Find the introduction and context of this blog series on the Singapore Convention here.

Click here for the complete annotation in Portuguese (Anuário – Ano 3).

ARTICLE 1 – SCOPE OF APPLICATION

1. This Convention applies to an agreement resulting from mediation and concluded in writing by parties to resolve a commercial dispute (“settlement agreement”) which, at the time of its conclusion, is international in that:

(a) At least two parties to the settlement agreement have their places of business in different States; or

(b) 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.

Reading the first rule on the scope of the Convention, one comes across a number of terms which require careful interpretation, since they refer to concepts, whose definition is not self-evident. The Convention itself takes care to define these terms, thus assisting in their interpretation and ensuring that the scope is clear to the interpreter.

In this annotation, the analysis of the scope of application is broken down, with each topic being dealt with in relation to the standard defining the corresponding term.

Thus, the concept of “agreements resulting from mediation” is dealt with in the annotation to Article 2-3, the concept of “concluded in writing” in the annotation to Article 2-2, the concept of “commercial dispute” in the annotation to Article 1-2 and the international character of the agreement in Article 2-1.

2. This Convention does not apply to settlement agreements:

(a) Concluded to resolve a dispute arising from transactions engaged in by one of the parties (a consumer) for personal, family or household purposes;

(b) Relating to family, inheritance or employment law

Cristiane Mara Mateus

Raissa Lemos

1. The Singapore Convention; 2. International relations; 3. Commercial litigation; 4. Concept of commercial litigation in international arbitration; 5. Interpretation of international conventions.

1. The Singapore Convention results from the work initiated in 2015 by UNCITRAL (United Nations Commission on International Trade Law). In 2018, it was defined that it would only apply to disputes that took place in mediation, definitively excluding conciliations. The Convention aims to facilitate international trade by allowing parties in dispute to invoke mediation agreements across borders, thus favouring a legal framework for international trade and, consequently, legal uniformity[1]. This harmonised framework allows the agreement to be binding and enforceable through a simplified procedure, which ultimately strengthens access to justice. Prior to this uniform regulation, the major challenge in international trade agreements resulting from mediation was security in the international framework and its cross-border enforcement.

The aforementioned Convention comes to fill this gap so as to enable the enforcement of agreements in an efficient manner. In the words of Bruce Love, “the goal is for an internationally ratified framework to give companies greater confidence to mediate cross-border agreements rather than taking them to court”[2].

2. International Relations. The scope of the Singapore Convention is to promote international commercial mediation as an alternative means of dispute resolution in an effective manner, with the aim of fostering the development of harmony in international economic relations. This aspect reveals the concept of a Transnormative Law[3] or Transnational Law[4], since the globalization process expands the legal issues more and more, rendering them truly international.

Thus, the normative production is not restricted only to the national geographic space, extending interaction mechanisms between International Law and Domestic Law. The Singapore Convention (together with the UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements resulting from Mediation, hereinafter the “Model Mediation Law”[5]) provides for the internationalization of rights and of all commercial legal life in such a way that, in the contemporary scenario, Nations become interdependent. In the perspective of Wagner Menezes, “International Law ceases to be eminently directed to States and starts to reach companies, individuals who, in turn, also act more constantly in the international order, even as protagonists”[6] .

3. Commercial litigation. The Singapore Convention does not expressly define the concept of “commercial dispute“. The same situation occurred in the Model Mediation Act and the Model Arbitration Act.

Although the term “commercial” is not conceptualised, it has been defined with the help of the illustrations provided in footnote 1 of the Model Mediation Act[7] , drafted together with the Singapore Convention. Let us see what is expressed in footnote 1: “the term ‘commercial’ should be given a broad interpretation so as to cover matters arising out of all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, inter alia, the following transactions: any commercial transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works, consulting; engineering; licensing; investment; financing; banking; insurance; contract or concession of exploitation; joint venture and other forms of industrial or commercial cooperation; transportation of goods or passengers by air, sea, rail or road”. 

Thus, although the Singapore Convention did not conceptualise the concept of “commercial dispute” in the body of its text, it should be interpreted in harmony with the provisions of footnote 1 of the Model Mediation Act. However, the Singapore Convention has taken care to narrow the scope of application of footnote 1 as some subjects have been explicitly excluded, such as consumer transactions, family law relationships, labour and inheritance (Article 1(2) of the Convention).

