D : 29 J 2022 . W : S C , A , : P . D . A V H K A S E U ’ T L.L.M. C M C ? S C : T

35  Download (0)

Full text

(1)

THE SINGAPORE CONVENTION: AN EFFICIENT TOOL FOR THE ENFORCEMENT OF INTERNATIONAL SETTLEMENT AGREEMENTS?

CIOCCA CARLO

MASTERS THESIS

L.L.M.EUROPEAN PRIVATE LAW

UNIVERSITY OF AMSTERDAM

SUPERVISOR:PROF.DR.AUKJE VAN HOEK

KEY WORDS:SINGAPORE CONVENTION,ALTERNATIVE DISPUTE RESOLUTION, INTERNATIONAL COMMERCIAL MEDIATION.

DATE OF SUBMISSION:29TH OF JUNE 2022

(2)

INDEX

INTRODUCTION. P.3

1. INTERNATIONAL SETTLEMENT AGREEMENTS, A WARRIOR WITHOUT AN ARMOR? P.6

2. THE IRON BEHIND THE ARMOR. P.14

3. ARTICLE 3. IS THIS THE SWORD AND THE SHIELD OF INTERNATIONAL MEDIATED

SETTLEMENT AGREEMENTS? P.19

4. ARTICLE 5.THE ACHILLES HEEL OF INTERNATIONAL SETTLEMENT AGREEMENTS. P.23

CONCLUSION. P.29

BIBLIOGRAPHY P.32

(3)

INTRODUCTION.

Mediation is an alternative dispute resolution (ADR) tool that can solve a dispute without having “a winner and a loser”. The result that - even after an economic or legal contrast between two or more parties – the door for a friendly resolution is still open instead of having a judgement held and imposed by a third super partes judge, is a quality that only this ADR can offer. In addition, broadly speaking a “friendly resolution” is reached with less cost and less time spent by the parties involved compared to litigation and arbitration.

Over the last fifteen years there have been some attempts to modernize and make more effective this ADR tool both in international and domestic disputes, however there have been some criticisms as well in relation to the pragmatic enforcement of the agreement reached.

This issue, that can be considered as the weak point that destroys from the beginning the use of mediation in solving legal disputes, is the “cruccio”1 of scholars, technicians, and governments; do we have – currently – a solution that can assess these uncertainties and make mediation an effective and more used tool in cross-border cases?

The U.N. Commission on International Trade Law (UNCITRAL) finalized on the 25th of June 2018 - and then adopted on the 20th of December 20182 - a new potential solution for cross-border commercial disputes that some scholars have defined as “The New York Convention for international mediation”3. This solution is The United Nation Convention on international Settlement Agreements Resulting from Mediation, or better known as The Singapore Convention4.

The Convention opened for signature on the 7th of August 2019, and nowadays fifty-five States have signed it and ten States have already ratified it; in addition, eight of them have put in place the national instruments needed for the correct application of the Convention5.

The main aim of the Singapore Convention is to promote the mediation as an efficient instrument for the resolution of cross-border commercial disputes, in light of the low utilization of this instrument despite the potential advantages that it has6. Indeed, contrary to international litigation and arbitration, it is more likely to expect that a concluded mediation will not attack nor undermine the economic

1 Issue, question

2 United Nations Convention on International Settlement Agreements Resulting from Mediation (New York, 2018) (the "Singapore Convention on Mediation"), available at

https://uncitral.un.org/en/texts/mediation/conventions/international_settlement_agreements

3 Ex multis, S. Sajnani, The Singapore Convention: Is This the New York Convention on Mediation?, [2020], 50 Hong Kong L. J. 863,

4 Hereafter “The Singapore Convention” or “Convention”

5 Updated information available at https://www.singaporeconvention.org

6 I will analyze better the surveys made in chapter one. If you desire to have more information, you can consult S.I. Strong, Realizing Rationality: an empirical assessment of international commercial mediation, [2016], 73 Washington and Lee Law Review 1973, available at

https://scholarlycommons.law.wlu.edu/cgi/viewcontent.cgi?article=4526&context=wlulr

(4)

relationship between two or more companies that hence, once that they have reached an agreement to solve the controversy between them and they are both happy of the result obtained, they will not breach the economic relation7; in addition, mediation is generally cheaper than international litigation and arbitration, it is faster and it can be easily done online8.

Even though there are all of these advantages, “not everything that shines is gold9”.

Indeed, as I will explain better in Chapter 1, mediation is generally not used to solve international commercial disputes. The lack of a certain and rapid enforcement of the agreement is an obstacle that has been always present when the company has to reflect in relation to the instrument to use to solve the controversy, and the risk to waste time and money for an agreement that, once that is reached, is actually not fulfilled by the opposite party, is sufficient enough to consider this instrument as not appealing in comparison with a judgment or an arbitral award that is more expensive but immediately (or almost) enforceable in the country of the defendants10.

Furthermore, the lack of a harmonious and comprehensive legal framework that can be a priori understood by the parties is another handicap for mediation, in addition to the risk to enforce the agreements with the ordinary national remedies applied to the breach of contract claims11 if the other party refuses to comply with that.

The Singapore Convention may overcome these obstacles, creating a uniform, clear and comprehensible international legal framework both for the recognition and for the enforcement of the agreements that are the result of a mediation between two or more individuals in commercial matters, creating and building a proper “armor” that covers the agreement when it is the time of enforcing it.

It is not accidental that some scholars have considered the Singapore Convention as a “sword” and a

“shield”12, especially regarding article 3, that I will analyze in Chapter 3.

