Client Alert:

UN CONVENTION ON INTERNATIONAL SETTLEMENT AGREEMENTS RESULTING FROM MEDIATION ENTERED INTO FORCE

UN CONVENTION ON INTERNATIONAL SETTLEMENT AGREEMENTS RESULTING FROM MEDIATION ENTERED INTO FORCE

The United Nations Convention on International Settlement Agreements Resulting from Mediation (the "Singapore Convention") entered into force as of 11 April 2022 by the Presidential Decree published in the Official Gazette dated 25 February 2022. The Singapore Convention aims to enable parties to enforce settlement agreements resulting from mediation in signatory states without the need for court proceedings.

Scope of the Singapore Convention

Singapore Convention applies to settlement agreements;

  • that are international,
  • resolving commercial disputes,
  • resulting from mediation and concluded in writing.

In order for the settlement agreement to be considered as international in terms of the Singapore Convention, at least two of the parties to the settlement agreement should have their places of business in different contracting states. Even though the parties’ places of business are in the same contracting state, if (i) a substantial part of the obligations under the settlement agreement is to be performed in or (ii) the subject matter of the settlement agreement is most closely connected with, a different state, than the places of business, the said settlement agreement is deemed to be under the scope of the Singapore Convention.

Another significant condition for the Singapore Convention to apply is that the settlement agreement must be commercial in nature. Although the Singapore Convention does not define “commercial disputes”, it does specify those settlement agreements that are not within the scope of the Singapore Convention. On that premise, the Singapore Convention does not apply to the settlement agreements arising from transactions conducted for personal, family or household purposes and relating to family, inheritance and employment disputes. Whether there is a commercial dispute or not, the Singapore Convention does not apply to the settlement agreements that have been approved by or concluded before a court and that are enforceable as a judgement in that state, and settlement agreements that are recorded and enforceable as arbitral awards.

The Singapore Convention further defines what constitutes a mediation. Accordingly, mediation refers to a process whereby the parties try to amicably settle their dispute with the assistance of a third person who does not have the authority to impose a solution regarding the dispute.

How to rely on settlement agreements under the Singapore Convention?

A party that wishes to rely on a settlement agreement, shall submit a signed copy of the settlement agreement and evidence showing that the settlement agreement was concluded as a result of mediation to the competent authorities of a signatory state.

The Singapore Convention only requires the signature of the parties to the settlement agreement. Nevertheless, depending on the national law of the state where relief is sought, signature of the mediator or the attorneys of the parties may also be required for a relief to be granted.

Signature requirement may also be deemed met in case of electronic communication, provided that a method is used to identify the parties or the mediator, and the intention of the parties or the mediator may be acknowledged from the information contained in the communication.

To evidence that the settlement has been reached through mediation, (i) mediator’s signature on the settlement agreement, (ii) a document signed by the mediator indicating that the mediation was carried out, (iii) a confirmative statement issued by the institution that carried out the mediation or (iv) if the former are not available, then any acceptable evidence in their place may be submitted to the competent authorities.

On what grounds may competent authorities refuse to enforce the settlement agreements?

The competent authorities of the signatory state where the settlement agreement is to be enforced may refuse to enforce the settlement agreement upon the request of the opponent party and if proven that; (i) one of the parties to the settlement agreement was under incapacity, (ii) the settlement agreement is null, void, inoperative or incapable of being enforced, according to the governing law or the law deemed applicable by the competent authority of the signatory state or it’s terms are not binding or final, or it has been subsequently modified, (iii) the obligations of the settlement agreement have been fulfilled or are not definite or comprehensible, (iv) enforcing the settlement agreement would be contrary to the terms of the settlement agreement, (v) there is a substantial breach of the mediation standards by the mediator without which the party would not have concluded the settlement agreement, (vi) there was a failure by the mediator to disclose to the parties circumstances that raise justifiable doubts regarding its impartiality or independence and without which the party would not have concluded the settlement agreement. On the other hand, the competent authority may also refuse to enforce the settlement agreement if it determines that enforcing the settlement agreement would be contrary to the public policy of that signatory state or the dispute is not capable of settlement by mediation under the applicable law of that state.

As per the Turkish legislation on mediation, if the settlement agreement was signed by the parties, their attorneys and the mediator, the same may be deemed a document in the force of a judgment. If such a settlement agreement is to be enforced in a contracting state where, as a matter of domestic law, settlement agreements do not have the force of a judgment, the Singapore Convention may be applied to these settlement agreements. However, if a settlement agreement concluded in Turkey qualifies as a judgment in a signatory state, the provisions on recognition and enforcement of foreign judgments will be applied instead of the Singapore Convention.

It is widely accepted that mediation is a growing method of dispute resolution, as an alternative to costly and time-consuming litigation or arbitration proceedings. On account of the Singapore Convention, parties to a cross-border commercial dispute may reach an amicable settlement without the need for full court proceedings and without the risk of non-enforcement.

If you have any queries please do contact us for further information or clarification.

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