The United Nations Convention on International Settlement Agreements Resulting from Mediation
The Singapore Convention, also known by its formal and lengthier title above, came into force on 12th September 2020, a little more than two years after its final draft’s approval. The Convention aims to bring certainty to the discourse of international trade dispute by promoting mediation as an effective, amicable alternative dispute resolution (ADR).
In the past, arbitration was the only practical means of resolving trade disputes across borders – the New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards) enables parties to enforce arbitral orders in jurisdictions of contracting states. This principle is reiterated in the Singapore Convention, allowing mediating parties to enforce awards in any signatory State.
Generally, the Singapore Convention applies to any agreement:
That is a result of mediation;
Concluded in writing;
Relating to a trade or commercial dispute; and
Executed in the context of international law/relations.
As of May 2021, there are 53 party States including China, United States of America, India and Saudi Arabia. Although Australia is not a party, the Singapore Convention remains relevant to Australian businesses engaging in international trade with participant States as the Convention does not rely on the principle of reciprocity.
There has been a rise of contract breaches as a result of the COVID-19 pandemic, which has long-lasting effects on supply chains and business liquidity. In such time of uncertainty, the Singapore Convention provides Australian businesses with an uniform dispute resolution framework, bridging the gaps between different State legislations and preserving important relationships for future engagement.
The Convention does not apply where:
One party to an agreement is a consumer for personal, family or household purposes;
An agreement relates to family, inheritance or employment law;
An agreement is enforceable by a court and has been approved by a court, or has been concluded in court proceedings; and
An agreement is recorded and enforceable as an arbitral award.
Parties to an international trade agreement should agree to the option of arbitration at the time of contract. This opens the door for the application of the Convention in the event of dispute. It may be difficult to obtain each party’s consent to engage in mediation after a dispute arises as the defaulting party would likely to disagree.