The key to read my thesis is considering my work as a little contribution in light of the debate that has already taken place in this first “infancy” phase of the Convention, where some believes that the success of it will follow the success of the New York Convention on Arbitration for mediation13 whilst others are more skeptical at the point to argue that the Convention itself could create more

7 Timothy Schnabel, The Singapore Convention on Mediation: A Framework for the Cross-Border Recognition and Enforcement of Mediated Settlements, [2019], 19 Pepp. Disp. Resol. L.J. 1, p. 3

8 Within the Singapore Convention, given all the other requirements satisfied, an exchange of e-mail can be considered sufficient

9 Italian idiom that is used to say, “all that glitters is not gold”, meaning that there are still some issues that have to be analyzed

10 Ex multis, S.I. Strong, supra

11 C.G. Hioureas, The Singapore Convention on International Settlements Agreements resulting from mediation: A new way forward?, [2019], 46 Ecology Law Quarterly 61, 37 Berkeley Journal of International law 215

12 B. Clark and T. Sourdin, The Singapore Convention: a solution in search of a problem?, [Autumn 2020], NILQ 71 (3), pp. 483-499

13 Ex multis, S. Sjnani, supra

(5)

issues and problematics in the recognition and enforcement of international mediated settlement agreements14.

My thesis is divided in four chapters, plus this introduction and the conclusion in which I resume my position after the research. Chapter one is entitled “International settlement agreements, a warrior without an armor?” and after a brief description of the different types and aims of mediation as an alternative dispute resolution tool it addresses the current issues of this instrument and tries to analyze the reasons of the failure – in terms of limited usage by the parties in an international controversy – of mediation. Chapter two is entitled “The iron behind the armor” and it resumes the main points of the Singapore Convention, with a focus on the scope, on the aims and on the background of the Convention. Chapter three is entitled “Article 3. Is this the “sword” and the “shield” of International Mediated Settlement Agreements?” and it reflects and resume the positions of different scholars regarding the above-mentioned article, while at the end of this chapter I will try to explain what I personally think about the possible effects of the words used in the article. Chapter four is entitled

“Article 5. The Achilles’ heel of International Settlement Agreements” and it highlights the unclarities and uncertainties of the grounds to refuse to grant a relief in case of the national procedure for the enforcement of a mediated settlement agreement if the opposed party refuses to spontaneously comply with that.

In the conclusion I will try to assess whether the European Union should sign and ratify the Singapore Convention and if there is actually the need of this convention in the European legal system, balancing the advantages and disadvantages that the convention has in light of the above considerations.

Broadly speaking, this paper intends to analyze the concrete usefulness of this new-born tool, The Singapore Convention, in relation to the recognition and enforcement of international mediated settlement agreements in the European Union.

14 Ex multis, B.Clark and T. Sourdin, supra

(6)

CHAPTER ONE.INTERNATIONAL SETTLEMENT AGREEMENTS, A WARRIOR WITHOUT AN ARMOR? Loosely speaking, mediation is potentially a huge cost savings for the parties of a dispute, but the main issue is that not many parties are involved nor inclined to use it.

Before we start to go into the main issues that an international mediated settlement agreement15 can encounter in the recognition and enforcement phase and the main obstacles that led to the lack of usage of this tool in international dispute, it is needed to define what mediation is: “a negotiation that is facilitated by a trusted and neutral person16.”.

Therefore, in mediation there are always - at least - three persons: two persons that are in conflict and cannot reach autonomously a solution, and a third person who has no interests in the dispute and is trusted by the people involved in the contrast, i.e. the mediator. The latter must be neutral and impartial, he/she absolutely has not any kind of coercive powers in imposing a potential settlement agreement and he/she is not allowed to give any enforceable judgements in the dispute17. In some legal systems, such as in Italy, sometimes and for certain subjects mediation is mandatory before starting the trial (mandatory mediation)18, but it is commonly perceived as a voluntary process in which the parties want to give mediation a try and hence there is the willingness and the inclination to find - with the help of the mediator - a voluntary solution to the case that is less expensive and faster compared to any kind of litigation before a judge or arbitrators. The nature of mediation is always not binding19.

When we talk about the different types of mediation, it is enlightening the division that Thomas Gaultier has made20 between the facilitative, the evaluative and the directive mediation21. This division is based on the role of the mediator and of the aim of the mediation itself: in the facilitative mediation, known as self-determination approach, the mediator is a mere communicator of the different positions of the parties involved in the process, and he/she helps them to understand the

15 hereafter also IMSAs

16 This definition is given by Michael Leathes, Stop shoveling smoke! Give users a classic definition of mediation, Int’l Mediation Inst., available at https://www.imimediation.org/2011/08/30/stop-shoveling-smoke-give-users- classic-definition-mediation/

17 In case that the mediator is the judge of the dispute, for the purpose of the thesis we will not consider it formally a mediation.

18 Art. 1 and 2 of the Legislative decree 28/2010

19 Mediation: Frequently Asked Questions, Worls Intell. Prop. Org., available at https://www.wipo.int/amc/en/mediation/guide/

20 Thomas Gaultier, Cross-Border Mediation: A New Solution for International commercial dispute settlement?, [2013], 26 Int’l L. Practicum 38,40 available at

https://nysba.org/NYSBA/Sections/Dispute%20Resolution/Materials/DRS%20Fall%20Meeting%20Materials/Cro ss-

Border%20Mediation%20-%20A%20New%20Solution%20for%20International%20Commercial%20Dispute%20 Settlement.pdf.

21 There is another type of mediation known as “Transformative mediation”, articulated by Robert A. Baruch Bush and Joseph P. Folger (source: Robert A. Baruch Bush and Joseph P. Folger, The Promise of Mediation: The Transformative Approach to Conflict. (2004)); however, it is not mentioned in the paper I am referring to.

(7)

opposite vision of the problems and the solutions that they propose on the plate, but leaving them the floor for business talks without interfering in the discussion. In the evaluative mediation, the mediator is allowed to give his/her opinion on the offers proposed by the parties, and he/she can give recommendations on the good and bad points of those. This type of mediation is common in European countries22, where the mediator is supposed to be as well an expert of that subject. Finally, in the directive mediation the mediator is a facilitator and a guide, and he/she intervene to suggest the parties to accept or decline the offer at stake. The mediator in this case should have had years of experience in mediation and should have been properly trained.

