On United Nations Convention on International Settlement Agreements Resulting from Mediation (the Singapore Convention)

United Nations Convention on International Settlement Agreements Resulting from Mediation which is also known as “the Singapore Convention” (hereinafter shall be referred as “the Convention”) is drafted by UNCITRAL (United Nations Commission on International Trade Law) to facilitate international trade and commerce by enabling disputing parties to easily enforce and invoke settlement agreements across borders.

The Convention was adopted on December 20, 2018 by the United Nations General Assembly and signed by Turkey in Singapore on August 7, 2019. The ratification of the Convention was approved by the Law no. 7282 which was published in the Official Gazette no. 31420, dated March 11, 2021. Subsequently, the Presidential Decree no. 3866, dated April 21, 2021 on the ratification of the Convention was published in the Official Gazette no. 31462, dated April 22, 2021 and entered into force. Lastly, in accordance with the Presidential Decree no. 5235 dated February 24, 2022 which was published in the Official Gazette dated April 25, 2022, the Singapore Convention came into force in Turkey as of April 11, 2022.

The Convention aims to promote and extend the use of mediation which is not a commonly preferred dispute resolution option for international commercial disputes due to its weak position in regard of enforceability compared to arbitral awards and court decisions to resolve international commercial disputes. Within the scope of the object of the Convention specified herein, the Convention follows the general structure of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter shall be referred as the “New York Convention”). A uniform and efficient framework for the enforcement and invocation of international settlement agreements resulting from mediation, which is similar to recognition and enforcement opportunities given to foreign arbitral awards by the New York Convention, is offered by the Convention. In other words, in case of a breach of international settlement agreements, the Convention enables the aggrieved party of the settlement agreement to directly request the enforcement of the settlement agreement from related authorities instead of arising claims on the grounds of contractual liability before arbitral tribunals or national courts.

In this Memorandum, once the scope of the Convention is explained, the application of the Convention will be focused also considering provisions of the related legislation in force in Turkey regarding mediation and settlement agreements. Finally, a brief conclusion of the Convention's entering into force from the perspective of the Turkish legal practice will be given.

A. Scope of the Convention 

The 1^st article of the Convention defines the scope. According to the first paragraph of the 1^st article, the Convention applies to the international settlement agreements resulting from mediation and concluded in writing by parties to resolve a commercial dispute. There are two set of agreements lie outside the scope of the Convention according to the second and third paragraphs of the article. In this regard, a settlement agreement which;

i. is resulted from mediation

ii. has international character,

iii. is concluded in writing,

iv. is concluded to resolve a commercial dispute and

v. is not an agreement listed in the second and third paragraphs of the 1^st article of the Convention,

may be enforced within the scope of the Convention.

I. Mediation Process

“Mediation” 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 lacking the authority to impose a solution upon the parties to the dispute in the third paragraph of the 2^nd article of the Convention. It can be clearly understood from the wording used in the paragraph that the Convention neither requires certain qualifications or certificates for the mediator nor pre-defined rules for the mediation process. Namely, a third person’s involvement, without an authority to impose a solution upon the parties, to an amicable settlement process of a dispute will be regarded as “mediation” in terms of the Convention. Besides, according to the 2^nd article of the Law no. 6325 on Mediation in Civil Disputes (hereinafter shall be referred as the “Law no.6325”), the “Mediator” is defined as the natural person who is registered in the mediators’ registry of the Ministry of Justice. Therefore, only the settlement agreements resulting from the mediation processes conveyed by the registered mediators may be enforced in accordance with the 18^th article of the same law. In this regard, provided that the other requirements specified in the Convention are met, settlement agreements concluded with the contribution of third persons who are not registered in the mediators' registry may also be enforced in Turkey within the scope of the Convention.

II. International Character 

First of all, despite the New York Convention focusing on the “foreignness” of the arbitral awards, the Convention seeks “internationality” of the settlement agreements. The location of the parties’ places of business is accepted as the main criterion to determine the international character of the settlement agreement as is the case with the United Nations Convention on Contracts for the International Sale of Goods (CISG). According to 1^st paragraph of the Convention, a settlement agreement shall be deemed as “international” in that:

1. At least two parties to the settlement agreement have their places of business in different States; or
2. The State in which the parties to the settlement agreement have their places of business is different from either:

a.The State in which a substantial part of the obligations under the settlement agreement is performed; or

b.The State with which the subject matter of the settlement agreement is most closely connected.

Since the Convention focuses on internationality of the settlement agreements rather than foreignness, the place of the mediation is not a benchmark in regards of application of the Convention. In other words, provided that the other requirements specified in the Convention are met, international settlement agreements concluded in Turkey, may be enforced in Turkey within the scope of the Convention.

III. Written Form

In accordance with the 1^st article of the Convention, settlement agreements concluded in “writing” will be in the scope of the Convention. The “written form” is defined in the 2^nd article of the Convention also considering technological opportunities commonly used in the international trade practice. According to the second paragraph of the 2^nd article of the Convention, if the content of an agreement is recorded in any form, the agreement will be deemed as “written”. Besides, the requirement that a settlement agreement be in writing is met by an electronic communication if the information contained therein is accessible so as to be useable for subsequent reference. In this regard, since the requirement of written form is met in the settlement agreements made in electronic environment, these agreements may also be enforced within the scope of the Convention.

