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THE SINGAPORE CONVENTION IS TO MEDIATION AS:

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Welcome back from summer! During this summer, the Singapore Convention happened. What is it, and why do we care? Mediator Jack Esher reports, starting with a short quiz:
THE SINGAPORE CONVENTION IS TO MEDIATION AS:

  • (a) Getting to Yes is to negotiation
  • (b) The Model Law is to cross-border insolvency
  • (c) The Hague Convention is to court-approved agreements
  • (d) The New York Convention is to arbitration
  • (e) All of the above
  • (f) None of the above

Do the law school admission tests still use these things?  I always wanted to have one of the choices be “Some of the above”, but maybe that was already an indication that mediation would be my favorite thing about practicing law.

But back to the LSAT analogy.  To answer the quiz question, we will have to know about the new United Nations Convention on International Settlement Agreements Resulting from Mediation – first signed on August 7, 2019 in Singapore by 46 countries – also known as the Singapore Convention (one of the countries is the US, most others are Asian, while European countries, the UK, and others are likely to join soon).   In a nutshell, the Convention provides an expeditious enforcement path for out-of-court international mediated settlement agreements resulting from commercial disputes (“IMSA’s”) in those countries that adopt it, similar to what the New York Convention does for arbitrations.  So as to avoid overlap with the New York Convention for arbitrations as well as the Hague Convention for court judgments, the Singapore Convention does not apply to mediated settlements approved by a court and enforceable as a judgment or reached through an arbitration process (such as through an arb-med-arb process, a work-around for the enforcement problem which the Singapore Convention addresses directly).

Since the Convention will not apply to a mediated agreement approved in a court-administered or supervised insolvency proceeding (if it is enforceable as a judgment, as an IMSA approved under Bankruptcy Rule 9019 would be in the U.S.), foreign enforcement in countries that have adopted the UNCITRAL Model Law will likely first require that the foreign representative of the proceeding in which the mediated agreement was approved seek recognition of the foreign proceedings.  Upon recognition, the foreign representative can seek enforcement of orders entered in the foreign proceeding, whether resulting from mediated settlement agreements or otherwise.

Note that not all mediated settlement agreements, even if reached in the course of insolvency proceedings, are approved by the court and thereby enforceable as a judgment.  For example, in the Lehman Brothers case in which I served as a mediator, the Lehman Estate was given authority to implement many mediated agreements without the requirement of a Rule 9019 motion.  While the Court generally enforced these settlements in the rare cases in which a party tried to back out, the Singapore Convention may have been useful where a foreign party was a participant. Particularly if the initiation of proceedings in the party’s foreign State were required to enforce (and collect) under an IMSA, resort to the Singapore Convention (if adopted and ratified in that State) could have saved substantial time and cost.

The Singapore Convention may also be useful as a planning tool to consider before insolvency proceedings are initiated.  An out-of-court mediated settlement among a debtor and some or all of its creditor constituencies could be reached outside of the U.S. and enforced in the U.S. in a non-bankruptcy court of appropriate jurisdiction under the Singapore Convention without need for a Chapter 15 case.  The Singapore Convention should elevate qualifying IMSA’s to an enforcement level similar to arbitration awards or court judgments, as opposed to mere contracts or accord-and-satisfaction settlements. In that regard, note that the Convention has enforcement exceptions such as for agreements which are contrary to the enforcing state’s public policy (similar to Chapter 15), and agreements arising from a process that did not comply with basic mediation standards, such as mediator impartiality.

Whether an IMSA that goes beyond a simple two-party monetary resolution – for example an agreement between a debtor and a class of creditors embodying a complex out-of-court restructuring – can benefit from expedited enforcement remains to be seen.  No doubt, creative parties will test the boundaries of the new Convention.

Passage of the Singapore Convention is notable as an important hallmark in the development of mediation as a preferred dispute resolution process generally, and the continuing growth of court and nation acceptance of it.  The Convention will become effective after it has been ratified or otherwise entered into force by three signatories, and becomes effective 6 months after ratification in any nation.

Click here to view or download the full text of the Singapore Convention.

PS: The answer to the quiz is “d. All of the above” because in each answer, the predicate in some way facilitates the successful completion of the subject process. However, this is arguably a bit of a stretch for answer (a. Getting to Yes is to negotiation”), which is why I would prefer a “Some of the above” option.

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In a cross-border insolvency matter, if an expert opinion is required, if skilled mediation or arbitration can help resolve disputes, or if cross-border insolvency is simply unfamiliar territory, CBI can help

We will be pleased to discuss your cross-border insolvency issues and agree on a case-specific arrangement to assist you.  Please reach out to any of us for a quick and easy assessment of how we can help you. We welcome your thoughts, comments and questions. 

clark@cbinsolvency.com
esher@cbinsolvency.com
glosband@cbinsolvency.com

Hon. Leif Clark (ret.) was a U.S. Bankruptcy Judge for over 25 years. He has an international reputation for influencing the development of insolvency law both domestically and internationally. He has broad experience in international legislative development, the training of lawyers and judges, scholarship and as a sought-after mediator of complex disputes involving finance and insolvency.
Jack Esher has over 25 years of experience as a mediator, arbitrator and neutral adviser, including mediation of cross-border disputes in the country’s biggest cases. A pioneer in developing mediation as an innovative and effective dispute resolution process in insolvency matters, he has conducted mediation and negotiation trainings nationally and internationally for professionals, business leaders and judges.
Dan Glosband has 45 years of sophisticated insolvency practice, focusing on cross-border cases. He was part of the small drafting group for the UNCITRAL Model Law on Cross-Border Insolvency, one of the primary draftsmen of Chapter 15 of the Bankruptcy Code and has been an expert witness on U.S. insolvency law in major foreign proceedings.
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By Jack Esher