In 2008, the Mediation Directive was adopted23 in the European Union after ten years of discussions24, with the aim of facilitating and encouraging the use of mediation in cross-border disputes to civil and commercial matters25. This aim is reached guaranteeing the possibility for the parties that have reached an amicable settlement agreement, respecting the scopes of the Mediation Directive, to ask for the enforcement of the latter in the court or in another competent national authority of the member state in which it has to be enforced26.

However, as it was pointed out by the Briefing requested by the JURI committee on the EU Mediation Directive27, this instrument was not enough to make mediation “mainstream”; indeed, after three years, a study of 201128 shown that the Mediation Directive was not sufficient to increase the already low number of mediations in the EU. The same unsuccess of the Directive was registered in another study of 201229 and of 201430. The latter study showed that only in Italy there had been an increase of mediation procedures attended, and that it was done due to the mandatory mediation for certain subjects introduced by the Italian government31 in 2010.

22 Ibid.

23 Directive 2008/52/EC Of the European parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters, available at https://eur-lex.europa.eu/legal-

content/EN/TXT/PDF/?uri=CELEX:32008L0052&from=EN

24 Exception of Denmark

25 Art. 1 of the Directive

26 Art. 6 of the Directive

27 Giuseppe de Palo, A Ten-Year-Long “EU Mediation Paradox” When an EU Directive Needs To Be More ...Directive, November 2018, available at

https://www.europarl.europa.eu/thinktank/en/document/IPOL_BRI(2018)608847

28 Giuseppe De Palo, Ashley Feasley & Flavia Orecchini, Quantifying The Cost Of Not Using Mediation—A Data Analysis, (2011), available at

http://www.europarl.europa.eu/document/activities/cont/201105/20110518ATT19592/20110518ATT19592EN.pd f 29 Ibid. page 3

30 Giuseppe De Palo, Leonardo D’Urso, Mary Trevor, Bryan Branon, Romina Canessa, Beverly Cawyer &

Reagan Florence, Rebooting The Mediation Directive: Assessing The Limited Impact Of Its Implementation And Proposing Legislative And Non-Legislative Measures To Increase The Number Of Mediations In The Eu (2013), available at http://www.europarl.europa.eu/thinktank/en/document.html?reference=IPOL-JURI_ET(2014)493042

31 Decreto Legislativo 4 marzo 2010, n. 28

(8)

In 2016, in the Parliament’s Briefing Note known as “Achieving a Balanced Relationship between Mediation and Judicial Proceedings” it was stated that “the key goals of the Directive remain far from being achieved.32”; a solution for increasing the number of mediations in cross border disputes that was proposed by the authors was to imitate the Italian mandatory mediation for certain subjects and hence to modify article 5.2 of the Directive. However, the focus was on the beginning of the mediation but not on the enforceability issues of the agreement reached through a mediation if a party chooses to disregard what he/she has previously agreed.

However, if we change the perspective and we focus our attention on the lack of enforceability of the IMSAs in cross border disputes, there are some international empirical studies that prove that this is one of the main reasons that refrain people from choosing mediation as an alternative dispute resolution instrument in cross-border cases. An important study was made by Professor S.I. Strong33. He collected and analyzed 221 questioners given by respondents from different jurisdictions (such as the USA, Europe, Oceania, Middle East, Latin America, Asia).34 These people were essentially practitioners, judges, mediators, arbitrators, academics, and it was asked to them what might encourage them a further use of international commercial mediation. The three main factors that were considered relevant were a better knowledge about the cost of mediation, a better information in relation to the procedure of mediation and the effectiveness of mediation in solving the conflict35. In addition, Strong asked if it was desirable an international convention used to harmonize the enforcement of IMSAs36; 74 percent of the people interviewed considered the adoption of an international treaty for the enforcement of IMSAs useful for a more common use of mediation in their jurisdiction in case of a cross-border dispute. This consideration emerged also in another study conducted by Weiss and Griffith37 on the desirability of a harmonious enforcement procedure for international mediation settlement agreements. It collected 103 surveys of people who were already involved in mediation in some way and who comes from different jurisdictions38. It was asked to them why they believed mediation as not a common instrument to solve international commercial conflicts; the two main responses were that there is unfamiliarity on this instrument and that there is

32 Giuseppe De Palo & Leonardo D' Urso, Achieving a Balanced Relationship between Mediation and Judicial Proceedings (2016), prepared at the request of the European Parliament's Committee on Legal Affairs and published by the Policy Department for Citizens’ Rights and Constitutional Affairs as part of the compilation, The Implementation of the mediation directive (29 Nov. 2016)

33 S.I. Strong, supra

34 Ibid. p. 2017

35 Ibid. p. 2037

36 Ibid. p. 2055

37 D. Weiss and M. Griffiths,‘Report on International Mediation and Enforcement Mechanisms’, [2017], Institute for Dispute Resolution IDR (NJCU) School of Business, UNCITRAL Working Group II (Dispute Settlement)

38 Ibid. p. 7

(9)

lack of the enforcement mechanism39. In addition, 80 percent of the people answered in affirmative when it was questioned whether they would have been more likely to include a mediation clause in their contract if there was already a universal mechanism to enforce a mediation agreement, such as the New York Convention for Arbitration40.

Furthermore, it is noteworthy to quote a survey of 2018 conducted by SIDRA (Singapore International Dispute Resolution), in which there had been collected 300 questioners from internal and external counsel and corporate executives41. From that it appeared that the most popular instruments used to solve a cross border disputes were, in order, international commercial arbitration, international commercial litigation, some hybrid processes (arb-med) and finally mediation42. When it was asked to them the reason of this rank, considering mediation as the least appealing dispute resolution tool, the replies were the lack of enforceability, neutrality, and impartiality of the third person, and cost43.

From the above considerations, it seems clear that, internationally speaking, mediation is perceived as an instrument that should be regulated by an international convention that can actually make IMSAs rapidly enforceable, homogenic and that can give certainty in the enforcement process to the users.

