The advent of globalization has manifested in manifold increase in cross-border business, which has instigated commercial disputes to take new dimensions including foreign disputants and multi-national corporations. In resolving such disputes, litigation did not become the preferred choice for reasons ranging from delays, exorbitant costs and inability to handle intricacies of transnational conflicts.

With this exclusion, alternative means for resolving disputes in this arena have been resorted to and arbitration, in particular, gained significance because to some extent, it overcame flaws found in litigation and offered several advantages. However, corporations have now started witnessing the downsides of arbitration because of its increasing costs, delays and procedural technicalities and thus, have started to look towards another mechanism: mediation.
 
The usage of mediation has exponentially increased over the past two decades. Multi-national entities are seen incorporating escalation clauses in contracts, requiring an attempt at mediation before commencing litigation or arbitration. However, international corporations still hesitate in mediating their conflicts. Various explanations can be attributed to this reluctance, but the lack of a final, binding and uniformly enforceable settlement agreement is one of the principal justifications as presently, there is no international framework for direct enforcement of cross-border mediated settlements. 
 
The subject of enforcement of cross-border mediated settlements poses two primary questions: (a) whether a mediated agreement should be legally distinguishable from an ordinary contractual settlement arrived at between parties without the assistance of a third party? and (b) whether there is a genuine need for an enforcement mechanism to make mediation a preferred choice for international commercial disputants?
 
An internationally mediated settlement agreement versus a contractual settlement
It is argued that a cross-border mediated agreement and a contractual settlement are legally identical and should be subject to the same enforcement regime for protecting the rights of the parties. Although, in essence, a mediated settlement is a private contract between parties, there are two fundamental differences which indicate that a different legal status should be accorded to each of them.

First, contrary to a contractual settlement, mediated settlement is the outcome of a process wherein parties willingly resolve their differences with the assistance of a neutral third party. In such a case, it would be unpleasant for parties to approach a court for enforcement of the settlement terms as no one would want to pursue additional set of proceedings to either enforce the concluded terms or to resolve the disputes arising from mediation and subjecting themselves to judicial or arbitral process, which the parties aimed to circumvent at the very start.
 
Second, the process of mediation is governed by certain rules of procedure. The interplay of these rules, which, inter alia, comprise of voluntary participation of the parties, confidentiality of proceedings and assistance of a neutral mediator, results in an amicable settlement. A contractual settlement, on the other hand, does not necessitate any of these factors. Procedural justice demands that a mediated settlement must be directly enforceable rather than resulting in a paper settlement, lacking finality without the support of contractual law for its enforcement. 
 
Need for a legal framework for cross-border enforcement of mediated settlements
Currently, enforcement of a cross-border mediated settlement can be sought through indirect modes, depending upon the existence of an enforcement legislation in the enforcing jurisdiction. In countries lacking such legislations, a settlement agreement is treated as a private contract and enforced under the contractual law of that jurisdiction. On the other hand, two trends for expedited enforcement emanate in jurisdictions, which have enacted provisions to facilitate the same.

First, a mediated settlement can be enforced through judicial means, by seeking its summary enforcement or by applying for enforcement after getting the agreement notarized according to the requirements of the enforcing State. For instance, Indian law provides for summary enforcement of a settlement agreement, which will have the legal effect of an arbitral award. Second, under domestic laws of some jurisdictions like South Korea, the parties can appoint an arbitral tribunal for the limited purpose of getting the mediated agreement recorded in an arbitral/consent award for expediting enforcement.
 
However, the present enforcement mechanisms are inconsistent and under-cut the benefits of mediation as enforcing a mediated agreement as a private contract exposes the parties to the intricacies of contractual law. They become the subject of another set of proceedings where the contents of the settlement might have to be proved according to the contract law and legalities of the enforcing jurisdiction.

For example, in Hong Kong Special administrative Region of China, a settlement agreement reached during conciliation proceedings will be enforceable through the court, only if it is concluded between parties to an arbitration agreement. Some countries restrict this approach to settlements concluded during ongoing arbitrations, where, in fact, no real arbitration takes place as an arbitral tribunal is appointed merely to record the settlement in a consent award.

Such a consent award, might be null, void and incapable of being enforced in jurisdictions where the domestic arbitral laws stipulate “existing or future dispute” at the time of appointment of the arbitral tribunal as a pre-condition for initiating arbitral proceedings. For instance, the Arbitration and Conciliation Act, 1996 provides that an “arbitration agreement” is an agreement to submit to arbitrate “existing or future disputes”, whether contractual or not. In the present context, as all the disputes are already determined at the time of arbitral tribunal’s appointment, the award so rendered would be incapable of enforcement. This could cast a doubt on enforcement of a mediated settlement as an arbitral award. 
 
