The Singapore Convention on Mediation was opened for signature on August 7, 2019, with the United States, China, and India among its first signatories. The Convention is “expected to bring certainty and stability to the international framework on mediation” by streamlining the process by which foreign jurisdictions will enforce settlement agreements resulting from mediation. This program will discuss the Convention’s potential impact on international commerce as well as its implementation in the United States.
Prof. Roger Alford, Professor of Law, University of Notre Dame Law School
Gary Birnberg, JAMS Mediator and Arbitrator
Mushegh Manukyan, Mediation Specialist, Office of the Ombudsman for UN Funds and Programmes, United Nations
Harout J. Samra, Associate, DLA Piper
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Dean Reuter: Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group teleforum calls, become a Federalist Society member today at fedsoc.org.
Greg Walsh: Welcome to The Federalist Society’s teleforum conference call. This afternoon’s topic is titled “The Singapore Convention on Mediation: What it Means for International Litigation and Arbitration.” My name is Greg Walsh, and I am Assistant Director of Practice Groups at The Federalist Society.
As always, please note that all expressions of opinion are those of the experts on today’s call.
Today, we are fortunate to have with us Mr. Harout Samra, an Associate at DLA Piper who will introduce the other three speakers. After our speakers give their opening remarks, we will go to audience Q&A. Thank you all for sharing with us today. Mr. Samra, the floor is yours.
Harout J. Samra: Thank you, Greg, and thank you to The Federalist Society for hosting today’s program. As you mentioned, today’s topic is the Singapore convention on mediation. And what we’re going to be talking about today is what it means for international litigation and arbitration. For those of you who might be familiar with the International Disputes Packet, the Singapore Convention on Mediation was open for signature on August 7, 2019.
Some of the initial parties, just to indicate how important this convention could be in the long run, were the United States, China, and India. So this is a convention that has, I think, right off the bat, earned quite a bit of broad-based support. It’s intended to bring stability to the international framework on mediation and, as we’ll discuss today, to a large degree streamline the process by which parties may seek to enforce mediation agreements -- settlement agreements that are a consequence of mediation.
We, I think, anticipate—and many people do—that this is going to have a broad and pretty significant impact on international commerce, at the very least on how international disputes are resolved in the coming years, especially as it’s more widely accepted and as mediation becomes a wider practice. We have a terrific panel today, who I’ll introduce briefly. And then we’ll jump right into the discussion. We’ll have about 15 minutes at the end for question for any of you who have questions of our expert panel.
Our first speaker is Professor Roger Alford. Professor Alford is Professor of Law at the Notre Dame Law School. He teaches and writes on a wide range of subject matter areas and, in particular, has taught international arbitration for decades. As part of that work, he actually founded the Kluwer Arbitration Blog and database, which for those who are in this practice area we all know are essential tools in the international arbitration practice. Professor Alford also previously served as the Deputy Assistant Attorney General for International Affairs with the Antitrust Division at the U.S. Department of Justice and practiced law at Hogan & Hartson, now Hogan Lovells, here in Washington.
Gary Birnberg specializes -- is with JAMS and specializes in a resolution in an array of commercial matters, both domestic and international. He served as a mediator, arbitrator, and a special master in hundreds of disputes and is know for employing his really great temperament, which I think you’ll all see today, as well as his business skills and legal acumen to really quickly grasp some of the challenging matters before him. He’s a certified mediator in Florida and as well a Fellow of the Chartered Institute of Arbitrators. He served as an arbitrator and mediator and serves on the panels for a number of institutions, including CAM-CCBR in Brazil, the ICC, the ICDR, and JAMS. He’s currently the co-chair of the International Bar Association’s mediation committee.
And finally, last but not least, certainly is Mushegh Manukyan. Mr. Manukyan is the General Counsel International for inVeritas and a mediation specialist to the Office of the Ombudsman for the United Nation’s Funds and Programs at the United Nations in New York. He played an instrumental role in the establishment of Armenia’s mediation system and is the author of Armenia’s first mediation law. He’s actually founded the first private mediation and arbitration center in Armenia and has mediated numerous cases around the world. Before joining the UN, Mr. Manukyan was an attorney at the Washington office of Three Crowns, which is a leading international arbitration firm. He is appearing today, I should say, in his personal capacity and not in his role as an Ombudsman at the United Nations.
So just to begin the conversation—and this will be a fairly free flowing conversation—I’d like to turn quickly to Professor Alford just to set the stage and tell us a little bit about the broader framework for international dispute resolution.
Prof. Roger Alford: Yes. Thank you very much, Harout, for the opportunity to speak and to join this FedSoc teleconference. It’s really a pleasure to be here. So just to sort of lay the groundwork generally, if you think about transnational business disputes and the mechanisms for trying to resolve those disputes, there’s really four traditional ways to deal with that issue.
There is negotiation privately between the parties to the dispute. There’s mediation where there’s a neutral umpire that can try to resolve the dispute. There’s arbitration that can be used, provided the parties agree to arbitrate. And then there’s, of course, litigation, and the litigation almost always is pursuant to a form selection clause or, in the absence thereof, based on the performance of the contract. So those are the four traditional ways that one can try to resolve the dispute.