The Mediation Directive did not strictly harmonize the rules for the enforcement of cross-border mediated settlement agreements. Indeed, it gave the possibility to Member States to request certain specific requirements (such as a notarial stamp) to the agreement to enforce it. Superficially speaking, it might appear that a notarial stamp or another requirement that is “common” in a national legal system is not a “big barrier” for the foreign party who seeks for the enforcement. However, this vision does not take into account the difficulties that a foreign non-practitioner encounters when it has to deal with a legal system that has differences and legal concepts that his/her national legal system does not have (as an example, some countries does not have the figure of the notary or it has different duties). Contrary to the Mediation Directive that – as explained – give freedom to Member states to impose specific requirements, the Singapore Convention does not require any formalities that make the procedure for the enforcement too uncertain and “heavy”. Can this new Convention actually harmonize the enforcement phase?

39 Ibid. p. 12

40 Ibid. p. 14

41 Singapore International Dispute Resolution Academy, International Dispute Resolution Survey: Currents of Change (Preliminary Report, 2019) available at

https://sidra.smu.edu.sg/sites/sidra.smu.edu.sg/files/documents/SIDRA2019_IDR_Survey_Preliminary_

Report.pdf

42 Ibid. p. 4

43 Ibid. p. 4

(10)

When we put our attention on the current state of the enforcement of international commercial MSAs, having in mind that we cannot analyze every single national provision related to the mechanism and procedure used, we can argue that it is a (national) contract law matter44. Indeed, once that a contractual party refuses to comply with what it was previously stated in the mediated agreement, the other party should claim before the national court the execution of that as a breach of contract45. Therefore, the cost and the time saved during the mediation have to be spent (requesting more time and expenses for the plaintiff) in another judicial procedure before the national judge.

Hence, in the international context, the settlement agreement is nothing more than a contractual commitment between two or more parties46. As a consequence, the main disadvantage of choosing mediation instead of arbitration or international litigation is that the agreements (in most of the jurisdictions taken into account) have not a res judicata effect47; under this perception, the party seeking execution of its right based upon the agreement has to litigate for the recognition of the existence and the validity of the contract. Another procedural obstacle is the competence of the forum for the enforcement of the agreement and the applicable law48 unless it is stated in the IMSA itself.

As it was aforementioned, some states allow to give enforceability to contractual agreements if they were concluded before a court or if there was an intervention of a public notary or of another national authority49; for instance, in Italy the Decreto Legislativo n. 28/2010 (Legislative decree) has given the same force of a judgement to IMSAs once that the court has briefly controlled that the content of the agreement is not contrary to public order50 or an overriding national mandatory provision (the so called “homologation” procedure of the MSA or “exequatur proceeding”). A similar provision is present in the French legal system51. It is interesting to point out that a decision of the French Supreme Court held that it is possible to give enforceability to the agreement as a notarial instrument if there is an intervention of the notary52. The German legal system gives enforceability to the mediated

44 B.L. Steele, Enforcing International Commercial Mediation Agreements as Arbitral Awards Under the New York Conventon, [2007], 54 UCLA L.Rev. 1385

45 Ibid. p. 1388

46 C. Treichl, The Singapore Convention: Towards a Universal standard for the recognition and enforcement of Intenrational settlement agreements? [2020], Journal of International Dispute Settlement, 11, 409-429

47 Ibid. p. 413. However, the party may use the agreement as a proof if there are new disputes on the same contractual object.

48 Ibid. 414

49 E. Chua, Enforcement of International Mediated Settlement without the Singapore Convention on Mediation, [2019], 31 Singapore Academy of Law Journal 572

50 E. D’Alessandro, Enforcing Agreements Resulting from Mediation Within the European Judicial Area: A Comparative Overview form an Italian Perspective, [2016], available at https://ssrn.com/ abstract=1950988

51 Art 2052 of the French Civil Code

52 Cour De Cassation, 2 ch. civ., October 21, 2010 No 09-12378

(11)

private settlement agreement if there is an authentication of the public notary53 or if it was made before a national court. In Spain the settlement agreement can have a res judicata effect54 if it was concluded before the court whilst in the other cases it is enforceable only if there is the stamp of a notary55.

Finally, in Greece the mediated agreement becomes enforceable after a rapid control of the competent court that, however, cannot review or modify it56.

Considering the above, we can firmly say that the enforcement of the mediated agreement has its source in a judgement/order of the judge that recognizes the agreement enforceable or by a stamp of the notary in certain countries.

If we cover the scopes of Brussels I Regulation, according to chapter IV57, the procedure seems to be more harmonious; however, some uncertainties and “complicated” formal requirements are just around the corner.

First, it is needed to define, according to article 58(1), what an authentic instrument is58. In 2008 a comparative study was undertaken by the Council of Notariats of European Union, which stated:

“Authentic instruments have been defined by the European Court of Justice in the Unibank decision, following the Jenard-Möller Report, and by the EC legislator in Article 4 (3) (a) Regulation (EC) No 805/2004 on the European Enforcement Order:

- An authentic instrument is an instrument which has been established by a public authority or other authority empowered for that purpose by the Member State in which it originates;

- in the required form;

- and the authenticity must relate not only to the signatures, but also to the and content of the instrument59.

53 R Dendorfer-Ditges and P Wilhem, Mediation in a Global Village: Legal Complexity of Cross-Border Mediation in Europe, [2017], in M Roth and M Geistlinger (eds), Yearbook on Inter- national Arbitration and ADR Volume, 242

54 Spanish royal decree n.5/2012, available at https://www.boe.es/boe/dias/2012/03/06/pdfs/BOE-A-2012- 3152.pdf. Once that there is the notarial stamp, the judge will enforce it without giving the possibility to the parties to litigate on the content of the agreement.

55 Art 25(4) of the 5/2012, Ley de mediación en asuntos civiles y mercantiles and Art 1816 of the Spanish Civil Code

56 Greek Law 4640/2019 Art. 8

57 Art. 58 and 59 of the Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and Enforcement of judgemen in civil and commercial matters

58 For a comparative study, see Directorate General For Internal Policy Department C: Comparative Study on Authentic Instruments, National Provision of Private law, circulation, mutual recognition and enforcement, possible legislative initiative by the European Union, available at

https://www.europarl.europa.eu/RegData/etudes/STUD/2008/408329/IPOL-JURI_ET(2008)408329_EN.pdf

59 Therefore, the notary shall guarantee that the authenticated instrument expresses exactly the wishes of its signatories, their correct identity, the date and the substance of their commitments.

