During the signing ceremony held in Singapore on August 7, 2019, Turkey signed the United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as the "Singapore Convention on Mediation" ("Convention"), which applies to international settlement agreements resulting from mediation ("Settlement Agreement"), together with 45 other countries, including the United States, China, India, and South Korea. The Convention was drafted by the United Nations Commission on International Trade Law ("UNCITRAL") and adopted by the General Assembly during the 62nd plenary meeting held on December 20, 2018. The primary motivation of the Convention is "to become an essential instrument in the facilitation of international trade and in the promotion of mediation as an alternative and effective method of resolving trade disputes."1 Indeed, mediation has always been a low-cost, swift, and efficient way to resolve disputes, in comparison to other dispute resolution methods, which can also be observed from the data obtained in Turkey, from a microperspective.
The mediation procedure has become a compulsory stage in commercial litigation process in the Turkish jurisdiction, as of January 1, 2019, following on from its initial introduction in the context of labor disputes. After only eight months of practice, it appears that the success rate of mandatory mediation procedures is 57%, according to the data published by the Mediation General Office of the Turkish Ministry of Justice. Since the national mediation procedures appear to be useful and effective thus far, Turkey has taken a new step and signed the Convention, which provides enforceability to international settlement agreements.
The scope of the Convention comprises the international settlement agreements that are concluded following a commercial dispute. However, such settlement agreements, even in the context of commercial disputes, are still required to satisfy certain specific qualifications for the Convention to be applicable:
- The settlement agreements that are included within the scope of the Convention have been clearly defined under Article 1/1 of the Convention. Furthermore, the qualifications that are required for applicability of the Convention have been described in Article 2 of the Convention. With reference to Article 1 of the Convention, the parties are required to satisfy the qualifications that (i) the agreement shall be borne from a mediation process, (ii) the agreement shall be concluded in written form, (iii) the agreement shall be resolving a commercial dispute, and (iv) the dispute shall be international.
- As per the Article 1/2 of the Convention, the Convention shall not apply to settlement agreements (i) which were concluded to resolve a dispute arising from transactions engaged in by one of the parties (a consumer) for personal, family or household purposes, or (ii) which are related to family, inheritance or employment law.
- Furthermore, as per Article 1/3 of the Convention, the Convention does not apply to (i) settlement agreements that have been approved by a court, or concluded in the course of proceedings before a court; and which are enforceable as a judgment in the State of that court, or (ii) settlement agreements that have been recorded and are enforceable as an arbitral award.
To be able to enforce a mediation agreement, the party relying on the mediation agreement must provide a signed copy of the settlement agreement and furnish the necessary evidence documenting that the agreement has been concluded as a result of a mediation process. The Convention offers a few examples of such pieces of evidence, such as mediator's signature on the settlement agreements; the list of evidence required is not numerus clausus (i.e., closed list), and it can be tailored according to the conditions of the case at hand. The competent authority can always require any necessary documentation in order to verify that the requirements of the Convention are met, as per Article 4/4 of the Convention.
The Convention will apply to the settlement agreements that are issued after the Convention enters into force, i.e., six months after the deposit of the third instrument of ratification, acceptance, approval or accession, which has already been completed by 45 signatory States.
Turkey is adopting an approach that encourages mediation in order to lower litigation-related costs and to reduce the time spent on long and complex litigation procedures. A comparison of the Convention and the mediation regulations in Turkish Law reveals that their provisions are very similar to each other with respect to legal understanding, overall system and procedural conduct. Moreover, the Convention stipulates that enforcement actions will be taken according to the countries' applicable domestic laws, in compliance with the conditions of the Convention.
Ultimately, as a result of application of the Convention, there will be no need to initiate lawsuits based on "breach of contract" claims in order to enforce settlement agreements, as the mediations agreements that satisfy the qualifications and have the characteristics explained above will be directly enforceable under the Turkish legal system. Therefore, the number of lawsuits based on breach of contract claims that are launched to enforce settlement agreements and mediation agreements will diminish significantly, which will help to uphold the principle of procedural economy. As mentioned earlier, the Convention does not stipulate or specify enforcement procedures, leaving this issue up to each country's domestic enforcement system. As this is the case, settlement agreements in Turkey should be enforced as court decisions, which is the procedure applied to settlement agreements that are signed by both the parties and their attorneys and concluded as a result of mandatory mediation procedures.
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in December 2019. A link to the full Legal Insight Quarterly may be found here
1 See Singapore Convention on Mediation, About the Convention, at https:///www.singaporeconvention.org/about-convention.html (last accessed October 7, 2019).
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