The Singapore Convention – Will Mediation be the new Arbitration?

Singapore will be the witness and the namesake for the signing of the Convention on International Settlement Agreements resulting from Mediation (Convention) in August 2019. Member states of the United Nations may sign to indicate their intention to support the enforcement of settlement agreements resulting from international mediations through their domestic courts/competent authorities. It remains in suspense for supporters of alternate dispute resolution  (ADR) in India whether or not the ministry at New Delhi will sign the Convention.

Recent events like the decision of the Indian Supreme Court to attempt resolution of the Ayodhya dispute through mediation and statements made by the Law Minister for introduction of compulsory pre-litigation in government disputes indicates the faith of the Union in this conciliatory form of dispute resolution.

It is often preferred in international commercial transactions that disputes be resolved through ADR since foreign parties want to minimize their interaction with domestic courts. Despite improvement post the 2015 amendment to the Arbitration and Conciliation Act 1996 (Indian Arbitration Act), the Indian jurisdiction has often carried the image of a black sheep for enforcement of arbitral awards. Hence, mediation will be a perfect substitute for dispute resolution process in cross border disputes but for the lack of enforcement mechanism for the agreement resulting from such mediation.

The position as of today is that most mediations in India occur only pendente lite and in court attached mediation centers. It is logical to say that the compliance rate for a settlement resulting from an agreement between the parties is much higher than an award or a decree forced upon them through adjudicatory resolution processes.  Nevertheless, it is not rare to find that a party to a settlement agreement experiences ‘buyer’s remorse’ or has signed the settlement agreement only as a delaying tactic without having the resources to fulfil its promises. Therefore, it is recommended that parties have the settlement recorded as a ‘consent decree’ or an ‘award’ so as to borrow the sanction of the law.

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