(12)

Thus, EC law looks to national laws concerning authenticating authorities and authentication procedures.”

Once that the IMSA has been “authenticated”, Art. 58(1) of Brussels I Bis applies60. Hence, Member states’ competent court can refuse the enforcement only if it is manifestly contrary to the public policy of the Member State where the enforcement is sought.

In addition to the above instruments and procedural regimes, it is obviously possible to conclude an agreement before a national court or during arbitration. For instance, The Hague Convention on Foreign Judgements of 1971 in Article 19 allows the applicability of the Convention to the settlements made in court in course of a pending proceeding. Additionally, the arbitral tribunals can easily incorporate the agreement reached between the parties in the award they pronounce. Even though the New York Convention does not specifically provide the option of the consent award, due to the favor conciliationis that is present in the adversarial procedure, the recognition of the consent award as enforceable as an arbitral award is a fait accomplis61. However, it has to be kept in mind that – formally speaking – it is not recognized in the New York Convention and therefore the enforcement of the consent award is not guaranteed.

To sum up, one of the main reasons of the lack of the use of mediation in international commercial disputes is the absence of a rapid enforcement of the mediated agreement and the potential risk of another litigation before a national court in case the other contracting party decides to not comply with the agreement. As it is shown by this chapter, even if – looking at some national laws – there is the possibility to make the contract enforceable through a procedure before the court or before a public notary, there is still chaos and diversities between states that can undermine a smooth procedure.

It is felt by most of potential users of this alternative dispute resolution instrument the need of a harmonized discipline for a more linear and pragmatic recognition and enforcement of the agreement.

It is clear from the reports abovementioned that the Mediation Directive was a failure. The aim of the directive was to make the mediation a proper alternative of private and public justice, but the most that it did was to merely let the States to introduce – if they had not already done before 2008 – a procedure that could help the enforcement of the agreement.

60 The same provision is provided between the EU and Iceland, Norway and Switzerland in Art. 57 and 58 of the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (The Lugano Convention)

61 As stated in G. Marchisio, A comparative analysis of consent awards: accepting their reality, [2016], 32 Arbitration international 331, 332, the execution of the consent award is, in certain countries, considered the same as the execution of the arbitral award. Hence, de facto there is no differences in the procedure required and in the effects.

(13)

The Brussels I Regulation has introduced another tool for the recognition and enforcement of an

“authentic instrument”, but even after more than ten years since the application of that, there is still skepticism of the actual usefulness of mediation in terms of solving a cross-border dispute “once and for all”.

On the other side, the newborn Singapore Convention is giving the opportunities to harmonize the rules that have to be followed for seeking for the enforcement of the mediated agreement - both outside and, obviously, inside the EU Borders – between the contracting States.

What it was missed by the two other instruments (The Mediation Directive and Brussel I Bis, Chapter IV) can be resumed in two main points: easiness in the enforcement and harmony between national rules; the Singapore Convention does not require any “authentic instrument”, notarial stamps or any other formalities that bring with them confusion and uncertainty.

The opportunity to ask before the judge the enforcement of a mediated agreement covered by the Convention alleging no more than the agreement itself – already signed by the parties and the mediator - may or may not overcome some of the above discussed obstacles for preferring mediation instead of international litigation or arbitration; anyway, as I will argue in Chapter 3 and 4, one of the potential consequences of the adoption by the EU of this new international convention could be to change the culture that exists behind the international mediation, putting a light on this ADR instrument that most of the time is still totally forgotten when a cross-border dispute arises.

(14)

CHAPTER TWO.THE IRON BEHIND THE ARMOR.

The Singapore Convention is the compromise of negotiations62 between States63.

Before the Singapore Convention, in 2002 The United Nation Commission on International Trade Law already had attempted to modernize and develop mediation withing a soft-law instrument – the model law on international commercial conciliation64 -. This instrument was then amended in 2008 and it was renamed "Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation". It is relevant to say that the adoption of the amendment of the Model Law was made in parallel with the finalization and discussion of the Singapore Convention65; the aim of the UNCITRAL Commission was to unify the law of dispute settlement procedures in the States that would have adopted he Singapore Convention66. Indeed, the two instruments are complementary67.

The idea of the development of the Singapore Convention was initially developed and suggested at a public meeting of the State Department’s Advisory Committee on Private International law (ACPIL) on the 26th of February 201468.

Since the beginning, during the first discussion in the working group of UNCITRAL, it was said that the Convention would have had troubles to find a broad consensus between states69; there were actually doubts that UNCITRAL would had spent many years in drafting an unsuccessful Convention70.

It is noteworthy saying that the European Union was - since the beginning - very skeptical about the success of the negotiations and the actual success of this new treaty71; in addition, it was said that there were no pragmatic needs to harmonize the subject72.

This skepticism of the EU continued during all the negotiation phase regarding the desirability and usefulness of the project itself73.

62 The negotiations started in 2014 by a proposal made by the USA

63 E. Chua, The Singapore Convention on Mediation – A Brighter future for Asian Dispute resolution, Asian Journal of international Law, [2019], 9, 195-205

64 Available at https://uncitral.un.org/en/texts/mediation/modellaw/commercial_conciliation

65 Background to the model law, https://www.singaporeconvention.org/model-law/about; General Assembly, Report of the United Nations Commission on International Trade Law, Fifty-first session, 25 June–13 July 2018, available at https://documents-dds-ny.un.org/doc/UNDOC/GEN/V18/052/21/PDF/V1805221.pdf?OpenElement

66 Ibid.

67 Ibid.

68 Public Meeting on International Arbitration and Conciliation, U.S. DEPARTMENT OF STATE (Feb. 26, 2014), https://2009-2017.state.gov/s/l/229037.htm

69 Sixty- Second Session, U.N. Doc. A/CN.9/832, P 8 (2015), http://legal.un.org/docs/?symbol=A/CN.9/832

70 T. Schnabel, The Singapore Convention on Mediation: a framework for the cross-border recognition and enforcement of mediated settlements, [2019], 19 Pepp. Disp. Esol. L.J. 1, 13-14, 2019, p. 6

71 Ibid.

72 Ibid.

73 Ibid. p. 7

(15)

Hence, between States there were always contrasts in relation of the future of the Convention; whilst some argued that an international treaty for the enforcement of IMSAs was still premature because mediation was still not already well-developed in many states, others thought that this could have been an incentive for the development of this ADR tool74.

