United Nations headquarters in New York/Photo: IDN/Shutterstock.com

On Aug. 7, 2019, forty-six countries, including the United States, signed the United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as the Singapore Mediation Convention. In the global economy, most practitioners will have clients affected by contracts involving non-U.S. based companies. It means that a settlement may be enforced directly in the country where the breaching party is, rather than having to bring an action here and seek recognition in the foreign jurisdiction, or starting from scratch to get a judgment for breach of contract. It applies only to settlement agreements concluded after the date that the convention enters into force for the relevant nations.

The convention applies to a settlement agreement resulting from mediation of a commercial dispute and confirmed in writing, where: (1) at least two parties have their places of business in different countries; or (2) if both parties are in one country, the substantial part of the obligations is performed in a different country or a different country is more closely connected with the subject matter. Mediation itself is defined as "a process, irrespective of the expression used or the basis upon which the process is carried out, whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person or persons ('the mediator') lacking the authority to impose a solution upon the parties to the dispute."

Each signatory nation must enforce a settlement agreement meeting the criteria of the convention, provided the settlement agreement is signed by the parties, resulted from mediation, is signed by the mediator who confirms the mediation was carried out, the institute administering it attests to it, or in the absence of any of these criteria, "other evidence acceptable to the competent authority." Relief may be denied if (1) one of the settling parties is shown to have operated under an incapacity, (2) the settlement agreement is null and void, inoperable or incapable of performance under the applicable law, is not binding or final under its terms, or has been modified, (3) the obligations have been performed or are not clear or comprehensible, (4) granting the relief would be contrary to the settlement agreement, (5) the mediator breached applicable standards, or (6) the mediator's impartiality was compromised due to a failure to disclose circumstances having a material impact or undue influence. In addition, a country where enforcement is sought may decline to grant relief on the basis of its public policy or the dispute could not have been settled by mediation under its laws.

Notwithstanding skepticism in some quarters, the convention has been perceived positively as a step towards further mutual enforcement of dispute resolutions without having to start over in different countries. Just as the New York Convention has proved effective in facilitating recognition and enforcement of cross-border arbitration awards in the commercial arena, this is an important step. There remains a certain antipathy in some countries to mediation; the number of countries signing this convention at the start is encouraging. It is particularly encouraging that the United States was one of the original signatories.

In 2017, New Jersey enacted the International Arbitration, Mediation and Conciliation Act, to facilitate international business in New Jersey and provide resources for resolution of claims. The new mediation convention is a welcome development in this spirit, and practitioners should be aware of it in cross-border contract resolution.