Considerations in favour of an enforcement mechanism

1. Demand for economical and quick dispute resolution:
   Speed and cost are pivotal factors for international corporations in dispute as they save them from wastage of time and money. Mediation amply serves this dual purpose. The estimated total time including mediation preparation, conducting pre-mediation sessions between the parties and mediator and the actual proceedings till the conclusion of a settlement agreement is about three months. On the contrary, it might take over a year to procure an arbitral award and over three years in obtaining a court decision. Inspite of such enticing advantages, mediation has failed to be a preferred mode for resolving cross-border business disputes. Absence of a predictable enforcement mechanism plays a significant role in this unpromising trend.
    
2. Change in circumstances:
   There could be several reasons or excuses not to voluntarily implement a mediation agreement. For instance, a change in the surrounding circumstances after the conclusion of a mediation might cause a party to turn around from the settlement. Disagreement between parties regarding the interpretation of a term in the agreement, intervention of external elements factors like change in government policy, currency fluctuations, etc. are all factors which may dissuade a party from complying with the mediated agreement. Moreover, internationally mediated settlements are not supported by enforcement legislations in several countries, indicating that its non-compliance would not result in an immediate action. This can induce a party to either delay the performance of its obligations or withdraw from the settlement. Thus, it is inevitable for a legal system to tackle this problem of non-compliance in order to reinforce parties’ confidence in mediation.

 
Considerations against an independent enforcement mechanism

1. Reluctance to regulatory intervention:
   The principal argument against an enforcement mechanism is based on the impression that regulatory intervention might impede flexibility and innovation of mediation process. Mediated settlements, unlike judicial outcomes, are often beyond legal rights and duties and regulating mediated settlements may suppress their creativity and richness. An enforcement framework can also be resisted for defeating the fundamental characteristic of voluntariness as the parties subject to an enforcement mechanism would be legally obligated to comply with the settlement rather than implementing it willingly.
    
2. Compromise in confidentiality of mediation communications:
   Confidentiality is one of the vital aspects of mediation. It enables mediating parties to communicate freely, frankly and confidently, without the apprehension of their communication being used against them in any future process. With an enforcement mechanism, which would most likely and should logically stipulate grounds for challenging enforcement of a settlement agreement, there is a strong possibility of erosion of confidentiality of mediation communications as an enforcing authority could mandate its disclosure.

The Singapore Convention
After several years of development within UNCITRAL, the UN General Assembly adopted the United Nations Convention on International Settlement Agreements Resulting from Mediation, commonly referred to as the “Singapore Convention” in December 2018. Just like the efficient regime for recognition and enforcement of international arbitral awards under the New York Convention, the Singapore Convention intends to create an enforcement system for mediated settlement agreements, thereby addressing the concerns discussed above.
 
The Singapore Convention on Mediation came into force 12.09.2020 with the objective of providing a more efficient regime for enforcing cross-border mediated settlements of corporate disputes between signatory countries. The Convention specifically excludes consumer, family and employment settlements as well as agreements reached through arbitral or court proceedings. 
 
With the Convention in force, corporations seeking enforcement of an international settlement agreement, can do so by directly approaching the courts of countries that have signed and ratified the Convention, instead of having to enforce the agreement as a contract in accordance with each country’s domestic process. As on 01.09.2020, the Convention has 53 signatories, including India, U.S.A. and China. As adoption of the Convention becomes more prevalent globally, it will further fortify Singapore’s position as an international dispute resolution hub and serve the requirements of multi-national entities that rely on Singapore for their international commercial transactions.
 
Just like its counterpart, the Singapore Convention does not discuss how the enforcement regime should look like. Rather, the form of enforcement proceedings is determined by the jurisdiction.

The only substantive requirements for enforcement are (a) an agreement signed by the parties; and (b) evidence that the agreement resulted from mediation. However, the right to enforce a mediated settlement is not absolute.

The Convention stipulates 6 grounds on which the enforcing jurisdiction may refuse to enforce a mediated agreement:

1. incapacity of a party to the agreement;
2. agreement not being final and binding or incapability of being performed,
3. obligations of the agreement have been performed or are incomprehensible,
4. express prohibition of enforcement under the mediated agreement,
5. serious breach by mediator of standards applicable to him or mediation without which breach a party would not have entered into the settlement agreement; and
6. failure on the part of mediator to disclose circumstances that raise justifiable doubts as to his impartiality or independence causing material impact or undue influence on a party.

Conclusion
The future of International commercial mediation is promising. In a world of cross-border disputes, it is imperative for mediation to be made appealing to potential users by according settlement agreements certainty and finality when they operate internationally. A binding mechanism for international enforcement of mediated agreements is one way of addressing these concerns.

Although creating an efficient legal regime for cross-border enforcement can be can challenging, the developments in the field indicate progress. Such a framework can be a catalyst in changing the attitudes towards international commercial mediation by providing outcomes, which are final and binding as outcomes of other adjudicatory mechanisms. This can ultimately promote and foster mediation as an independent and co-equal mechanism of resolving international commercial disputes as arbitration.

Written By: Mayanka Dhawan Advocate - LLM, University College London (U.K)