Furthermore, the European Union initially wanted to restrict the scope of the convention only to pecuniary settlements, but the Working Group rejected that idea75; indeed, an incentive of the usage of mediation is the possibility for parties to be creative in the settlement itself; therefore, restricting the scope would have been counterproductive for the benefits of the instrument76.

Another point of discussion was the necessity of a “double exequatur”; some states proposed to include a formal requirement prior to the international circulation of the enforceable settlement agreement, such as a stamp put on it by a public notary. However, as the Working group at UNCITRAL highlighted, the aim of the Convention was to make the enforcement easier, without any necessary additional burdens77. This position raised some doubts in relation to the power that was recognized to a private agreement78. Indeed, once that the mediated agreement is signed by the parties, it can be enforced according to the national rules of the contracting state. Evidently, the national rules cannot impose any other requirements that are not explicitly mentioned in the Convention.

Consequently, a private agreement has the force of law between the parties and it can only be dissolved by mutual consent or for the reasons permitted by Article 5 of the Convention; technically, the private contract has a similar force of a public act – but it does not involve any public institutions recognized by the State in which it produces its effect nor in the State of the applicable law to the contract79. However, as I will explain better in the next chapter, the consensus itself can be used as a justification for the coercive enforcement of the contract covered by the Convention, restricting the possibilities for the opposition to the ones included in article 5.

Moreover, the scope of application of the Singapore Convention was one of the main objects of the discussion80. Article 1 currently states:

74 Ibid.

75 Ibid. p. 8

76 Ibid.

77 Ibid. p. 10

78 Ibid.

79 Obviously, it needs only the means of the Court

80 Ibid. p. 16

(16)

Article 1. Scope of application

1. This Convention applies to an agreement resulting from mediation and concluded in writing by parties to resolve a commercial dispute (“settlement agreement”) which, at the time of its conclusion, is international in that:

(a) At least two parties to the settlement agreement have their places of business in different States; or

(b) The State in which the parties to the settlement agreement have their places of business is different from either:

(i) The State in which a substantial part of the obligations under the settlement agreement is performed; or

(ii) The State with which the subject matter of the settlement agreement is most closely connected.

2. This Convention does not apply to settlement agreements:

(a) Concluded to resolve a dispute arising from transactions engaged in by one of the parties (a consumer) for personal, family or household purposes;

(b) Relating to family, inheritance or employment law.

3. This Convention does not apply to:

(a) Settlement agreements:

(i) That have been approved by a court or concluded in the course of proceedings before a court; and

(ii) That are enforceable as a judgment in the State of that court;

(b) Settlement agreements that have been recorded and are enforceable as an arbitral award.81

Therefore, the agreement that may be enforceable under this Convention shall be the consequence of a mediation, it shall be international and, finally, the subject of the agreement shall not be included in the exclusions provided in art. 1 (2).

As stated before, the Singapore Convention has to be interpreted in accordance with the Model Law on International Commercial Mediation; the definition of mediation is (almost) identical in the two instruments: it is needed a third impartial person – without any authority to impose any decision on the parties – who assists the parties in the process of reaching an amicable solution82. In the interpretation, the name of the process is not relevant, but is the substantial process and the existence of the above elements that defines the scope of the Convention83. The definition hence is broad.

81 Singapore Convention on Mediation, art. 1

82 Art. 2(3) of the Singapore Convention on Mediation and art. 1 of the Model Law on International commercial mediation

83 It is relevant to say that the term “conciliation” was used for most of the negotiations at UNCITRAL (Working Group II Feb. 2018 report, p. 16; Note by the Secretariat, A/CN.9/WG.II/WP.205, P 5 (2017), available at

http://legal.un.org/docs/?symbol=A/CN.9/WG.II/WP.205

(17)

There were some contrasts in relation to the needs of the requirements of the place in which the mediation could take place84. After a long discussion85 it was decided to have a loose definition without defining any requirements of the place in which the mediation must be undertaken in light of the benefits of a more flexible process. However, it is fundamental the presence of the third party86 but it is not clear the amount of involvement of this person in the mediation87, hence if he/she has to have an active role or he/she can maintain a super partes passive role, giving only suggestions on the offers between the two parties that are in conflict. However, it is essential the absence of any coercive powers on him/her, and so the mediator cannot be an arbitrator nor a judge of the controversy88. This broad definition of mediation that allows a mere participation of the mediator even if he/she is not active during all the negotiation phase is coherent within the aim of the Singapore Convention89, which is clearly present as a background of all the prescriptions since the preamble of that. Therefore, if the opposite party does not want to comply with the mediated agreement and he/she opposes to the enforcement of that before the national court, it is sufficient for the other party to allege the proof of the presence of the mediator in the negotiation in order to grant the relief90. The same conclusion can be reached even if the mediated agreement is a formal – but not substantial – consequence of the mediation: the opposite party cannot defence him/herself saying that the terms of the mediated agreement had been established without the concrete help of the mediator, but it is sufficient that the settlement was reached respecting formally the requirements of the Convention91.

However, it must be kept in mind that the agreement cannot be intended as a “non-mediated settlement”92, the consecutio is that the figure of the third person is necessary.

Additionally, the mediated agreement must be international93. This second requirement has to be fulfilled at the moment of the conclusion of the negotiations and when the agreement is signed, without considering the prior situation; thus, a settlement is international even though at the beginning or over the mediation process there were not satisfied the conditions provided by art 1.1 (a) or (b) – for instance if the business of one of the parties was moved in another country during the negotiations - .