There are some justifications for this legislative policy option. The first motivation is the fact that UNCITRAL deals mainly with commercial relations; the second ground is based on the fact that the list of exclusions refers to sensitive issues, which could clash with specific cultural situations of each nation. In this vein, although footnote 1 remains unchanged and serving as a basis for the Singapore Convention, the express exclusion of some issues aimed at preventing dubious interpretations and avoiding practical weaknesses in the application of mediation in international commercial disputes[8] : “thus, there was a risk that a broad coverage of the “commercial” concept would create barriers to consensus on an efficient procedure and make the instrument less attractive for States considering ratification. These issues were summed up convincingly in comments submitted by the Government of Germany at the start of the deliberations. Germany maintained that the basis for any implementation of a mediated agreement should be “full autonomy of the parties” and concluded: “[c] the scope should be limited to trade agreements between enterprises only”[9] .

The Singapore Convention adopted, therefore, the policy of restricting itself to “commercial litigation” suggested by Germany[10] , in view of being an instrument destined to cases in which other international law instruments do not apply, without colliding with the internal legislation of the countries. With this wise legislative option controversial situations were avoided, in which there could be contractual imbalances between the parties, leaving these situations to the internal and sovereign scope of each Nation. This option was also designed to encourage acceptance of the Convention in the international sphere and subsequent ratification by the States.

4. Concept of commercial dispute in international arbitration. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 was not restricted to commercial disputes but had a broader spectrum. Article I(3) provides that “at the time of signature or ratification of this Convention, accession thereto, or notification of extension under Article X, any State may, on the basis of reciprocity, declare that it will apply the Convention to the recognition and enforcement only of awards made in the territory of another Contracting State. It may also declare that it will apply the Convention only to disputes arising out of legal relationships, whether contractual or not, which are regarded as commercial under its national law.”[11]

It should be noted that the approach of the New York Convention stands out for allowing States to opt for its application to non-commercial disputes. Therefore, depending on the option of each State, non-commercial legal issues may be involved, provided that they can be resolved by arbitration[12].

We note that prior to the deliberations leading to the Singapore Convention and the Model Law on Mediation, UNCITRAL adopted the Model Law on International Commercial Conciliation[13] . This Act followed the references adopted by the Model Law on International Commercial Arbitration[14] with respect to the concept of “commercial”[15].

As narrated above, none of these laws defined the term “commercial litigation”, establishing only a list of relationships that would constitute commercial litigation. The purpose of this definition in the New York Convention was to provide a broad application of this concept, not being limited to what may qualify as “commercial” under national law. 

The Singapore Convention adopts a different approach, as it has not opted for a specific definition of the concept, but only brought in the body of its text the disputes that cannot be considered “commercial”[16].

5. Interpretation of international conventions. In international conventions, gaps or undetermined concepts may appear which require clarification or more specific definitions. In this context the importance of interpretation stands out, which enables the attribution of meaning even in the absence of an express definition in the Convention. In this sense, the text of the Convention should not necessarily be interpreted with the same meaning as the norms that exist in domestic legal systems, but should have its own meaning, consistent with the origin and purposes of the Convention. Thus, for the sake of legal security, when there are issues that generate discussions, it is necessary that the national and international courts take into account the uniformity of its application, as well as good faith in international trade[17].

It should be noted that there is no higher international instance to solve questions related to divergences of interpretation of international conventions. Thus, as already mentioned, it is indispensable that, when applying a convention, the courts observe the decisions of other courts to interpret it in a uniform manner. Therefore, in the case of Conventions, in principle the internal general rules do not apply, but the general principles on which it is based, or, if this is not possible, the law of private international law applies. Thus, the use of internal rules is only accepted to fill gaps or indeterminate concepts that cannot be filled by other means. In addition, in order to respect the particularities of some States, it is possible to make reservations. However, these reservations must be expressly authorised by the convention so that they do not refute its objectives. In the case of the Singapore Convention, the admissibility of reservations and their limits is provided for in Article 8.

It is fundamental to highlight that the convention has their construction based on principles and open clauses, in order to allow for constant flexibility, reducing the characteristic rigidity of domestic laws[18]. Consequently, the filling of gaps and of the indeterminate concepts themselves becomes a mechanism for the development of the Convention, as well as a resource to adapt it to the innovations resulting from legislative advances.

[1] Nadia Alexander; Shou Yu Chong, “Singapore Convention Series: Bill to Ratify before Singapore Parliament”, in Kluwer Mediation Blog, 2020.

[2] Bruce Love, “New UN Singapore Convention drives shift to mediation of trade disputes”, Financial Times, 2019, available at: https://www.ft.com/content/6e1df030-9e6f-11e9-9c06-a4640c9feebb.