One historically -- at least in recent years we’ve always sort of said that international arbitration is the means by which it’s most likely and most readily enforceable. Any arbitration award pursuant to the New York Convention has a very, very high degree of likelihood that it will be enforced. And that’s because the New York Convention, which was signed in 1958, has become incredibly popular and widespread and the basis for a high degree of confidence that parties will be able to successfully enforce any arbitration awards. But we should remember that the New York Convention -- it took quite a long time for the New York Convention to really get widespread adoption.
I looked recently at the numbers. There were only six accessions in the 1950s, about 30 in the 1960s, another 20 in the 1970s—including the United States—and then in the 1980s another 26, including major countries like Canada. So it really did take a while, decades one could say, for the New York Convention to become as popular as it is. But it no doubt today is incredibly effective.
So where are we now? Well, now, all of a sudden on the scene are new treaties that try to provide a high degree of confidence in enforceability in these other mechanisms for dispute resolution, mediation, of course, with the Singapore Convention and then litigation with the Choice of Court Convention of 2005, as well as the Hague Judgments Convention of 2019 as well. So we have two major treaties in 2019, one on mediation and one on litigation, and then an earlier Choice of Court Convention from 2005, all of which portend the possibility of a greater likelihood of enforcement.
Now, just like the New York Convention, I suspect that it will take quite awhile for each of these treaties to get the sort of necessary support. Although, I think that it’s safe to say that the Singapore Convention is doing quite well given the number of signatories. There’s not as many in Europe yet, but, of course, Europe is leading the charge in terms of the Choice of Court Convention.
So I think it will take some years for those treaties to get widespread support. But I think it’s fairly likely that that will be the case. And what that means, then, is—and we’ll talk about this at greater length—is that all of a sudden both litigation and mediation are going to have increased chances of enforcement. And that really does bode well for the future of international commerce because international commerce, then, will have not just one popular mechanism for enforcement but now arguably three. Right? There will be greater ease in enforcement of mediation, business mediated international settlement agreements, and then also, of course, judgments as well. So that’s sort of where we are.
The other thing that I think is worth noting in addition to this is the proliferation of what you might call global commercial courts. Everyone thinks of the Delaware courts or the London Commercial courts as really, really the benchmark for this. But there actually are these international commercial courts, Singapore being the most prominent one that are coming on the scene, but in addition in Dubai, Qatar, Abu Dhabi. Paris in 2018 has a special commercial court for international disputes.
So in addition to all of the sort of new treaties, there’s also emerging sort of transnational, international, global commercial courts that is vying basically for business. So I think all of this is a positive trend for the increased likelihood of enforcement of mediation and not just arbitration but mediation and also litigation. So that’s sort of broadly the landscape.
Harout J. Samra: And thanks for that, Professor Alford. And actually, your point on the New York Convention’s well-taken. I think it’s been a part of this broader acceptance of international arbitration certainly since it was initially signed decades ago. To a degree—and I’d like to turn it over to Mr. Birnberg, to Gary—there’s a bit of a reluctance today in many sort of parts of the world to adopt mediation. And I think it’s important maybe before we get into the substance of the convention just to talk about how mediation is viewed.
We here in the U.S., of course, view it as kind of an everyday part of our mitigation practices. But that isn’t really it’s position in many jurisdictions around the world. And do you perceive at all a reluctance, particularly in terms of these transnational or international commercial disputes -- a reluctance to engage in mediation?
Gary Birnberg: Thank you, Harout, for the question and if I may take the opportunity before I answer to thank you for your kind introduction and to thank The Federalist Society for the kind invitation to speak here today, particularly in the company of such knowledgeable and respect colleagues, Roger and Mushegh. So to address your question, Harout, I think that there is certainly resistance to mediation. And it’s not necessarily centered in specific pockets of the world. I think there’s a general resistance to mediation.
And one of the reasons why there is this resistance is that in the cross-border -- in terms of cross-border disputes arbitration has worked so well for so many years. I’d like to mention that it took some time to get a level of close to universal adherence to the New York Convention. But over the last 20 years or so, the arbitration has been the game, not just the name of the game. It’s been the game in terms of dispute resolution -- cross-border dispute resolution. And it has encouraged along the way global trade, economic development, and direct foreign investment.
But there are two problems that we’re confronting now. The first one actually is more of an endemic problem and that being the mindset of arbitration works. We have the New York Convention. If it ain’t broke, don’t fix it. So the problem with that is that that’s total fallacy, as we know in these days of continuous improvement. The question that we should be asking—and we need to remind ourselves to ask this question continually—is what can we do to encourage, develop, and evolve systems that respond to and anticipate client need as well as encourage societal economic development and access to justice? So that’s number one. Okay?
We have to keep reminding ourselves of that. The second thing -- which means implicitly that arbitration isn’t necessarily the only answer or the best answer in all cases. But secondly, there’s another problem which has been emerging, particularly, I would say over the course of the last 10 years, and especially in the last 10 years, is that cross-border arbitration is loosing some of the realization of its full promise. Arbitrations promise is—particularly in cross-border arbitration—is access to unbiased, quick, and economical justice. The unbiased part, it’s working pretty well. That I support fully. But arbitrations are being dragged out and as such becoming much more expensive as well.