84 T. Schnabel, supra, p. 16-17

85 Ibid.

86 Article 2 (3) of the Singapore Convention

87 T. Schnabel, supra, p. 18

88 Ibid.

89 Which is, as stated in this chapter, in the introduction and in Chapter one, a broader use of mediation as an ADR tool.

90 Ibid. 20

91 Ibid.

92 Ibid.

93 Art. 1 (1) of the Singapore Convention

(18)

I will not be too much focused on the issues that this article could create regarding the conception itself of the “places of business”, but it is noteworthy to say that if the business has more than one place in which it carries out its activities, according to art. 2 of the Singapore Convention it has to be taken as the reference the business that has the “closest relationship to the dispute resolved by the settlement agreement, having regard to the circumstances known to, or contemplated by, the parties at the time of the conclusion of the settlement agreement”94. In my opinion, this definition creates more issues than it is worth. This approach is similar to article 10 of the Vienna Convention on Contracts for the International Sale of Goods (CISG)95, that might be considered for a clearer interpretation. As well as the previous criterium, the definition of “international” is based also on art.

1 of the Model Law.

Finally, in order to be covered by the Singapore Convention, the agreement shall be not only mediated and international, but also commercial.

In this case, Commercial is referred to the dispute and therefore the agreement has to solve a

“commercial dispute”. It is a concept that is not defined as in the New York Convention, but it has to be interpreted in the same way within a broader definition96.

However, the exclusions from the scope of the subjects individuated in art. 1.2 and art. 1.3 of the Singapore Convention shall be applied.

These three criteria (mediated, international, commercial) should define what is covered by the Convention and what is not, covering of “iron” the agreement when it is the time of enforceability, according to art. 3 and art. 5. Both articles will be analyzed in the next two chapters.

94 Art. 2.1 (a) of the Singapore Convention

95 U.N. Convention on Contracts for the International Sale of Goods, art. 10

96 According to note 1 on the Model law, “relationships of a commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreement;

commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing;

investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; and carriage of goods or passengers by air, sea, rail or road.”

(19)

CHAPTER THREE. ARTICLE 3. IS THIS THE SWORD AND THE SHIELD OF INTERNATIONAL

MEDIATED SETTLEMENT AGREEMENTS?

Article 3. General principles

1. Each Party to the Convention shall enforce a settlement agreement in accordance with its rules of procedure and under the conditions laid down in this Convention.

2. If a dispute arises concerning a matter that a party claims was already resolved by a settlement agreement, a Party to the Convention shall allow the party to invoke the settlement agreement in accordance with its rules of procedure and under the conditions laid down in this Convention, in order to prove that the matter has already been resolved.97

As it emerged in the previous chapters, normally the enforcement of a private-mediated settlement agreement that is not covered by the Singapore Convention is subject to the norms of contract law or, if it respects certain formal requirements, different states, such as the Member States of the European Union, recognizes a special procedure for the enactment of the clauses of the agreement98.

Article 3 of the Convention has been defined as the article that gives a “sword” effect as well as a

“shield” effect to the mediated agreement99. The former effect is granted by the possibility given to the party – who is interested in the enforcement of the obligations included in the mediated contract – to start a rapid procedure, in accordance with the rules of the contracting state in which the enforcement is pursued, without an excessive effort, for the execution. The latter effect is just the fact that, once that the agreement is signed, it is not possible for the same parties to litigate again on the matter resolved (ne bis in idem).

Two premises are here necessary: first, the mediated agreement is a “stateless instrument”100, which means that in principle the concept of “state of origin” of the agreement is not included or provided in the Convention101. However, even though the mediation can be carried out online without finding a physical place in which the parties involved - plus the mediator - can negotiate, according to article 3 the procedure for the national enforcement of the mediated agreement inevitably involves the domestic law of the country in which the enforcement itself is sought. As already stated, the national procedure cannot provide any formal additional requirements for the coercive enforcement of the agreement other than the ones included in the Convention.

97 Article 3 of the Singapore Convention on Mediation

98 As I stated in Chapter one, my research was general and I had not studied and analyzed every single national legal system of the world. My reflections are based on the bibliography at the end of my thesis.

99 Ex multis, E. Silvestri, The Singapore Convention on mediated settlement agreements: a new string to the bow of international mediation?, (2019), Access to justice in Eastern Europe, 3(4)

100 E. Silvestri, supra, p. 9; T. Schnabel, supra, p. 22

101 Ibid.

(20)

Indeed, there is no possibility for parties to ask for the invalidity or reporting any vitia that can make the contract voidable/void or not effective or binding if they are not specifically included in art. 5 of the Convention, adapted to the applicable law chosen for the contract102. Secondly, this provision is similar to art. III of the New York Convention103; however, contrary to this instrument, the Singapore Convention does not mention the term “recognition”. The Uncitral Working Group II decided to not include the recognition as it is perceived differently by some States104. The aim of this decision was to not have different interpretations or implication under different jurisdictions105. Additionally, over the negotiations for the draft of the Convention, the delegation of the European Union expressed their concern regarding the “res judicata” effect of the agreement if it was expressed the term

“recognition”106. Indeed, in civil law countries this effect is typical of acts of the state, such as judgments, and not of private law acts107. However, even if not explicitly, if hypothetically a party attempts to re-litigate on a matter that was previously solved by a mediated agreement covered by the Singapore Convention, according to art. 3 (2) the other party can easily oppose the settlement and the national judge (or the private arbitrators) must immediately declare the process inadmissible due to the existence of the mediated agreement – unless there are the grounds, as provided in article 5, for refusing to grant a relief -108. This “implicit recognition” is the compromise of the negotiations109; pragmatically, even if it is not possible to refer to it as the “res judicata” effect of the private mediated agreement, it is clear that the legal consequences are similar, rectius, same, unless it is proved the existence of one of the vitia individuated in article 5 or if it is proved that the Convention itself does not cover the agreement. This effect is essentially the “shield” - a powerful weapon and armor that can be easily invoked - that normally national legal systems do not offer to common private agreement unless they fulfill certain formal requirements, within the risk of a declaration of invalidity or misrepresentation of the foreign national law applicable to the contract.

