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Philippines signs the Singapore Convention on Mediation

Process for enforcing settlement agreements arising from mediation simplified as the Philippines signs the Singapore Convention on Mediation

Recent Developments

On 7 August 2019, the Philippines signed the United Nations Convention on International Settlement Agreements Resulting from Mediation, otherwise known as the "Singapore Convention on Mediation" (hereafter "Convention").  The Convention will take effect six months after it is acceded or ratified by three States.  The Philippines joins 45 other States that have signed the Convention.  The list of signatory States may be found here.

Practical Implications of the Philippines’ signature to the Convention

Presently, the enforcement process for cross-border settlement agreements is complex due to the involvement of more than one jurisdiction and possibility of multiple proceedings before the settlement agreement may be enforced.  For example, a party invoking a settlement agreement may be required to have it recognized in one jurisdiction first before enforcing it in another jurisdiction (i.e. where the assets are located).  The difficulty is compounded by the fact that each jurisdiction will have its own rules and procedure for enforcing the settlement agreement.  

Consequently, these proceedings may involve substantial time and costs, thereby delaying the ultimate remedy to the party seeking enforcement.  These potential enforcement issues may discourage parties from agreeing to mediation in the first place.

The Convention attempts to solve these issues by providing a process for directly enforcing a cross-border settlement agreement resulting from mediation between parties. The Convention provides that a settlement agreement may be enforced directly by the courts of a State. This allows the party seeking enforcement to apply directly to the courts of the State where the assets are located such that execution may also be sought if the enforcement process is successful. This prevents potential multiple proceedings arising from cross-border settlement agreements involving more than one jurisdiction. 

What the Convention says

The Convention defines mediation as a process, irrespective of the expression used or the basis upon which the process is carried out, whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person or persons lacking the authority to impose a solution upon the parties to the dispute.

In general, the Convention directs State-parties to allow the invocation of the settlement agreement, in accordance with its local rules and procedures and in compliance with the Convention, to prove that the matter has already been resolved in mediation.  The competent authority of the State-party (i.e. a court) (hereafter "Authority") is also required to act expeditiously on such invocation.  The Convention requires a party invoking a settlement agreement arising from mediation to provide the Authority only with the following:

  • The settlement agreement signed by the parties, and 
  • Evidence that the settlement agreement resulted from mediation (i.e. the mediator's signature on the settlement agreement).

The Authority may only refuse to grant relief on specific and limited grounds enumerated in the Convention (i.e. granting relief would be contrary to public policy of the State-party). Furthermore, the Convention only applies to a settlement agreement: 

  • Resulting from mediation, 
  • Concluded in writing by the parties, 
  • Concluded to resolve a commercial dispute, and 
  • International at the time of its conclusion.  

A settlement agreement is considered international when:

  • At least two parties to the settlement agreement have their places of business in different States;
  • The State in which the parties to the settlement agreement have their places of business is different from either: (i) the State in which a substantial part of the obligations under the settlement agreement is performed; or (ii) the State with which the subject matter of the settlement agreement is most closely connected.

However, the Convention shall not apply to settlement agreements:

  • Relating to consumer transactions for personal, family or household purposes;
  • Relating to family, inheritance, or employment law;
  • That have been approved by a court or concluded in the course of proceedings before a court, and are enforceable as a judgment in that State; and
  • That have been recorded and are enforceable as an arbitral award.

How it affects you

Presently, Philippine law already provides for a simple and straightforward process for enforcing a mediated settlement agreement ("Agreement").  The Special Rules of Court on Alternative Dispute Resolution provides that a party to the Agreement needs only to deposit the same with the proper court.  In case of breach thereof, a party may file a Petition with the court where the Agreement was deposited for enforcement thereof. The Petition should show how the Agreement was beached and be accompanied by an authenticated copy of the Agreement together with the Certificate of Deposit proving the Agreement was previously deposited.  If the court, after a summary hearing, finds the Petition was breached, it may order the enforcement thereof.

The Convention benefits you more by simplifying the procedure and setting the standard for enforcing mediated settlement agreements in signatory-States outside the Philippines, regardless of the place where the settlement agreement is concluded. With 45 States signing the Convention, the Convention will provide an effective way of resolving cross-border disputes across multiple jurisdictions that is both speedy and cost efficient. This will also facilitate international trade as mediation becomes more commonly used in international commercial practice as an alternative to litigation.

In light of the foregoing, persons or entities in an international commercial dispute should seriously consider mediation as a means to resolve issues arising therefrom, especially if its involves cross-jurisdiction disputes.