[Akash S. Ray and Aman Guru are fifth year B.A. LL.B. (Honours) students of Symbiosis Law School, Pune]
The United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Mediation Convention) is a recent development in UNCITRAL’s long term commitment to harmonisation of the international scheme of alternative dispute resolution mechanisms. By taking cues from tremendously successful and widely ratified techniques found under the Singapore Mediation Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), it denotes a pivotal headway in the establishment of mediation as an efficacious means for settlement of international commercial disputes, thereby facilitating the recognition and subsequent enforcement of such settlement agreements that meet the conditions mandated therein, in a manner similar to Foreign Arbitral Awards.
Applicability & Scope of the Convention
To determine the applicability of Singapore Mediation Convention, it is pertinent to determine the constituents of a settlement agreement thereof and to evaluate the criteria it must meet, to ensure its enforceability. Thus, in this regard, a perusal of Article 1 of the said Singapore Mediation Convention reveals the following:
First,the Singapore Mediation Convention applies to international mediated settlement agreements which are recorded in writing and which resolve a commercial dispute. Second,the definition of the term “international” under the Singapore Mediation Convention is only triggered if the place of business of the parties lies in different States, or if a party’s place of business is different from either the place where a substantial part of its obligation is carried out under the settlement agreement is performed, or the State with which the subject matter of the settlement agreement is related. Third,the issues should be a ‘commercial’ in nature. In spite of the fact that the word ‘commercial’ is not defined (intentionally), it is intended to be understood widely, like under the New York Convention.
Further, to alleviate any concerns where the disputing parties might not have had equal bargaining powers, Article 1.2 of the Singapore Mediation Conventions specifically excludes out of its scope such settlement agreements, from being internationally recognized, which are related to: first, disputes arising out of situations where the transactions carried out by one of the parties is for personal, family or household purposes, and second, family and inheritance law & employment law.
Finally, the Singapore Mediation Convention does not have any significant bearing to those settlement agreements that are eitherapproved by a court or decided in court procedures (on the basis that these would probably be recorded as order or judgments of a court, and enforceable); or recorded and subsequently enforceable as arbitral awards.
Analysis of the scope reveals that the Singapore Mediation Convection exclusively deals with such disputes which are commercial as well as international in nature. Even though the term “commercial” is not expressly defined, the exclusions made out in Article 1.2 reinforce the commercial nature of the disputes envisioned by the Singapore Mediation Convention. Moreover, the term “international” derives its definition depending on “places of business” of the parties. This approach is similar to both, the domestic and international regime of recognition of awards made in the practice of international commercial arbitration.
Dichotomy in the Present Indian Approach
While the Singapore Mediation Convention does not stipulate the ways in which a settlement agreement may be reached, it does affix the meaning of the aforesaid process to define ‘mediation’. However, such processes are loosely defined to include both, conciliation as well as mediation in several jurisdictions, without having regard to any particular difference between the two.
This position does not hold true in the Indian scenario, where mediation and conciliation are treated as separate alternate dispute resolution mechanisms. A dichotomy accrues out of the legislative intent of various statutes where ‘mediation’ and ‘conciliation’ have been separately established as being alternative methods of recourse within themselves.
First, an examination of the Arbitration and Conciliation Act, 1996 (the Act) reveals that under Part I, which deals exclusively with the subject of arbitration, subject to the constraints of party autonomy, an arbitrator may “use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement” as per Section 30. This has been kept separate from the topic of Conciliation, which is dealt with separately under Part III, where under Section 67(4), a conciliator is permitted to make recommendations for the resolution of disputes.
Second, in 2002,the Amendment to the Civil Procedure Code. 1908, introduced Section 89 read with Rule 1A of Order X, which enabled for the reference of cases pending before a court to be settled through alternative dispute resolution mechanisms.
Third, the ADR rules promulgated by various High Courts, such as Bombay, Calcutta and Telangana appear to make a similar distinction between mediation and conciliation proceedings. They further remark that a role of a conciliator is greater than that of a mediator, as the former has the capacity to form or revise the terms of settlement between disputing parties.
The Enforceability Conundrum in India
The ‘conciliation’ of legal disputes in India operates in accordance with the provisions of Part III of the Indian Act. The provision for enforcement of the settlement agreement which arises during such conciliation proceedings is governed under Section 74 which states that “the settlement agreement shall have the same status and effect as if it is an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal”. Such settlements thereafter receive recognition as if they were a decree of the court, and are thus made enforceable.
This procedure therefore provides for enforcement of only such proceedings which constitute ‘conciliation’ within the framework of the Act. Consequently, when parties arrive at a settlement through any other means such as mediation, their only plausible recourse lies in the form of drawing up a contract, and thereafter securing its enforcement by instituting a separate legal proceeding in that regard.
Ramifications of the Singapore Mediation Convention
During the development of Singapore Mediation Convention, the drafters refused to include the concept of a ‘seat’ for the mediation proceedings covered by it. The Singapore Mediation Convention also clearly excludes such settlement agreements out of its scope “[t]hat have been approved by a court or concluded in the course of proceedings before a court; and enforceable as a judgment in the State of that court.” Similarly, “[s]ettlement agreements that have been recorded and are enforceable as an arbitral award” have also been excluded.
The subject matter of the settlement agreements which receive recognition under the Singapore Mediation Convention thus solely addresses the enforceability of such legal disputes which are international and commercial in nature, and which are resolved through the process of mediation as defined under Article 2 therein. Presently, such settlements executed offshore should be enforceable in India on the same basis as conciliations taking place within India, subject to meeting the other conditions in Part III of the Act; however, the settlements must not curtail the applicability of the Act to conciliations that take place outside India.
As such, the Singapore Mediation Convention allows harmonisation of the procedure for the execution of privately-mediated settlement agreements, with the relevant enforcement procedures established within India as well as other signatory States. It thus addresses what was earlier a legal vacuum riddled with uncertainties.
The need for mediation has developed and grown, especially since it is a less expensive process, compared to international arbitrations (which are condemned inter alia for being expensive and unpredictable, even though they we conceptualised to address the same concerns in conventional dispute resolution), and furthermore on the grounds that it is bound to save business and commercial connections.
These advantages are recognised in the Preamble to the Singapore Mediation Convention, mirroring the expectation that the enforceability of global commercial settlement agreements would encourage productive organization of equity by States, and furthermore add to the improvement of worldwide financial relations. It is estimated that the Singapore Mediation Convention will assure parties that settlement agreements affected through mediation will be at last be enforceable, and that they won’t be consigned back to arbitrations, should the other party default.
Thus, India’s approval of the Singapore Mediation Convention would help Indian parties in implementing settlement agreements against parties outside India. It would enable direct enforcement of the settlement arrangement by courts, and help parties avoid a contractual route to seek implementation.
– Akash S. Ray & Aman Guru