So where we’re seeing an opening for something like mediation to come in and to have greater acceptance on a global cross-border basis is the -- based on the failure of arbitration to continue to respond fully to these needs. Mediation, of course, is much less expensive and a much quicker alternative. Even in the best of situations, even in the most efficient arbitrations, mediation’s going to be a lot quicker and a lot more economical.
So that being said, there is, as you indicated, Harout, some, what shall we call it, asymmetrical use of mediation. The common law jurisdictions traditionally have been leaders in mediation. For me, I believe that that partially reflects the common law bias that the law is a constantly evolving instrument, whereas, in civil law, essentially if it’s not in the legislation it doesn’t exist. So it’s very hard for systems -- for legal systems to embrace mediation in civil law jurisdictions where it is not specified as a condoned alternative.
That being said, a number of civil law jurisdictions have instituted laws mandating mediation. Over the last years, Italy, Argentina, Brazil, and Turkey are among them. Another aspect in terms of, shall we say, asymmetrical acceptance is a cultural question, a question of formalism, shall we say.
And the example that I like to use for this is the Netherlands. The Netherlands very much like common law jurisdictions, has a very advanced mediation practice. And I believe it’s a reflection of their culture and attitude, first of all their culture. The Netherlands has been a crossroads for trade for centuries and centuries. They are used to adapting.
I remember I once had a conversation with a Dutch friend of mine. I asked him how is it that Dutch people speak so many languages. And his response was, “Well, we’re a small country. We’re a trading country. If we didn’t learn a lot of languages, we’d have nobody to talk to, and we’d have nobody to do business with.”
So this is a bit of a reflection for me of a practical approach to problem solving, like we Americans have and the Canadians have and the Australians. We have a challenge. Let’s fix it. Let’s do what’s most practical. Let’s do it in the most practical way. And the Dutch have embraced mediation as being a practical way to address problems.
That being said, we have a general challenge, as well, in terms of mediation. And that is we, the legal profession. We, in general, both in the United States and abroad -- and by the way, I do point to the United States as being a jurisdiction that has not fully embraced mediation. We do it a lot, but we do not do it as well as we could do it. And the reason for that -- a big reason for that in my estimation is that the art of mediation is not in the training or the vocabulary of lawyers.
We as lawyers are trained to operate in a zero-sum arena, and our business models create, in fact, a perverse incentive to drag conflicts out for as long as possible. Now, forgive me, I’m talking about the billing-by-hour practice specifically. And in fact, I’ve done some writing on this, but there are ways to tune the legal business model here in the United States so that mediation can become highly lucrative for lawyers and for law firms. And I believe that this can make a difference and will make a difference not only in the better use and further use of mediation in the United States but with American companies involved in cross-border disputes as well.
Harout J. Samra: Yeah. And thank you for that, Gary. So now that we’ve set the table and talked a little bit about the broader framework for international disputes, the different options that parties to these kinds of international transactions have, as well as—thanks to Gary’s contribution, as well—a little bit of an understanding about the cultural and legal acceptance of mediation in different jurisdictions, I think it’s a good time to jump into the actual convention itself and talk a little bit about its background, where we are today, what its status is. And then after that, we’ll talk a little about some of the key provisions and what it means substantively. But for the initial overview, I’d like to ask Mushegh to offer us some thoughts.
Mushegh Manukyan: Happy to do it, Harout, and thank you for inviting me and thank you to The Federalist Society for having me today to talk about the topic that I’m most passionate about: mediation. So in terms of just to give a background of the Singapore Convention, as you know, it started in 2014 within the UNCITRAL Working Group II. And in fact, the U.S. delegate, Tim Schnabel, [inaudible 19:55] at that time he proposed -- and hopefully he’s now part of this meeting. He told me that he would try to make it.
So he proposed and then it actually moved to become a huge project since 2014. And it took about four years to negotiate. And as you can imagine, as any convention within the UN or any other committee, it takes years and years to negotiate. And the countries have negotiated about four years. And in 2018, December -- I think 20th of December 2018, the UN general assembly adopted the Singapore Convention.
And in fact not only was it the convention that was adopted but also the model law on international commercial mediation. That model law actual amended the model law that was before this convention, which was the Model Law on International Commercial Conciliation, which was adopted in 2002. So there were two instruments as a result of this project which lasted four years.
And eventually, the Singapore Convention was open for signature on the 1st of August 2019. And the opening ceremony took place on the 7th of August 2019. So basically at this point now we have about 52 states, I believe, who signed the convention, some of which they signed at the opening ceremony on the 7th of August. Some of them also joined later on.
And at this point, it’s good to report that we have now the three states who have actually ratified the convention. And one is Fiji. The other one is Singapore, and the final state who ratified was Qatar, which ratified on the 12th of March 2020. And in fact, the convention says that it will enter into force six months after the deposit of the third instrument of ratification acceptance or approval. And in fact, we have already three, which means the Singapore Convention will come into effect on the 12th of September of this year, which is good news because, at the time, when more than 40 states had joined, people were kind of skeptical whether it will follow ratification or the true law. And it’s good to report that now we have the three required ratifications and then the convention will enter into force.
Last but not least about the convention and how it works is that I want to mention the mechanisms of reservations. And two nations have made reservations. One is Iran, and one is Belarus. And we will talk a little bit more about the topic of reservation if there’s a need for that.
