediation Convention, Article 6.

[19] Singapore Mediation Convention, Article 8.

[20] Strong, supra note 5.

[21] Strong, supra note 5, at 11.

[22] The Arbitration and Conciliation Act of 1996.

[23] Singapore Mediation Convention, Article 1.

[24] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 10 June 1958, United Nations Treaty Series, vol. 330, No. 4739 [hereinafter New York Convention].

[25] New York Convention, Article I.

[26] Singapore Mediation Convention, Article 1.

[27] New York Convention, Article IV.

[28] Singapore Mediation Convention, Article 4.

[29] New York Convention, Article V (1)(b).

[30]Singapore Mediation Convention, Article 5; Schanbel, supra note 1, at 43.

[32] Ankur Khandelwal, 'Assessing the Scope of Mediation in India: Upholding the Principles of Justice', Asian Dispute Review, (© Hong Kong International Arbitration Centre (HKIAC); Hong Kong International Arbitration Centre (HKIAC) 2010, Volume 12 Issue 2) pp. 52-56

[33] Code of Civil Procedure of 1908, § 89.

[34] Code of Civil Procedure of 1908, Order X (1A).

[35] Code of Civil Procedure of 1908, § 89 cl. 2(d).

[36] Mridul Godha, 'A Renewed Interest In Mediation In India', Kluwer Mediation Blog,
March 30 2019, available at http://mediationblog.kluwerarbitration.com/2019/03/30/a-renewed-interest-in-mediation-in-india/ .

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