Following the conclusion of a Ministry of Justice consultation in April 2022, the UK Government signed the Singapore Convention on Mediation in May 2023. In doing so, it stated its intention to send a ‘clear signal to our international partners that the UK is committed to maintaining and strengthening its position as a centre for dispute resolution and to promote the UK’s flourishing legal and mediation sectors’.
So, what is the Singapore Convention on Mediation? What effects does it have on international disputes, and what does the UK becoming a party to the Convention mean for your business?
What is mediation?
Mediation is a form of alternative dispute resolution. It aims to assist the parties to a dispute in reaching a settlement with the help of an independent third party known as a ‘mediator’.
Whilst the parties are not legally obliged to mediate, the Courts expect them to consider alternative dispute resolution methods before proceeding to litigation. If they fail to do so, the Judge will want to know why, and any party who has unreasonably refused to attempt mediation or another alternative dispute resolution method may be penalised on costs.
Mediation is extensively used in the UK in the context of business disputes and often produces positive results. It can preserve business relationships in a manner rarely possible when the parties become embroiled in litigation. Mediation allows the parties the flexibility to agree terms tailored to their commercial reality, can often be arranged quickly and is usually cheaper and less stressful than Court proceedings. It is also confidential and without prejudice.
What is the Singapore Convention on Mediation?
The Singapore Convention on Mediation is an international Treaty relating to settlement agreements arising from mediation. The Convention applies to international disputes of a commercial nature. It does not impact employment, family or inheritance disputes, or those in which one party acted as a consumer.
The Convention enables the parties to easily enforce the terms of their settlement by applying to the Court in signatory states, without the need to commence new proceedings. As of May 2023, 55 countries have signed the Convention.
How will the Singapore Convention on Mediation impact business disputes in the UK?
Mediation is already an integral part of the UK Justice System. In its response to the Consultation on the Singapore Convention, the Government noted that commercial mediation is estimated to save UK businesses ‘around £5.9 billion per year in management time, damaged relationships, lost productivity, and legal fees.’
Cross border disputes can benefit from mediation in the same way as domestic ones. However, the use of mediation, and the recognition of it as a reliable dispute resolution method, remains inconsistent globally. Parties originating from a jurisdiction in which mediation is less widespread may be wary of its efficacy and hesitant to attempt it, despite the clear benefits. Further, in countries where the Convention does not apply, the enforceability of any settlement of an international dispute reached through mediation can require the commencement of a new claim and the enforcement of the subsequent Judgment, potentially in an unfamiliar jurisdiction.
The accession of the UK to the Singapore Convention is expected to boost the status of mediation in cross border disputes, and generally. Parties to an international dispute will have clarity on the enforceability of any settlement borne out of mediation. They can be reassured that, provided the legal criteria are met, any subsequent enforcement attempts that prove necessary will be more straightforward and cost-effective to implement. It underlines the UK’s commitment to promoting commercial mediation, and its belief in its effectiveness. This, in turn, may go some way towards convincing parties – both domestic and foreign - that mediation is as credible a dispute resolution method as arbitration and litigation.
Will the Singapore Convention on Mediation have a wider impact on your business?
The Government’s signing of the Convention may also have broader implications for UK businesses. It is hoped that it will enhance the UK’s appeal as a place to do business and encourage cross-border trade between its signatories, which include some of the world’s leading trading nations, such as the USA and China.
The Governments and courts globally continue to encourage businesses to use mediation to resolve commercial disputes. They are a cost effective and quick way to resolve a dispute compared to litigation. If you find yourself in a commercial dispute, it is advisable to seek legal advice from an experienced dispute solicitors. They will be able to provide the necessary guidance and support to help you explore the potential benefits of mediation as an alternative to litigation.