But I want to just highlight that the convention allows these states to make a reservation that they will not apply the convention if a government, per se, is a party to the convention or a governmental entity. Also, there’s kind of a clause that allows the state to apply the convention if the parties themselves -- they put it into their agreement that they want to apply the Singapore Convention. So Iran is in -- has made quite bold reservation to that extent. And it said that they will apply the convention only to the extent that the parties have agreed to apply it.
And of course, Iran has made clear they will not apply the convention if Iran -- the government of Iran is part of it, or governmental agency is part of the settlement agreement. Of course, they have made a couple of other kind of tweaks to their reservation, but I don’t want to get into that. But also Belarus has made a reservation and said that they will not apply the convention if Belarus’ government is party to the settlement agreement resulting from mediation or the governmental agency is part of the convention.
So in both sense, we have a convention right now, which will enter into force in September of this year, which will regulate the settlement agreements resolving of mediation. And hopefully later on in this discussion we’ll discuss what does this mean and what is the scope of the convention and what type of settlement agreement are caveats of the convention.
Harout J. Samra: And thank you, Mushegh. And later on is now, so I actually was going to ask Gary to talk a little bit about kind of the substantive terms of the convention and what this means when we talk about more readily enforceable settlement agreements arising from mediation.
Gary Birnberg: Mushegh, maybe you’d like to continue on this?
Mushegh Manukyan: Yeah. Happy to do it, and then, Gary, you can chime in. So in terms of the scope of the convention, I’m happy to lay out just the general features of the convention. So there’s several things that I want to highlight. One is that the convention itself -- it applies to the international settlement agreements resolving from mediation. And there’s a definition -- what does it mean, mediation? And of course, international settlement agreements, they are not completely defined in the convention itself.
But it’s meant to be very broad. One thing that I want to mention is that how it’s defined -- it’s very similar to the Vienna Convention, the CISG Convention. And people who do international transactions, they will be familiar with the language that is used in the CISG. A similar language is used in the Singapore Convention.
It says if the two parties that have a different place of business in different countries then the convention will apply. Or if the place of businesses is different from one another and it’s a substantial part of the obligation under the settlement agreement is performed in another country, then the convention will apply. And, of course, the final one is the subject matter of the settlement agreement is most closely connected with another country. Then again the convention will apply.
And, of course, you can recognize that those terms are using the context of a private international law or the conflict of laws, and those most closely connection will be, of course, determined by the rules of the conflict of law private international depending where you are. But I also want to mention that the convention will not apply to personal, family, or household purpose of transaction, employment. It will not apply to that. And also, it will not apply if the settlement has been -- was the result of a settlement that was approved by the court and is enforceable as a judgment.
So you may have a settlement agreement that is resulting from mediation. But if it’s approved by the court and it’s enforceable as a judgment, then it likely will fall out of the scope of the convention. Of course, there are a couple of other things that we can discuss in terms of the -- in terms of whether, for example, whether the investor state disputes are covered, but it’s probably a topic of a later discussion.
But just general terms, if you have a settlement agreement, it is international, it is commercial, and it resolves from mediation, then technically it should be covered by the convention. And then you can be easily -- you will be able to easily enforce it in another member state.
Harout J. Samra: And just to understand the context a little bit, Mushegh, prior to the convention coming into force, what process would a party have to undergo in order to enforce a settlement agreement?
Mushegh Manukyan: Sure. That’s a very good question that you’re asking, Harout, because that was one of the disadvantages of mediation when lawyers or parties were thinking about mediation because the question that you would have is what happens if the other party does not comply with that agreement -- with the settlement agreement? What you have to do at that point, you will have to enforce it as a normal contract. You will have to go to the court and claim there was a breech of the contract if the party does not want to comply and then enforce it as a contract, which means potentially it would be another dispute between the parties.
Now, it’s a completely different situation. What it will mean then -- how it will work in practical terms that you will approach a competent authority of that particular stage when you want to enforce, and you will provide the settlement agreement signed by the parties. And in fact, the convention says that you don’t necessarily need to physically sign the agreement. You can actually sign in other -- by other means as well, including electronic means.
And of course, you provide the settlement agreement, and you need to provide evidence that the agreement resulted from mediation. And the convention also specifies how you can do that, and that’s enough. You need to only prove that there’s a settlement agreement and it has resulted from mediation. And that will be enforced by the competent authority, and you don’t need to go into another litigation.
Harout J. Samra: Right. And we’ve talked a little bit -- and I know Professor Alford mentioned the Hague Judgments Convention, which, as I understand it, has not been as widely accepted or adopted as the Singapore Convention, even pre-entry into force. So to a degree, what a consequence of this may be is if a settlement agreement that is not reduced to a judgment by the court actually is more enforceable than a settlement agreement that has been reduced into a judgment.
Mushegh Manukyan: That’s absolutely right, Harout. And I think probably the presumption is, if it’s approved by the court, there will be another international instrument, which is the Hague Convention or maybe some other convention that will provide some tools to enforce it. But if it’s a result of a mediation and has no other tool like an approval by the court or approval by the arbitral tribunal which can be enforced later through the New York Convention, then you have now the Singapore Convention, which gives us, the lawyers and the parties, an excellent justification to say why it is important to mediate and what would happen if there’s no settlement agreement. Or if there is a settlement agreement, then you can easily enforce it without going to another litigation.
