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Mediation and the Relevance of the Singapore Convention
[/vc_column_text][us_separator][vc_column_text]When contracting parties enter into a business relationship, they rely on the belief that it will be fruitful and cordial, leading, consequently, to both parties benefiting from the business that binds them. In this business relationship, the interests of the parties involved abound, and these interests must converge harmoniously. However, differences can also arise from the convergence of interests. Sometimes, the difference is not yet a conflict that puts the parties in an antagonistic position. This is when mechanisms such as conciliation, negotiation, or mediation are extremely useful, as a third party assists the parties in resolving the disagreement amicably. In the context of international trade, mediation has established itself as an ideal mechanism for resolving cross-border commercial disputes. However, the outcome of the mediation, that is, the mediation agreement that settled the dispute or controversy, could not be enforced in a court of law, as is the case with a court judgment or arbitration award. However, this situation is intended to be resolved by the United Nations Convention on International Settlement Agreements Resulting from Mediation, known as the Singapore Convention. To date, 53 contracting states have signed the Singapore Convention, including, for example, the United States of America, Chile, Ecuador, Uruguay, Korea, Colombia, Saudi Arabia, Israel, and the Republic of Honduras, among others. The Singapore Convention is very important because it grants International Settlement Agreements the possibility of compulsory enforcement in the contracting states of the Convention, similar to the enforcement of arbitral awards based on the New York Convention.
Relevant provisions of the Singapore Convention
The Convention applies to international settlement agreements arising from mediation and concluded in writing, meaning any means of verifying their content, including by electronic means. The international character of a settlement agreement is defined when: (i) the parties have their business establishments in different States; or (ii) the State in which the parties to the settlement agreement have their business establishments is not the State in which a substantial part of the agreement will be performed or is the State most closely linked to the subject matter of the agreement. Of course, there are some matters excluded from the Convention, such as those agreements that: (i) have been concluded by a consumer for personal, family, or household purposes; (ii) relate to family, inheritance, or labor law; (iii) have been approved by a judicial body or concluded in the course of proceedings before a judicial body; (iv) can be enforced as a judgment in the State of that judicial body; and (v) that they have been incorporated into an arbitral award and are enforceable as such. The Convention sets out, inter alia, the requirements for enforcing a settlement agreement and the grounds under which enforcement of the agreement may be refused.
Benefits of Mediation
With an international legal framework that makes it more effective, and given the current situation in which disagreements have arisen, continue to arise, and continue to arise in different industries, mediation presents itself as an attractive mechanism for resolving cross-border trade disputes. Furthermore, this dispute resolution method is less damaging to the parties' commercial relationship because, as it is non-litigious, it is more likely to lead to the conclusion of the process and the restoration and continuity of business. Likewise, the parties have a more direct participation in the process, so the results will be more easily enforceable by them without the need to force it through other mechanisms. Furthermore, mediation has a long history of success in other jurisdictions where it has proven to be an effective method for resolving these types of conflicts. Therefore, when a dispute arises, the parties should favor this type of mechanism before initiating litigation or arbitration proceedings. Our firm, Lexincorp, has a renowned practice in dispute resolution through alternative dispute resolution methods such as direct settlement, negotiation, mediation, conciliation, and arbitration. We also have experience in international trade, international contracting, and public and private international law. If you need support or advice in these areas, please contact us at fvilleda@lexincorp.com.
