Settlement agreement singapore law

A uniform and efficient framework for international settlement agreements resulting from mediation

The Singapore Convention on Mediation (“SCM”) applies to international settlement agreements resulting from mediation, concluded by parties to resolve a commercial dispute. It provides a harmonised framework for the enforcement and invocation of international settlement agreements resulting from mediation.

The SCM has been designed to serve as an essential instrument in the facilitation of international trade and in the promotion of mediation as an alternative and effective method of resolving trade disputes. It ensures that an international mediated settlement agreement reached by parties becomes binding and enforceable under a simplified and streamlined procedure. It thereby helps to strengthen access to justice and the rule of law, and promote certainty and stability in the field of international commercial mediation. This contributes to the development of a mature, rules-based global commercial system.

What is Mediation?

Mediation 1 is a process for discussing and resolving disputes. It is known for improving the efficiency of dispute resolution and offering flexibility to the parties. It is a party-driven process whereby the mediator’s role is not to adjudicate, but rather to facilitate discussions between disputing parties to arrive at a mutually acceptable solution. The nature of the process promotes the preservation of relationships between the parties. The mediation process is also flexible, confidential, and in many instances, more cost and time efficient than other dispute resolution processes such as litigation and arbitration. For States, the process can help relieve pressure on the state court system.

Until the introduction of the SCM, however, an often-cited challenge to the use of mediation in commercial disputes was the lack of an efficient and harmonised framework for cross-border enforcement of settlement agreements resulting from mediation. It was in response to this need that the SCM was developed and adopted by the United Nations.

1 For the purposes of the Convention, the terms ‘mediation’ and ‘conciliation’ can be taken to be interchangeable.

Enforceability of Settlement Agreements under the Convention

Only international commercial settlement agreements resulting from mediation can be enforced under the SCM.

• The mediation settlement agreement must be international in character ( Art 1(1) SCM )
• The mediation settlement agreement must be commercial. This excludes disputes arising from transactions by consumers for personal, family, or household purposes, or relating to family, inheritance, or employment law ( Art 1(2) SCM )
• The Convention does not apply to settlement agreements that are enforceable as a judgement or arbitral award ( Art 1(3)(b) SCM ).

A settlement agreement has a dual function under the SCM.

• Settlement agreements can be directly enforced in the competent authority of a Party state, in accordance with its rules of procedure and under the conditions laid down in the Convention. ( Art 3(1) SCM)
• Where a dispute arises relating to a matter which has already been resolved by the settlement agreement, the agreement can be invoked to prove that the matter has been resolved. ( Art 3(2) SCM )

The competent authority of a Party state to the SCM may refuse to grant relief on the grounds laid down in the SCM, including:

• If a party to the settlement agreement was under incapacity. ( Art 5(1)(a) SCM )
• If the settlement agreement is not binding, null and void, inoperative or incapable of being performed under the law to which it is subjected, or has been subsequently modified. ( Art 5(1)(b) SCM )
• If there was a serious breach by the mediator in terms of applicable mediator standards ( Art 5(1)(e) SCM ), or failure to disclose circumstances that raise doubts as to mediator impartiality or independence ( Art 5(1)(f) SCM ), without which the party would not have entered into the agreement.
• If granting relief would be contrary to the public policy of the Party state. ( Art 5(2)(a) SCM )

Lastly, Parties to the SCM have been given the option to make the following reservations when signing the SCM:

• To qualify that the Convention would not be applicable to settlement agreements to which its government or other public entities are a party. ( Art 8(1)(a) SCM )
• To adopt an opt-in approach which provides that the Convention only applies to the extent that the disputing parties agree to its application. ( Art 8(1)(b) SCM )

Referring to the travaux préparatoires of the Convention can provide useful insights into the drafter’s intentions when the Convention text was being prepared.