IV. Commercial Dispute

As stated in the 1^st article of the Convention, settlement agreements concluded to resolve "commercial" disputes fall within the scope of the Convention. Besides, the Convention does not include any provision defines “commercial” nature of the disputes. The Scholars[1] argue that “commercial” nature should be broadly interpreted considering UNCITRAL Model Law on International Commercial Arbitration and the general objectives of the Convention. In this regard, disputes arising from all commercial transactions including but not limited to investor-state relationships governing by civil law, will be considered as “commercial” and international settlement agreements concluded to resolve these disputes, may be enforced within the scope of the Convention.

V. Out of the Scope

The agreements listed as numerus clausus in the second and third paragraphs of the 1^st article of the Convention are excluded from the scope of the Convention. The first group of agreements listed in the second paragraph are excluded from the scope due to their own nature. These are:

1. settlement agreements concluded to resolve a dispute arising from transactions engaged in by one of the parties (or a consumer) personal, family or household purposes and
2. settlement agreements relating to family, inheritance or employment law.

Besides, the second group of agreements listed in the third paragraph are excluded from the scope due to special privileges given to them by legislations in terms of enforcement. In this context, the Convention does not apply to settlement agreements

1. that have been approved by a court or concluded in the course of proceedings before a court and
2. that are enforceable as a judgement in the State of that court and
3. that have been recorded and are enforceable as an arbitral award.

In this regard, settlement agreements concluded and also enforceable in accordance with the 18^th article of the Law no.6325, and settlement agreements executed within the scope of the 35th article of the Attorney Practice Code no. 1136 and enforced as court decisions according to the same provision, fall outside the scope of the Convention. Although these settlement agreements are not enforceable within the scope of the Convention in Turkey, provided that the other requirements are met, they may be enforced in other contracting states within the scope of the Convention as, their “specific privileges” in terms of enforcement, restricted with the jurisdiction of Turkish courts. So, these agreements will not be deemed as excluded agreements and may be enforced within the scope of the Convention in other contracting states.

B. Application

Principles of enforcement of a settlement agreement within the scope of the Convention are stated in the 4^th and 5^th articles of the Convention. The 4^th article includes procedural requirements to rely on a settlement agreement and the 5^th article lists grounds for refusing to grant a request for relief.

I.Procedural Requirements

A party requesting enforcement of a settlement agreement under this Convention shall supply to the competent authority of the Party to the Convention where enforcement is requested:

1. The settlement agreement signed by the parties
2. Evidence that the settlement agreement resulted from mediation
3. If the settlement agreement is not in an official language of the Party to the Convention where relief is sought, the competent authority may request a translation thereof into such language
4. Necessary documents in order to verify that the requirements of the Convention have been complied with if required by the competent authority

The second paragraph of the same article includes guidelines regarding signatures of the parties. Methods are used to identify the parties or the mediator and to indicate the parties’ or mediator’s intention are considered enough to comply with the signature requirement. In this regard, the parties and the mediator may also use electronic signature to sign settlement agreements. Besides, since there is no limitation regarding the methods to be used, even if an electronic signature is not used in an agreement, it may be considered as a duly signed agreement in terms of the 4^th article. For instance, settlement agreements recorded by e-mail correspondences between the parties which include neither wet signature nor electronic signature may be deemed as duly signed agreements in terms of the Convention as long as the parties and mediators are identifiable and the parties’ and mediators’ intention is indicated.

II. Grounds for Refusal

1. The competent authority may refuse to grant relief (enforce the settlement agreement) at the request of the party against whom the relief is sought only if that party furnishes to the competent authority proof that:
   • A party to the settlement agreement was under some incapacity
   • The settlement agreement sought to be relied upon;
     • is null and void, inoperative or incapable of being performed under the law to which the parties have validly subjected it or,
     • failing any indication thereon, under the law deemed applicable by the competent authority of the Party to the Convention where relief is sought under article 4 or
     • is not binding, or
     • is not final according to its terms or
     • has been subsequently modified

1. • The obligations in the settlement agreement have been performed or are not clear or comprehensible
   • Granting relief would be contrary to the terms of the settlement agreement
   • There was a serious breach by the mediator of standards applicable to the mediator or the mediation without which breach that party would not have entered into the settlement agreement
   • There was a failure by the mediator to disclose to the parties circumstances that raise justifiable doubts as to the mediator’s impartiality or independence and such failure to disclose had a material impact or undue influence on a party without which failure that party would not have entered into the settlement agreement.
2. The competent authority of the Party to the Convention where relief is sought under article 4 may also refuse to grant relief if it finds on its own motion that (ex officio):

• • Granting relief (enforcement of the settlement agreement) would be contrary to the public policy of that Party:
  • The subject matter of the dispute is not capable of settlement by mediation under the law of that Party.

C. Conclusion

Upon the Convention’s entering into force, international settlement agreements concluded in Turkey and falling out of scopes of the Law no. 6325 and the Attorney Practice Code, and international settlement agreements concluded abroad may be enforced in Turkey within the scope of the Convention.

Since the Convention defines a unique and effective enforceability opportunity for international settlement agreements resulting from mediation, it will contribute to the use of mediation as a dispute resolution method for international commercial disputes. As of May 26, 2022, 55 countries[2] including India, Republic of Korea and Qatar have signed the Convention but only 9 of them have ratified the Convention. As more countries sign and ratify the Convention, its objectives will be more achievable.

Sincerely,

Tunca Attorney Partnership.

[1] Claxton J., The Singapore Convention: Mediation in a New York State of Mind, https://ssrn.com/

abstract=3416116

[2] https://www.singaporeconvention.org/