[3] “This transnormative relationship is characterized by several factors of allocation of a new international reality, which through its normative instruments produced at the international level, dissolve the borders and enables an interpenetration of legal norms between the local and the global in the same space of sovereignty and normative competence”. Wagner Menezes, “O Direito Internacional Privado e a Teoria da Transnormatividade”, Revista Pensar, Fortaleza, volume 12, March 2007, p. 140.

[4] “Transnational law is the set of norms that regulates facts that transcend national borders, both public and private law, as well as other norms that do not fit entirely into the classical categories.” Philip C. Jessup, Direito Transnacional, translation by Carlos Ramires Pinheiro da Silva, Rio de Janeiro, Fundos de Cultura, 1965, p. 124.

[5] The United Nations Commission on International Trade Law (UNCITRAL) is a subsidiary body of the General Assembly. It plays a major role in developing the legal framework for international trade by preparing legislative texts for States to use in modernising international trade law and non-legislative texts for States to use in negotiating their commercial transactions. UNCITRAL’s function is to promote the progressive harmonisation of international trade law, thus including international commercial practices, transport, insolvency, e-commerce, international payments, secure transactions, the purchase and sale of goods, as well as dispute settlement. Initially, dispute settlement was restricted to arbitration, but has been extended to include mediation and conciliation. 

[6] Wagner Menezes, “O Direito Internacional Contemporâneo e a Teoria da Transnormatividade”, in Pensar, Fortaleza, volume 12, March 2007, p. 139.

[7] UNCITRAL, Model Law on International Commercial Mediation and International Settlement Agreements resulting from Mediation, available at: https://www.iaa-network.com/wp-content/uploads/2019/02/Model-Law-on-International-Commercial-Mediation.pdf.

[8] Ellen E. Deason, “What’s in a Name? The Terms “Commercial” and “Mediation” in the Singapore Convention on Mediation,” Cardozo Journal of Conflict Resolution, 2018-2019, pp. 1149 -1162.

[9] UNCITRAL, Commercial Dispute Settlement: Enforcement of Settlement Agreements Resulting from International Commercial Conciliation/Mediation, Comments received from States, UN Doc. A / CN.9 / WG.II / WP.188, at 2, 2014, note by the Secretariat.

[10] Germany’s warnings of the potential complexity and risk of difficulty in reaching consensus on an instrument applicable to consumer, labour relations and family matters had been confirmed by the previous experience of the drafters of the Uniform Mediation Act (“UMA”) in the United States. The UMA covers a broader range of mediations than the Singapore Convention, in that it is not limited to international or commercial matters.

[11] UNCITRAL, Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), New York, 1958, available at: https://uncitral.un.org/en/texts/arbitration/conventions/foreign_arbitral_awards.

[12] Nádia Araújo, “A Convenção de Nova York sobre o Reconhecimento e a Execução de Sentenças Arbitrais Estrangeiras: Análise sobre seu Âmbito de Aplicação”, in Wald Arnold; Selma F. Lemes (coord.), “Arbitragem Comercial Internacional: A Convenção de Nova York e o Direito Brasileiro”, São Paulo, Saraiva, 2011.

[13] UNCITRAL, Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation (2018) amending the Model Law on International Commercial Conciliation (2002), available at: https://uncitral.un.org/en/texts/mediation/modellaw/commercial_conciliation.

[14] The Model Law on International Commercial Arbitration was adopted in 1985 and amended most recently in 2006.

[15]  UNCITRAL, Model Law on International Commercial Arbitration (1985), with amendments as adopted in 2006, available at: https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration.

[16] Ellen E. Deason, “What’s in a Name? The Terms “Commercial” and “Mediation” in the Singapore Convention on Mediation,” 2018-2019, pp. 1149 -1162.

[17] Alessandra Mizuta, “Applicability of the Vienna Convention for Completion in Case of Contractual Tort”, Periódico Acadêmico Semestral, Teresina – PI, volume 1, no. 7, July/December 2014, pp. 62-88.

[18] Iulia Dolgava and Marcelo B. Lorenzen, “Brazil and the Accession to the 1980 Vienna Convention on the International Sale of Goods”, Revista Fórum CESA, year 4, no. 10, January/March 2009, pp. 46-61, available at: https://d9fb7405-82b7-4d54-ab34-81a2a7516b0f.filesusr.com/ugd/932f9c_87eb87f6afd449a3b99ad1d28b7f664b.pdf.