Harout J. Samra: Right. I know -- Professor Alford, I don’t know if you want to talk just for a moment about the Hague Judgments Convention, maybe give us some context because we talked a little bit about the New York Convention. And you did introduce these things at the beginning, but what seems to be happening is there’s a bit of an ecosystem that’s being created for all of the different avenues that you’ve introduced at the beginning of today’s program.
Prof. Roger Alford: Yeah. So the Hague Judgments Convention has been in negotiations literally for decades. It’s almost shocking how long it has been subject to negotiation. And finally, they did come to an agreement in July in the Hague to sign this. Right now, there’s only, I think, two signatories. But the actual drafting of it was very, very broad in terms of the number of countries that were willing to draft it. I think the likelihood of it getting more widespread support is likely, but it will take time. It will take a lot of time.
Currently, most foreign judgments are enforced through sort of a patchwork of laws rather than having a treaty. So that patchwork of laws provides less certainty than one would want under, say, the New York Convention. The other great exception to that, of course, is in Europe under the sort of EU regulations where there’s, essentially, the equivalent of full-faith-in-credit recognition within Europe for sister European judgments. But beyond that, there’s just this patchwork of laws. Even in the United States, the enforcement of foreign judgments surprisingly is governed by state law, not by federal law. And there’s this uniform law that a lot of states have adopted -- I think almost half the states have adopted for enforcement foreign money judgments.
So the goal of the Hague Judgments Convention is to sort of provide that sort of uniformity. But I do think that it’s going to take a long time. And I should add there’s a lot of reservations about certain kinds of disputes that are simply not capable of enforcement under the Hague Judgments Convention. So that’s sort of the distinction between the Hague Judgments Convention and the Singapore Convention.
If I can sort of speak to the issue of the likely sort of impact on the Singapore Convention on both -- not just mediation but also arbitration and litigation, transnational litigation, I think that there is likely to be increased reliance on mediation, I think, as a result of the Singapore Convention and particularly mediation that is in so called med-arb clauses, right? There’s a mediation first, and then, if there’s not a solution under the mediation, then there’s an arbitration. So you potentially have a situation where, with a med-arb clause, you could have a mediation.
If it’s successful and it’s a mediated commercial settlement agreement, then you could enforce that in any other signatory country. If it’s not successful, then you can go straight to arbitration and have it enforced under the New York Convention. And I would imagine that, Singapore always being sort of ahead of the game compared to many other countries, I think it’s going to be likely -- quite likely that a lot of parties are going to say “Let’s have arbitration with the seat of the arbitration in Singapore, and let’s have the med-arb clause be so that we’ll have a mediation occur in Singapore. That way, if we have the mediation in Singapore and if we have the arbitration in Singapore and we get a successful mediation, then we can very, very quickly enforce that mediated settlement agreement in Singapore courts. And if we happen not to be successful, then we can use the Singapore system for one of the leading places in arbitration in Singapore, as well.”
So I think that’s -- and I think once countries see that Singapore is going to be attractive for parties, that will create an incentive for other countries to sign on and ratify the Singapore Convention. Because in the end, you can have a much higher rate of degree of certainty where you combine mediation with arbitration, I think, and do it in a way that you know that there’s a great likelihood of enforcement.
I also wanted to ask the question—and I would be curious, Gary, if you have thoughts on this—but I think there might be a new role for mediation as a result of the Singapore Convention. Because if you have essentially mediated settlements that are not enforceable under the Singapore Convention but ones that are mediated are enforceable, then you might not just have meditators that are facilitative or evaluative, which is the two traditional roles for mediators.
I wonder if there’s a possibility of third new type of mediation. And that would be sort of what you might call a notarial mediation where, essentially, there’s been massive amounts of negotiation, but you want -- and you pretty much have resolved all of the disputes, but you want the mediator to wrap a bow around it and basically say, “Yeah, we want to sort of present to the mediator this is our thinking, this is what we want to do. Can you basically notarize the fact that we are, in fact, doing a mediated settlement agreement?” And I’m curious if that’s a possible sort of new way for mediators to have a function because then negotiation could very, very quickly become mediated settlement through that role of a mediator.
Gary Birnberg: So a quasi-consent decree mediation settlement is what you’re thinking more.
Prof. Roger Alford: That’s the question.
Gary Birnberg: Yeah. Yeah. I think one of the great beauties of mediation is its flexibility, both in form and in function. So my response to that is why not? If it works, we do it. Again, one of the great advantages of mediation is that there aren’t a lot of rules. There’s confidentiality, which can be defined -- well, there are general thoughts about what confidentiality does and best practices in mediation. Neutrality -- so why not? I think that’s a great idea, Roger.
Mushegh Manukyan: One thing I want to mention, Roger, to your question, we had exactly the same problem in Armenia when we passed the laws. And according to the law, the mediator -- if it’s approved by the mediator -- if the settlement agreement is approved, then within six months as a party you can actually bring that settlement agreement to the judge. And the judge does not need to ask any other questions like why the settlement agreement is presented to me. He just needs to approve, and it will become a judgment.
