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By Ricardo Cata*
On June 2, 2014, the United States proposed an UNCITRAL Convention on International Mediation and Conciliation (Future Work for Working Group II, U.N. Doc. A/CN.9/822), on the enforcement of international settlement agreements resulting from conciliation. “Conciliation” is defined by the Working Group II (“WG II”) as the process whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person lacking authority to impose a solution … to the dispute. The WG II (Dispute Settlement) is composed of all sixty States member of the Commission, mainly, countries from North, Central and South America, Western and Eastern Europe, Asia, and the Middle East. Also, States not members of the Commission and international government organizations may attend the sessions of the W G II as observers and participate in the deliberations; invited non- government organizations (NGOs) may also attend and participate in the W G II deliberations.
The W G II has held bi-annual meetings on the subject since 2015 in New York and Vienna. The most recent session, the Sixty-Seventh Session, was held in Vienna on October 2-6, 2017. See: www.uncitral.org/uncitral/en/commission/working_groups/6Security_Interests.html. At the Vienna session, the WG II developed a draft instrument on the enforcement of international commercial settlement agreements. The WG II agreed to prepare both, a legislative text amending the 2002 UNCITRAL Model Law on International Commercial Conciliation (which presently has no enforcement mechanism), and also a Convention on the enforcement of international settlement agreements (“ISAs”). A total of twenty-eight national and sub-national jurisdictions have adopted the 2002 UNCITRAL Model Law on International Commercial Conciliation (“the Model Law”), including twelve States in the United States (but not Florida). See: www.uncitral.org/uncitral/en/uncitral…/arbitration/2002Model_conciliation_status.html
The WG II’s approach would allow the various member States to ratify/adopt either the Convention and/or the Amended Model Law (which will then have an enforcement mechanism for ISAs similar to those found in the Convention). For the twelve U.S. States that have already adopted the 2002 Model Law (and even for the U.S. States that have not adopted the 2002 Model Law), it would be easier to adopt the Amended Model Law, with its enforcement mechanism, instead of waiting for the U.S. to ratify a future Convention on enforcement of ISAs. This writing will cover only the enforcement mechanism and provisions as found in the draft Convention, presented by the W G II at its Sixty-Seventh Session.
The Preamble to the draft Convention states that Parties recognize “… the value for international trade of methods for settling commercial disputes in which the parties … request a third person … to assist them in their attempt to settle the dispute amicably …”, and noted that “… conciliation and mediation … are increasingly used in international … commercial practice as an alternative to litigation …”. It further states that ” … such dispute settlement methods results in significant benefits, such as reducing the instances (of) … termination of a commercial relationship, facilitating the administration of international transactions by commercial parties and producing savings in the administration of justice by States….”.
The Preamble also states that “… a framework for international settlement agreements …. From such dispute settlement methods … would contribute to the development of harmonious international economic relations.” These declarations by the WG II represent an important recognition of the continued growth, value and benefit of international commercial conciliation and mediation. Though the draft Convention is not final, the United States delegation stated that, in its opinion, “… very little substantive work remains to be done on the … text …”, and that “… most of the remaining points … relate to drafting issues.” The United States, however, did proposed substantive changes as to Articles 3 (2); 4(1) (b); and 4 (1) (c), discussed below.
The Scope of the draft Convention at Article 1 is stated to apply “… to international (settlement) agreements resulting from conciliation … to resolve a commercial dispute ….” Article 1 excludes settlement agreements concluded for personal, family, or household purposes, or relating to family, inheritance or employment law; or to settlement agreements that have been approved by a court, or have been concluded before a court in the course of proceedings, either of which are enforceable as a judgement, or that have been recorded and are enforceable as an arbitral award. The draft Convention’s Definitions under Article 2 defines what constitute an “international settlement agreement,” and also defines the “place of business” of a party in order to determine if a settlement agreement is “international.” Article 2 further defines of what constitutes a settlement agreement “in writing”, taking into consideration the legal and business practices of our modern digital/electronic age.
