Answering The Call For A New York Convention On Conciliation

telefonAlternative methods of dispute resolution are a topic on the legislative agendas of a large number of countries as states actively work to promote their use. A reoccurring issue related to the spread of alternative dispute resolution (ADR) mechanisms is enforceability, of both the mediation/conciliation clause and the settlement arising thereof.

In light of the above efforts, the 47th Session of United Nations Commission on International Trade Law (UNCITRAL) called upon its Working Group (WG) II to create an instrument on the enforcement of international commercial settlement agreements resulting from conciliation/mediation.

The pursuit of such an instrument is motivated by the call for placing settlement agreements reached via conciliation/mediation on an equal footing as arbitral awards in order to promote the use of international conciliation/mediation.

At its 65th session, the WG II continued its works on the preparation of an instrument on the enforcement of international commercial settlement agreements resulting from conciliation. This article reports on the progress made during the latest session of the WG II.

Uncertainty as to enforceability

Although referred to as a New York Convention for Conciliation, the proposed instrument addressing the enforceability of conciliated settlement agreements is a completely different creature. Conciliated settlement agreements are not arbitral awards nor court judgements, they are according to the majority of states a contract entered into voluntarily by both parties with the assistance of a third party neutral (the conciliator/mediator).

Therefore, as contracts their enforcement is currently dependent on the national laws of the enforcing state. The proposed instrument aims to facilitate the enforcement of such contracts when they result from international commercial conciliation through creating uniformity. However, no consensus has been reached regarding the form of the proposed instrument: a model law or convention.

This uncertainty is surprising, as there is a clear call from the potential users of the proposed instrument, which includes both mediators and the parties to settlement agreements, for a convention that provides certainty as to the enforceability of conciliated settlement agreements. Furthermore, the WG II has proposed that the instrument cannot be relied upon if the settlement agreement has been recorded in an arbitral award or a court judgement.

Thus, commercial parties might opt to simply transform their settlement into an arbitral award in order to benefit from the established framework of the New York Convention instead of navigating the uncertain waters that currently persist in relation to settlement agreements.

Limited application

The above prediction is strengthened in light of the limited scope of the proposed instrument, its form requirements, and extensive defences. The proposed instrument only applies to the enforcement of commercial settlement agreements resulting from international conciliation. Hence, disputes relating to family, consumer, employment, inheritance, etc. fall outside its scope.

Evidently, only commercial parties that carry on activity outside in different places of business can benefit from the proposed instrument. Moreover, a party seeking the enforcement of a settlement agreement under the proposed instrument must comply with form requirements that are at times more extensive than the form requirements of a simple contract.

It seems that in answering the call for a New York Convention on conciliation, the response has not been what the users of conciliation had hoped for, namely a suitable framework. Instead, in its current wording, the proposed instrument will not promote the use of conciliation as the parties will find it hard to comply with.

A convention that applies to settlement agreements with few form requirements and limited defences is what is needed in light of the high level of party compliance with settlement agreements. There is a need for a convention that provides parties sceptical of conciliation the security of enforceability.

Written by Maryam Salehijam.

Image ©Winnie Schwarz, 2016.

maryam-profile

 

Maryam Salehijam is a PhD Student at the University of Ghent (Transnational Law Centre). She obtained her LLM in International Laws and her LLB in European Law from Maastricht University.

 

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Categories: ADR, arbitration, conciliation, mediation

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2 replies

Trackbacks

  1. Workshop On The Implementation Of The Mediation Directive – Global Pound Conference Blog
  2. Is The Enforceability Of Mediated Settlements Holding Back Commercial Dispute Resolution? – Global Pound Conference Blog

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