So what happened after passing the law, there were a couple of mediators who became, as you were describing, kind of a notary type mediators who were just approving the mediation settlement agreements without even conducting mediation. And that has become a huge problem in the country because judges were trying to call me and some other people saying, “I don’t feel comfortable just giving this as an enforce of the judgment if the mediation has not been carried out.” That was a very kind of challenging situation.
That context, when we look at the Singapore Convention, I think that there’s a definition of a mediation that you can use. It says it’s a process, irrespective of these prescient views or the basis upon which the process is carried out, whereby it’s only the parties’ attempt to reach an amicable settlement of the dispute with the help of the third party. So it doesn’t require the parties to be in extensive negotiation in mediation. So you’re absolutely right. In that context, that could create another dynamics of mediation and potentially a new type of mediation where you will have people just approving it for the purpose of the enforcement.
Gary Birnberg: I’d like to go back, if I may to another comment that you made, Roger, just a moment ago about utilization of mediation growing through the use of step causes. What I’ve been seeing, as a practitioner, are a lot of cases in which the parties simply choose to go to mediation despite its absence from dispute resolution clauses in the governing contracts. I had one very notable cross-border dispute last year, quite a large one, hundreds of millions of dollars at stake, in which there was some doubt whether the arbitration clause would have effect.
So the parties decided, “Well, why don’t we give mediation a try rather than to start fighting out the details of which direction this will go in?” And it turned out actually quite fortunate for the parties because they avoided what -- regardless of whether it was in arbitration or litigation, the dispute certainly would have lasted for five to ten years had it not been settled in five days of mediation. So I think that there are a lot of practitioners and businesspeople who just have their eyes on mediation and will jump at the opportunity, particularly now with the notoriety of mediation rising thanks to the function of the Singapore Convention.
Harout J. Samra: I thank you all for these thoughts. I think this is exactly right. Overall, we are, I think, going to see this kind of movement. At least it’s anticipated. Maybe, Gary, one question in addition.
In addition to the different kinds of mediation where -- Roger’s point is well taken. What we’re going to have is parties seeking out sort of the informata of the mediator to elevate their agreement and to make it fall under the convention potentially. And I think that that is likely. But, Gary, as well, do you anticipate maybe sort of mediation moving also into maybe the pre-dispute phase where people are looking for sort of that perspective or the facilitative or evaluative feedback, understanding that, if they ultimately do reach an agreement at that stage, they can avoid the dispute but have something that is just as readily enforceable?
Gary Birnberg: Harout, have you been reading my blog? That’s a great question. That’s a great question. No, I think that it’s very much a tendency that we will see and that should continue. And when I was mentioning earlier in my first part of the conversation today that mediation is underutilized here in the United States, this is one area in which it is sorely underutilized. Preventative mediation, asymptomatic mediation, among the situations in which I’ve used mediation is a question of -- in the area of mergers and acquisitions.
I’ve served as a reserve -- you could call it reserve mediator during the course of negotiations between companies to make sure that -- to be able to put the train back on the tracks should it start to fall off the tracks. So if I see something that looks like it could create a conflict, that looks like it could be an impediment in the consummation of the agreement, I would step in and have a -- and perform a type of mediatory resolution to make sure that -- to get the train back on the track. So certainly, certainly.
And again, one of the beauties of mediation is, if a case is not -- a case is rarely unripe for mediation. When people ask me, “When should we mediate?” if it’s a voluntary question, I say, “Early and often.” Very often, as well, even if there is a dispute which is ready, which is pronounced, an initial mediation may just set the stage for an eventual settlement a couple of weeks later, a couple of months later. So certainly there’s a lot of space for early mediation, early intervention, and asymptomatic intervention via mediation.
Harout J. Samra: And for those who thought that they could join today’s call to avoid hearing the word asymptomatic, I apologize in advance. But it’s a part of all of our vocabularies these days, I suspect.
Gary Birnberg: Forgive me.
Greg Walsh: So we’ll go to our first caller.
Caller 1: Yes, hello. The voice of New Hampshire Conservative here. I’m thinking that -- this is all very new to me, and I am very protective of common law and protective of the balance of powers and so forth. If a United States judge is asked to rule on enforcement, that would imply that the party that needs to be enforced is perhaps not agreeing, as you say, at mediation even though he has signed to it.
So would that judge, using his brain to make law -- would he be operating outside of all that he is trained to think of as law? Like an analogy that once our military is in NATO, which of course I don’t approve of, it means that Section 8 courts or everything sort of goes out the window, and how is a congressperson supposed to relate to those decisions that have been made elsewhere, really outside of the body of known behavior. I hope everyone understood me.
Harout J. Samra: Yeah. Thank you for that question. Just with an initial matter and maybe, Professor Alford, I don’t know if you’re the right person, but the convention doesn’t compel parties, per se, to participate in the mediation. Rather it’s generally either an obligation that they’ve already agreed to in a contract or some agreement. Or it’s a process that they’re actually voluntarily participating in and ultimately coming to some voluntary settlement agreement that then this provides a mechanism to enforce. Professor Alford, I don’t know if you have any other thoughts from the perspective of U.S. courts enforcing these kinds of agreements.