102 I will explain better this concept in the next chapter

103 Article III of the New York Convention on the recognition and enforcement of foreign arbitral awards, 1958: “Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles.

There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.”

104 T. Schnabel, supra, p. 19

105 P. Wòjtowicz and F. Gevaerd, How the Singapore Convention will enforce mediated settlement agreements across borders, [January 2020], Alternatives, 38 (1), January 2020

106 T. Schnabel, supra, p. 35

107 Ibid.

108 The mediated agreement does not cover matters that are not explicitly solved there (i.e., just orally discussed).

Therefore, the written form is necessary

109 N. Alexander and S. Chong, Article 3. General Principle, The Singapore Convention on Mediation: a commentary, (2019), Global Trends Dispute Resolution, 8, p. 67-79

(21)

Some scholars – and some states during negotiations110 – pointed out that recognizing a similar, rectius same, force to the private agreement, considering it as a public act, or a judgement, is aberrant and undermines the freedom of contract itself. In light of the above considerations, included the ones that I have formulated in the previous chapters, the “shield effect” – and the “sword effect” - are justified due to the previous consensus that the parties already expressed when they decided to “opt in” when they signed the final mediated agreement. The moment in which the party writes its signature in the contract, he/she is renouncing to claim before the judge any other vitia except from the ones that are provided in the Singapore Convention. In this sense it is acceptable the “sword and shield” effect that protects the mediated agreement.

In my opinion, article 3 can be read also as a “bridge” between the direct enforcement provided by the Convention and the independence of the single contracting state and of the procedure that it can decide to enact. The autonomy granted to the national legal system that shall only guarantee the enforcement of the mediated agreement covered by the Singapore Convention has two sides of the medal: more autonomy to the contracting state means that - plausibly – more states will sign and ratify the convention, without feeling pressed to conform to international strict rules. However, there is the risk that the enforcement of the mediated agreement is still undermined by an excessive onerous procedure that is not too different from the common procedure.

Currently, there are nine states that have already integrated – and one is going to adapt it soon111 - their legislation in accordance with the Singapore Convention: Belarus, Ecuador, Fiji, Georgia, Honduras, Qatar, Saudi Arabia, Singapore, Turkey and Kazakhstan112.

It has to be noted that some of them, according to article 8 of the Convention113, have made a reservation specifying that the provisions are not applied to settlement mediated agreements in which one of the parties involved is a public/governmental agency114.

Looking into their amended legislation on mediation, it appears that there is a general transposition of article 4 of the Convention to which parties have to refer for the enforcement115. Indeed, it is

110 T. Schnabel, supra

111 i.e., Fiji

112 Source: https://www.singaporeconvention.org/jurisdictions

113 Article 8.1: “A Party to the Convention may declare that: (a) It shall not apply this Convention to settlement agreements to which it is a party, or to which any governmental agencies or any person acting on behalf of a governmental agency is a party, to the extent specified in the declaration […]”

114 Belarus, Gerorgia (within another reservation in relation to the excusive application of the Singapore Convention only if the parties expressly agreed to that), Saudi Arabia. Source: https://www.singaporeconvention.org/jurisdictions

115 Article 4. Requirements for reliance on settlement agreements

1. A party relying on a settlement agreement under this Convention shall supply to the competent authority of the Party to the Convention where relief is sought:

(a) The settlement agreement signed by the parties;

(b) Evidence that the settlement agreement resulted from mediation, such as:

(i) The mediator’s signature on the settlement agreement;

(22)

generally required a translation of the official agreement in the national language and the proof that the agreement is mediated; it is not asked to provide any other certifications or formal requirements.

The procedure is rapid, generally without setting any oral hearing116 and the national codes sometimes prescribe not only the procedure but also the timeline117 that the court has to respect.

Hence, the aims of the Singapore Convention are respected: it is not required any notarial stamps or certifications other than the proof that the agreement is the result of a mediation. Compared to the procedure of the enactment of an authentic instrument as provided in chapter IV of Brussels I Bis, here the enforcement is more rapid and smooth, it does not require the intervention of any other authorities (such as notaries) and there is more certainty of the potential grounds to refuse to grant the relief based on that agreement (or at least potentially, as I will explain better in Chapter 4).

The “sword” effect is guaranteed, as well as the “shield” effect that a party can use to defense him/herself before the court on a matter already resolved.

In my opinion the main implication, here, is that the private agreement has the same force of a public judgement. We cannot talk explicitly of “recognition”, as it was decided in the Working Group, however the effects are (almost) the same – and they are justified by the consensus itself that is given by the parties when they sign the mediated agreement, knowing the implications of that contract used to solve the cross-border dispute.

(ii) A document signed by the mediator indicating that the mediation was carried out;

(iii) An attestation by the institution that administered the mediation; or

(iv) In the absence of (i), (ii) or (iii), any other evidence acceptable to the competent authority.

2. The requirement that a settlement agreement shall be signed by the parties or, where applicable, the mediator is met in relation to an electronic communication if:

(a) A method is used to identify the parties or the mediator and to indicate the parties’ or mediator’s intention in respect of the information contained in the electronic communication; and

(b) The method used is either:

(i) As reliable as appropriate for the purpose for which the electronic communication was generated or communicated, in the light of all the circumstances, including any relevant agreement; or

(ii) Proven in fact to have fulfilled the functions described in subparagraph (a) above, by itself or together with further evidence.

3. If the settlement agreement is not in an official language of the Party to the Convention where relief is sought, the competent authority may request a translation thereof into such language.

4. The competent authority may require any necessary document in order to verify that the requirements of the Convention have been complied with.

5. When considering the request for relief, the competent authority shall act expeditiously.

116 Art. 363 of the Civil procedural code of Georgia recognizes the discretion to the competent authority to conduct an oral hearing if necessary

117 Such as the Civil procedural code of Georgia and the Royal Decree no. 96 of Saudi Arabia,

Figure

Updating...

References

Related subjects :