Knowledge Highlights 14 February 2020

On 4 February 2020, the Singapore Convention on Mediation Bill (“Bill”) was passed in Parliament. Its provisions have yet to come into effect.

The Bill implements the United Nations Convention on International Settlement Agreements Resulting from Mediation (also known as the Singapore Convention on Mediation) (“Convention”). The Convention, which is reproduced in the Schedule of the Bill, is an international treaty on mediation that addresses the need for an effective means to enforce cross-border commercial mediated settlement agreements. The Convention was opened for signature in Singapore on 7 August 2019.

Senior Minister of State for Law, Edwin Tong, SC (“SMS Tong”) noted in his second reading speech that as part of Singapore’s efforts to strengthen its dispute resolution ecosystem, the country has invested in the development of international commercial mediation by building up institutions, developing capabilities and updating laws.

The ability to enforce a settlement agreement will promote mediation as a method of settling cross-border disputes, as it addresses a key hindrance to mediation. Mediation is rising in popularity as a means to resolve cross-border commercial disputes but its growth has been hampered by the difficulty a party can face in ensuring compliance with a mediated settlement agreement. The Convention, in enabling the enforcement of such settlement agreements, provides the “missing piece” in the international dispute resolution enforcement framework, which includes the Hague Convention on Choice of Court Agreements for litigation, and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards for arbitration.

Key features of the Bill

The Bill relates to the cross-border enforcement of mediated settlement agreements and the invocation of such agreements as a defence. In other words, as SMS Tong explained, if a party chooses to act and bring a claim in breach of a prior mediated settlement agreement to which the claim applies, then the agreement can also be invoked as a defence.

Scope of the Bill 

The Bill applies to international settlement agreements resulting from mediation and concluded by parties to resolve a commercial dispute. A settlement agreement is considered “international” where:

  • at least two parties to the settlement agreement have their places of business in different States; or
  • the State in which the parties to the settlement agreement have their places of business is different from either:
    • the State in which a substantial part of the obligations under the settlement agreement is performed; or
    • the State with which the subject matter of the settlement agreement is most closely connected.

The Bill does not apply to settlement agreements that have been approved by a court or concluded in the course of court proceedings and are enforceable as judgments. It also does not apply to settlement agreements that have been recorded and are enforceable as an arbitral award. Also excluded from the remit of the Bill are agreements relating to certain subject matters such as family, inheritance and employment law.

Enforcing or invoking settlement agreements 

The Bill provides a range of options for parties seeking to enforce or invoke their settlement agreements in Singapore under the Convention.

Parties can apply to the High Court to record a settlement agreement as an order of court which can be used for enforcement or as a defence. SMS Tong notes that this procedure and framework is similar to the enforcement of awards under the International Arbitration Act. The court order does not extinguish the underlying mediated settlement agreement, leaving it open to parties to use it to seek enforcement or invocation in another country party to the Convention. Parties’ legal rights and remedies existing outside the Convention will also be preserved (for example, reliance on contractual principles to enforce or invoke the settlement agreement).

Refusal to grant relief 

The court may refuse to grant relief under the following circumstances:

  • a party to the settlement agreement was under some incapacity;
  • the settlement agreement is not binding, null and void, inoperative or incapable of being performed under the law which it is subjected to;
  • there was a serious breach by the mediator of standards applicable to the mediator, without which breach that party would not have entered into the settlement agreement;
  • failure by the mediator to disclose circumstances that raise justifiable doubts as to the mediator’s impartiality or independence and such failure had a material impact or undue influence on a party without which failure that party would not have entered into the settlement agreement; and
  • granting relief would be contrary to the public policy of Singapore.

Where a settlement agreement has been recorded as an order of court, a party is also able to apply to set aside the court order under grounds set out in the Bill.

Reference materials

The following materials are available on the Parliament website www.parliament.gov.sg and the Ministry of Law website www.mlaw.gov.sg:

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