Prof. Roger Alford: Yes, I agree, Greg, with basically what you just said. The mediated settlement means that the parties, through the use of a mediator, mutually agree to resolve the dispute. So then they have a settlement agreement. And then presumably the scenario that is envisioned by the question is that, in the course of the enforcement of that settlement agreement, there is a dispute that arises out of that settlement agreement. And then the parties are trying to basically force the non-complying party to the settlement agreement to basically accept the terms.
And then the question is, okay, how do they go about doing that, right? I think the Singapore Convention simply says under Article III that each party to the convention shall enforce the settlement agreement in accordance with its rules and procedure and under the conditions laid down in the convention. So each country is going to have its own procedure rules for precisely how they enforce it.
And really what the Singapore Convention says simply is, if the dispute arises concerning a matter that has been resolved by the settlement agreement -- say, for example, there’s a price clause in the settlement agreement and it is subject to a consumer price index. And the question is whether or not there should be an upcharge on the thing. Well, if the settlement agreement says there’s a CPI up-charged based on an index, that should resolve the question. There doesn’t have to be new litigation about the question because a settlement agreement clearly answers that question.
So I think I don’t view it as in any way really an encroachment on the role of the courts or the role of arbitrators. It simply provides a new higher level of enforcement beyond just the normal contract law enforcement. That would be my view on it. I don’t know if others have thoughts.
Harout J. Samra: Gary or Mushegh if you have any comments?
Gary Birnberg: A couple of quick comments. It’s higher enforcement, but it’s also more efficient enforcement as well. And to the extent that it encroaches on parties’ rights, we have to remember that we’re looking to enforce agreements that were arrived at in mediation. And part of the definition of mediation is that the parties that enter therein are not obliged to come to an agreement, so we wouldn’t be having this conversation if weren’t for the fact that there was an underlying agreement that came out of mediation.
Now, one curious thing, if I can just take a second to point out something that I think is interesting. A lot of people have criticized the Singapore Convention as being a solution in search of a problem and for that very reason that I just mentioned. Why are we so worried about resolving -- or about enforcing agreements that were come to voluntarily? And we get into a bit of a chicken and the egg conversation. We can take this conversation on at some other point in time. But the bottom line is it is, at the very least, as Professor Alford said, a higher level and an efficiency play.
Harout J. Samra: Thank you. Mushegh, do you have any thoughts on this?
Mushegh Manukyan: No, I’m good. I think that provides a good summary on the topic.
Harout J. Samra: Okay. Great. So Greg, if there are other questions, please let them jump in. Otherwise, I’m going to continue to talk a little bit about some of the challenges that I think our panel of experts anticipate looking forward. If I can ask maybe Mushegh or Gary maybe just to talk about sort of the level of expertise among international mediators and whether training is going to be an issue in the near future.
Mushegh Manukyan: Yeah. I’m happy to take it in terms of just what I see now. I think we probably need to think about hopefully by September the COVID situation will become a bit better. Obviously, we don’t expect that it will go away given what we see at least in the U.S. and in many other countries. But let’s assume the situation will become better and what it will entail in terms of the training or whether the field is actually ready to embrace the Singapore Convention.
The biggest challenge, as I think Gary and Professor Alford noted, that for mediation has been the lack of cases. And even though we say mediation is wonderful, is great -- and it is, actually. If you have once tried and you had a successful mediation, then it’s just impossible you will go back to an adversarial proceedings, unless you are required to because there are certain cases you have to go there.
But assuming that you have enough cases and you have tools. If you’re a legislator, you can put together the system which we call opt-out systems. And assuming that you have all the systems that will incentivize the parties to move to mediation, then, again, it will be a challenge to, as we also spoke about—I think Professor Alford mentioned about Article III—what are the differences to implement the Singapore Convention? This will be one of the challenges of the implementation because it may be the case that Iran would have completely different rules on the implementation of the Singapore Convention versus the United States.
You may have a settlement agreement resulting from mediation that will comply by the U.S. rules. And then you will take it to Iran and implement or Belarus or some other state, and we’ll see some more reservations come out. And then you will not be able to enforce it, or there will be some challenges because of the reservations made. So I see that that will be a challenge, what type of rules the states will implement to implement the Singapore Convention.
Another challenge as you rightly noted, Harout, it could be the training and how mediators understand certain provisions. I want to give one example, then I will pass it over to Gary. One ground to incline the enforcement of the settlement agreement by the states is what we call the receivers breech. It is Article -- sub-article E of the Singapore Convention, which says if the mediator has committed a serious breech of a standard applicable to the mediator or the mediation, without which the breech that the party would not have entered into settlement agreement -- that is a ground to decline the enforcement.
And of course, a natural question that comes up, what does this mean, a serious breech? What kind of standards will be applicable to the mediator or mediation because two are relevant here? And of course, we know that if you are practicing in international mediation that could be many standards and we can expect that as Singapore Convention gets more traction than you will get more standards and more rules that are applicable to mediator and mediation. And the conflicts are inevitable there, as well.
So it may be the case that one authority or one court of the national -- of one state will determine that it’s a serious breech and, therefore, they will refuse the enforcement. But another state would say no, it is not a serious breech. So those kind of things we’ll see. And I think we have talked already about this that the practice that was in place in terms of international law will question some of the language or some of the practice we can use also in relation to the Singapore Convention. The same is applicable to Vienna Convention, and we have already what does this mean “place of business?” What does this mean “most closely connected?” Those type of things we can leverage from other estimates -- from other practices. Over to you, Gary.
