Link Singapore Convention with PRC legal system

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The final draft of the Singapore Convention on Mediation was approved on 27 June 2018 at the 51st Session of the United Nations Commission on International Trade Law (UNCITRAL), which is designed to promote international commercial mediation and establish a set of mechanisms for direct enforcement of international commercial settlement agreements resulting from mediation. This landmark document in the history of mediation development is as significant in the mediation field as the New York Convention is in the arbitration field.

The Singapore Convention on Mediation was open for signatures by member states on 7 August 2019. China needs to make appropriate adjustments to its current legal system to gear it to the convention. This article discusses the possible challenges in the face of implementation of the Singapore Convention on Mediation in China, and offers possible solutions.

Expediting legislation on commercial mediation. The Singapore Convention on Mediation addresses enforcement of settlement agreements resulting from mediation, but does not provide for the mediation procedures. For this reason, whether this convention can be effectively implemented in member states relies on the national legislation.

At the international level, mature legal rules on international commercial mediation have come into being after years of development. The most representative is the UNCITRAL Model Law on International Commercial Conciliation, which provides for the basic problems in commercial mediation in detail. China is still on its way to establishment of a legislation system for commercial mediation. Therefore, China should learn from the Model Law on International Commercial Conciliation for systematic construction of the legal system for commercial mediation.

Understanding and application of articles. In order to gain wide support, UNCITRAL made a compromise, or drafted some provisions vaguely, in drafting the Singapore Convention on Mediation. In China, these articles will need further clarification from the Supreme People’s Court in the form of judicial interpretation.

For example, article 1 of the convention stipulates that the convention is applicable to the entire settlement agreement without differentiating pecuniary obligations from non-pecuniary ones. In practice, however, a settlement agreement generally contains non-pecuniary obligations, or contains mutual obligations of the parties for each other. Say, if it is difficult to enforce the non-pecuniary obligation of one party (e.g., for the delivery of a famous painting), will the court enforce the corresponding pecuniary obligation of the other party? In this regard, the Supreme People’s Court should offer guidance.

For another example, the Singapore Convention on Mediation provides “not clear or comprehensible” settlement agreement as one of the defences but leaves a decision of “not clear or comprehensible” agreement to the courts of member states. In this regard, the Supreme People’s Court should lay down uniform criteria for courts of different regions at all levels.

Appointing a specialized division of the court to hear and ascertain the content of settlement agreements. Operative laws of China provide that the effective legal document that a party concerned applies to the court for enforcement must contain specific subjects of rights and obligations, and performance content. In practice, however, a large number of settlement agreements will become unenforceable in China if the arrangements of the direct enforcement mechanism, as provided in the Singapore Convention on Mediation, are applied.

Therefore, it is necessary that the Supreme People’s Court appoints an adjudicatory division dedicated to ascertaining the settlement agreements where the content, as the enforcement division decides, needs to be determined. The decision of the dedicated adjudicatory division will serve as the foundation for subsequent enforcement procedures.

Improving the provisions on management of false mediation. When the Singapore Convention on Mediation was approved, some legal professionals expressed their concerns on false mediation that may result from implementation of the convention in China. What is to be done if the parties concerned reach a settlement agreement through false mediation and attempt to initiate the enforcement procedure in China in accordance with the convention?

In response, on the one hand, the court may dismiss the claim by reference to article 112 of the Civil Procedure Law and impose a fine or other penalty in light of the seriousness of the circumstances. On the other hand, the parties concerned may be criminally punished by reference to the provisions of the Criminal Law on false litigation crime.

Setting up the annual report and escalation reporting systems. In order to help legal practitioners and parties concerned seeking remedies in accordance with the Singapore Convention on Mediation to understand the standards of judicial review and enforcement outcomes of Chinese courts, the Supreme People’s Court may set up “an annual report system for settlement agreement enforcement cases” and, by reference to the internal report system for judicial review of arbitration, apply the escalation reporting system to settlement agreements that the courts decide not to enforce. The courts should give the parties concerned the opportunity to fully voice their opinions in implementation of the escalation reporting system.

In conclusion, the Singapore Convention on Mediation will significantly drive forward development of the alternative dispute resolution mechanism. If China signs and ratifies the convention, it will improve and adjust the operative judicial system for better implementation of the convention in China.

Sun Wei is an arbitrator at the China International Economic and Trade Arbitration Commission (CIETAC), a partner at Zhong Lun Law Firm, and an observer representative of Work Group II of UNCITRAL