The Singapore Convention: The rise in mediation and the role of legal finance

On 7 August the United Nations Convention on International Settlement Agreements Resulting from Mediation—also known as the Singapore Convention—was opened for signatures. The aim of the convention is to create a framework for the enforcement of international mediation settlement agreements, similar in spirit to the New York Convention on the enforcement of arbitration awards.

With 46 nation states signing on day one, including major trade states such as the US and China, the convention foretells the increased popularity of mediation as a form of alternative dispute resolution (ADRs), which have gained traction over time as litigation has evolved into an increasingly expensive and arduous process.

This was certainly true with arbitration: After the implementation of the New York Convention, the popularity of international arbitration as an effective method for resolving trade disputes grew exponentially. The Singapore Convention aspires to do the same for mediation: Given limited judicial resources and increasing caseload, mediation is likely to be increasingly adopted both as a complementary and alternative dispute mechanism to court litigation.

This is also good news for users and providers of legal finance. Given the non-recourse nature of litigation finance agreements, a negotiated settlement resulting from a successful mediation can be afforded a greater level of confidence when backed by an internationally ratified framework such as the Singapore Convention. Finance providers when considering a dispute for funding will naturally evaluate whether, on successful conclusion of the matter, an award or settlement agreement can be enforced—and will be more likely to invest in mediation with the added protection of an internationally recognized framework for enforcement.

UN conventions like the New York and now Singapore Convention can facilitate the recognition and enforcement of foreign awards resulting from ADRs, but there will always be challenges to enforcement in cross-border disputes. For a more detailed discussion of the challenges to enforcement in arbitration, see our recent article on navigating judgment enforcement in multi-jurisdictional arbitrations. Ascertaining whether a settlement agreement reached through mediation is binding and final could lead to significant difficulties, and knowing how and where best to enforce often requires a level of specialist knowledge. Burford’s in-house asset recovery and judgment enforcement team can help lawyers and their clients navigate the enforcement of settlement agreements resulting from mediation.

Although mediation is fast becoming yet another avenue for enforcement and another route to resolution outside the court process, as with all new international frameworks there will inevitably be some problems to rectify. Ultimately, however, we expect that as mediation becomes increasingly popular, we will see more matters coming to Burford for funding which use mediation as complementary to litigation or arbitration, and more clients seeking assistance for enforcement of settlement agreements arising from mediation. We welcome those conversations and stand ready to help.


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