The Recognition of Importance of Arbitration and Mediation in Business

Serbia Signs the Singapore Convention

On 7 August 2019, became one of the first 50 countries in the world to sign the United Nations Convention on International Settlement Agreements Resulting from – dubbed the Singapore convention. Much like the New York Convention on Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the aims to ensure that a mediation settlement reached by parties becomes effectively and extensively binding and enforceable in a large number of countries.

Increasing the Importance of Mediation

Mediation is increasingly being promoted as a go-to dispute resolution mechanism as it allows the parties to resolve their issues at a negotiating table, while still keeping a healthy business relationship. However, businesses were reluctant to opt for mediation due to limited enforceability of mediation settlements before courts.

The adoption of the Singapore Convention significantly increases attractiveness of mediation, and allows for a more reliable process altogether. Given that the mediation settlement agreement will be enforceable before the local courts (with all the accompanying benefits of mediation as an ADR mechanism), the parties might be more inclined to opt for mediation.

Applicability of the Singapore Convention

The Convention has limited applicability in terms of agreements resulting from mediation, as such agreements are required to be international in that (i) at least two parties to the settlement agreement have their places of business in different States or (ii) the State in which the parties to the settlement agreement have their places of business is different from either the State in which a substantial part of the obligations under the settlement agreement is performed; or from the State with which the subject matter of the settlement agreement is most closely connected. On a similar note, the Convention does not apply to court settlements or to settlements that are enforceable as a judgment or an arbitral award nor to settlement agreements arising from transactions for personal, family or household purposes and relating to family, inheritance or employment law.

Businesses in Serbia welcome the fact that authorities recognized the importance of and mediation as alternative dispute resolution mechanisms; if the Singapore Convention is half as successful as the New York Convention, it can be said with some degree of certainty that mediation will be lurking as a much more favored ADR mechanism than it has been in the past.

 

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.