The Application or enforcement mechanism for ISAs, is contained in Article 3 (1) to 3 (6) of the draft Convention. Article 3 (1) states that “… each Contracting State shall enforce a settlement agreement in accordance with its rules of procedure, and under the conditions laid down in this Convention.” Article 3 (2), provides that if a dispute arises concerning a matter that a party claims was already resolved by a settlement agreement, that the State “… shall allow the party to invoke the settlement agreement in accordance with its rules of procedure and under the conditions laid down in this convention.” Article 3 (3) (a) to 3 (3) (c) of the draft text provides that a party relying on a settlement agreement under the Convention shall “… supply the competent authority of the State where relief is sought with: (a) the settlement agreement signed by the parties; and (b) evidence or indication that the settlement agreement resulted from conciliation (mediation), such as by including the conciliator’s signature on the settlement agreement, by providing a separate statement by the conciliator attesting to the involvement of the conciliator in the conciliation process, or by providing an attestation by an institution that administered the conciliation process; and (c) such other necessary document as the competent authority may require. Article 3 (4) (a) to 4 (b) sets out the manner under which the requirement that a settlement agreement shall be signed by the parties, or, where applicable, by the conciliator shall be met. Article 3 (5) provides that if the settlement agreement is not in the official language(s) of the Contracting State where application is made, the competent authority may request the party to supply a translation. Article 3 (6) provides that when considering the application, the competent authority shall “… act expeditiously.”
Article 4(1) to 4 (2), and subparts, provide ten specific grounds for the competent authority where the application is made for Refusing to Grant Relief, mainly: 4(1) (a), incapacity of one of the parties; 4 (1) (b) the agreement is not binding or is not a final resolution of the dispute, or the agreement has been subsequently modifies or it has already been performed, or the conditions set forth in the agreement have not been met; or 4 (1) (c), the agreement is null and void, inoperative or incapable of being performed under the law to which the parties have subjected it, or under the law deemed applicable by the competent authority; or 4 (1) (d), due to a “serious” breach by the conciliator (mediator) of “…standards applicable to the conciliator or conciliation, without which breach that party would not have entered into the agreement; or 4 (1) (e), for failure of the conciliator to disclose circumstances that “… raise justifiable doubts as to the conciliator’s impartiality or independence, and such a failure had ” … a material impact or undue influence on a party” without which that party would not have entered into the agreement; or, 4 (1) (g), the agreement has been concluded before a court in the course of proceedings, prior to any application under Article 3, and is enforceable as a judgement under the law of that court; or, 4 (h), the agreement has been recorded as an arbitral award prior to the application, and that award is enforceable under the law of the State where enforcement is sought; or, 4 (2) (a), granting relief would be contrary to the public policy of that state, or, 4 (2) (b), the subject matter of the dispute is not capable of settlement by conciliation under the law of the State where application is made. As noted above, the United States has proposed an amendment adding the following text as a new Article 4 (3): “… nothing in Articles 3 (3) (c) or 4 (1) (c), or any other provision of this instrument permits a court to deny relief on the basis of domestic law requirements regarding the formalities, or conduct, of the conciliation process, such as requirements regarding notarization of a settlement agreement or use of a particular type of conciliation process or conciliator.” See: www.uncitral.org/uncitral/en/commission/working_groups/2Arbitration.html
Article 5 of the draft Convention, Parallel Application of Claims, provides that the competent authority where the application is made, may, if it considers it proper, adjourn the decision on the enforcement of the settlement agreement, or may also request a party to give suitable security, in the event that an application or claim relating to a settlement agreement has been already made to a court, an arbitral tribunal, or any other competent authority which may affect enforcement of that settlement agreement. Article 6 of the draft, “Other Laws or Treaties”, provides that the Convention shall not deprived any party to a settlement agreement of any right it may have to avail itself to the extent allowed by the law or treaties of the Contracting State where such agreement is sought to be relied upon.
There are several other Articles (Articles 7 to 14) in the draft Convention, but Articles 1 to 6, covered above, are the most relevant to practitioners of international trade law. By the summer of 2018, the WG II may have a finalized Convention and a finalized Amended Model Law to be submitted for approval to the U.N.’s General Assembly. While it would take time for Contracting States to approve/ratify the Convention and/or the Amended Model Law, the approval by the U.N. of such UNCITRAL instruments on the enforcement of ISAs should give a significant boost to the growth of international commercial mediation.
*Ricardo Cata is a mediator with Upchurch Watson White & Max, and Chair of the ILS Mediation Committee.
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