Gary Birnberg: Yeah. I fully embrace everything that Mushegh stated, well-articulated. I think we’ve got to look at this very broadly. One of the threshold -- in fact, the threshold issue that we have to look at in terms of the dissemination of the practice is information dissemination. Both the legal community and businesses have to know the what, why, and how of mediation.
And it’s somewhat shocking to me in my travels and experiences how few people know the why of mediation in terms of there are a number of things which are always mentioned as to the why: speed, economy, and autonomy -- party autonomy. The parties to the conflict come up with their own decision rather than depending on a third-party judge or arbitrator to make the decision for them. There are also other factors which are really important: risk management, predictability, a number of things which are very important in the business plane.
But we have to make sure that, again, our lawyers and our businesspeople understand this, that lawyers be equipped not only to develop into mediators themselves to the extent that they may want to. But they have to be equipped to mediation advocacy. How do you act when you’re representing a party in mediation? It’s not the same thing as going into court. It’s very, very different. As a legal community, we have to equip ourselves to provide ourselves with training that will put us in a position to represent clients in mediation. So training not just of mediators but also of advocates of mediation is really important.
One thing that Mushegh mentioned that I thought is quite true and I can’t second enthusiastically enough is once a party has a successful experience in mediation they’ll never want to go back to anything else. But the converse is also true. If they’ve had a bad experience, they’re never going to want to go back to it. We’ve got to be very careful about this training thing and make sure that we have competent practitioners as mediators out in the field.
I have to say in all candor that there are currently -- in the United States, there is a profusion of mediocre mediators plying their trade. And I don’t mean to be ungracious in this comment. But it’s something we have to be aware of.
And when we choose mediators for our cases, be they cross-border or otherwise, we have to do it with great care, make sure that they’re well-trained, make sure, to the extent possible, that they have deep experience in mediation, which is a problem when you’re expanding the market and going into new jurisdictions where mediation has not existed before because there’s this chicken and the egg thing. How do you develop the skill and the experience if you’re starting from zero?
Harout J. Samra: Right. And thank you for that Gary. It may be even just the question of mediation really being prized for perhaps even jurisdictions where it hasn’t happened but places where there is even to a degree a little bit of a prejudice towards it. So Greg, unless there are questions, we’ve got about a minute or two and maybe if I could just ask the speakers to give just a 30 second final thought if they have one. And maybe, Professor Alford, I don’t know if you want to kick that off.
Prof. Roger Alford: Yeah. I don’t really have any major comments. I think it’s going to be one of those things we just have to watch this space and see what happens. It’s coming into force in September. And three countries have signed on. It will be very interesting to see where we are in five years. So I think it’s going to be one of those things that we should monitor. It’s not going to change the landscape immediately. But I think if you look at it on an incremental basis I think it’ll be significant.
Harout J. Samra: Mm-hmm. Gary?
Gary Birnberg: The landscape had already started to tilt before the Singapore Convention. For the last ten years or so, we’ve been talking about step clauses. The arbitration community has been embracing the possibility of mediation. We’ve been opening our eyes more to it over this time. As Professor Alford said, the Singapore Convention will be another piece in that puzzle. It is the future. Mediation cross-border disputes is the future. The question is how quickly we’re going to get there.
I encourage you all to engage in this conversation because it’s a very important conversation. And to the extent that any of you want to reach out to me, I’m happy to be a resource. Ask to befriend me on LinkedIn and just say you were part of this conference. I’ll be happy to work as a resource, as I’m sure my colleagues would be as well and happy to do more events like this one.
Harout J. Samra: Thank you, Gary. And Mushegh, lastly?
Mushegh Manukyan: On this very positive note that I fully agree with Gary that mediation is the future. I want to make the very last observation and just express my hope that the Singapore Convention will increase the number of mediations. Even if not, it will definitely make a bit more impact on international arbitration. And by that, I mean I hope it will become a bit more efficient because if you see that a high-end process, which is mediation now -- it’s becoming on the same foot like arbitration was before.
Now, you can see efficient as it is, it kind of incentivizes you as an arbitration practitioner or as an arbitrator to think about mediation, to think about what I can do more to respond to the needs of the future. And as Gary said, that’s the future so I think it will also significantly impact not maybe tomorrow but the day after the arbitration practice, maybe merging, maybe just creating new opportunities arbitrators and arbitration counsel. But I’m very hopeful that it will make it more efficient.
Harout J. Samra: Thank you, Mushegh. And on behalf of the International & National Security practice group, which is sponsoring today’s teleforum, I want to thank our really exceptional panel for this very vibrant and interesting discussion on the Singapore Convention. And maybe just to close with Professor Alford’s word: watch this space. This is an area where we’re going to see a lot of development. Greg, back to you.
Greg Walsh: Thank you. On behalf of The Federalist Society, I want to thank our experts for the benefit of their valuable time and expertise today. We welcome listener feedback by email at firstname.lastname@example.org. Thank you all for joining us. We are adjourned.
Dean Reuter: Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.