On 7 August 2019, the Singapore Convention on Mediation (“Singapore Convention”), was signed by 46 countries, including China, the United States, Singapore, India and South Korea, a recognition that mediation has become a viable dispute resolution option.
The Singapore Convention seeks to expedite the enforcement of settlement agreements arising from the mediation of cross-border disputes by setting down a unified framework for enforcement. It will enter into force six months after it has been ratified by at least three signatory States.
The Singapore Convention applies to mediated settlement agreements that satisfy the following criteria - the agreement must be recorded in writing; it must resolve a commercial dispute; it must be international, ie, at least two parties should have their “place of business” in different signatory States or the State in which the agreement will be performed is different from the place of business of the parties involved; it must have resulted from mediation.
However, certain questions remain regarding the application and operation of the Singapore Convention. For instance, it does not define what constitutes a “place of business” or how a court should apply the “closest relationship” test, potentially creating uncertainties for parties seeking to rely on the Convention. There may also be disagreements over what “standards” should apply when considering the ground of refusal, given that there are different models of mediation in use. In other instances, the public policy ground for refusal can give flexibility to some States to refuse enforcement.
Another consideration is that, at present, the European Union member states (including the United Kingdom) and some Commonwealth countries (such as Australia and Canada) have not signed the Singapore Convention. Their support will be important in further promoting the adoption of the Convention by other States.
The Singapore Convention also has implications for Hong Kong.
Although China is a signatory of the Singapore Convention, this does not automatically result in Hong Kong being bound by the Convention. According to Article 153 of the Basic Law of Hong Kong, international treaties and agreements acceded to by China do not automatically apply to Hong Kong, and the ultimate decision regarding the application of the Convention to Hong Kong rests with the Chinese Central Government, “after seeking the views of the government of the Region”.
It is likely that the Chinese Central Government will take the relevant steps to apply the Singapore Convention to Hong Kong, as it benefits the enforcement of international mediated settlement agreements. Application of the Singapore Convention to Hong Kong will further bolster its reputation as a leading dispute resolution centre in Asia.
It is questionable whether the Singapore Convention would apply to the enforcement of mediated settlement agreements between a Hong Kong and a Chinese party, because the agreement may lack the requisite “international” character, given that Hong Kong is a Special Administrative Region of China. To remove any uncertainty, Hong Kong and China can make special arrangements for the mutual enforcement of such mediated settlement agreements.
Editorial Note: this is a summary of the article “A New Era for International Mediation” which was circulated via Hong Kong Lawyer eNewsletter and posted on Hong Kong Lawyer website in September 2019.