ARTICLE 5 – GROUNDS FOR REFUSING TO GRANT RELIEF

2. The competent authority of the Party to the Convention where relief is sought under article 4 may also refuse to grant relief if it finds that:

(b) The subject matter of the dispute is not capable of settlement by mediation under the law of that Party.

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).

Loredana Petrea

Article 5 of the Singapore Convention, which is entitled “Grounds for refusing to grant relief”, provides a number of grounds for refusing enforcement measures of the agreement reached through an international commercial mediation.

In particular, Article 5(2)(b), which we propose to examine, deals with the possibility for the competent authority of the Party to the Convention before which measures for recognition of the agreement have been sought in accordance with Article 4 to reject the application if it finds that the subject-matter of the dispute is not capable of settlement by mediation according to the law of that Party.

Indeed, this paragraph mirrors Article 5(2)(a) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards[1]. These provisions of the Singapore and New York Conventions aim to ensure the court’s control over the content of the agreement reached in mediation.

It is also important to note that the ground provided for in Article 5(2)(b) may be analysed by the court of its own motion[2]. For instance, Dorcas Quek Anderson notes that, as in the New York Convention, this ground for refusal may be invoked by the competent authorities, irrespective of whether or not it is alleged by the parties[3].

In the preparatory work for the Singapore Convention, little reference was made to the provision of Article 5(2)(b) or how it should be interpreted, but the conclusion was reached that the text of Article 5(2) would be maintained in accordance with the meaning taken in the New York Convention[4], which has been so important and successful in international commercial arbitration. If the meaning adopted in the New York Convention is to be maintained, and international arbitration is already well developed, it is very likely that the contracting States will be guided by the vast case-law on the New York Convention when interpreting Article 5(2)(b) of the Singapore Convention[5].

In general terms, for Felipe Pavan Callejas, subparagraph b) applies to situations in which the party is not legally able to relinquish a certain right through mediation, especially fundamental rights[6], such as the right to physical integrity and the right to life.

Shou Yu Chong and Nadja Alexander mention that, according to South Korean law, some disputes concerning intellectual property rights cannot be submitted to mediation because there are authorities that have exclusive competence over them, as they are more specialised bodies in this type of conflict[7].

A linear analysis of the body of the rule contained in Article 5(2)(b) of the Singapore Convention allows us to conclude that this ground will always have to be read and applied in accordance with the domestic law of each signatory country.

If the Convention refers to the domestic law of the country where the party wants to enforce the international mediation agreement reached, we need to establish what are disputes capable of settlement by mediation, under Portuguese law[8]. The question that arises is the following: which disputes are capable of being settled through commercial mediation in Portugal?

Law No. 29/2013 of 19 April (LM) establishes the legal regime of civil and commercial mediation in Portugal. Article 11 (disputes object of civil and commercial mediation), addresses the criteria that determine which disputes may be settled through civil or commercial mediation. The criterion of patrimoniality is enshrined in paragraph 1 of this article. But this is not the only criterion provided in Article 11. Paragraph 2 refers to an additional criterion, that of the transigibility[9], that is, even if the interest does not have patrimonial nature, provided that it is possible to conclude a settlement (idea of availability of the right), mediation will be possible.

Therefore, Portuguese law opted for a dualist system in which it is enough to verify one of these criteria for mediation to be possible, thus allowing it to cover most of the disputes that may arise in commercial (and civil) matters[10].

Regarding the criterion of patrimoniality, this is simple. When, in the context of mediation, a pecuniary interest is at stake, that is, one that can be valued in money, mediation is possible. But it is not only this. In the words of Mariana França Gouveia the law “(…) goes beyond these situations, including disputes relating to economic transactions, even when the fulfilment of benefits in fact is sought (…)”[11].

In a different sense, as regards the second criterion enshrined in Article 11(2) of the LM, it refers to the concept of transaction. A transaction, for the purposes of Article 1248 of the Portuguese Civil Code, is a contract by which the parties prevent or terminate a dispute, and Article 1249 of the Portuguese Civil Code adds that the parties must have the capacity to dispose of the rights that are the object of this contract, not being allowed to conclude contracts on matters relating to unlawful legal transactions.

Unavailable rights are those which cannot be extinguished by the will of the parties or which cannot be waived by them. A clear example of unavailable rights would be rights of personality. However, the question is not so straightforward. The truth is that the legal regime allows some personality rights to be the object of contracts at certain times or in certain situations, which is why we are faced with what is known as relative unavailability of the right. In addition, and defending the position adopted by Jorge Morais Carvalho[12], we may be facing a mediation process in which an unavailable right is discussed and in the end there is no act of disposal of that right. As Mariana França Gouveia argues, “the means of alternative dispute resolution postulate a different approach to the conflict, around the most appropriate solution to the conflict (…) which may involve the non-application of the law”[13]. In this sense, it is not justified a prior intervention in order to limit the disputes that may be subject to mediation, the control should be done a posteriori. Jorge Morais Carvalho also points out that, although the dispute apparently deals with an unavailable right, after the identification of interests and positions (one of the main advantages of the mediation), there can be hidden interests connected with the social pacification, that have nothing to do with that right or, at least, with its disposition by the parties[14]. Consequently, it will be up to the competent authority to analyse, on a case-by-case basis, whether the agreement reached respects the criteria defined in Article 11 of the LM.

With regard to the need for the competent authority to analyse the subject-matter of the dispute in order to conclude whether the dispute is capable of settlement by mediation or not, Shou Yu Chong and Felix Steffek[15], as regards the application of Article 5(2)(b) of the Convention, argue that the competent court must take a more limited approach in the application of that subparagraph. They make this position more concrete by stating that, although the court should first apply domestic law to determine whether the subject-matter of the dispute is capable of settlement by mediation or not, it must, at a later stage of this analysis, assess whether there is a connecting link between the subject-matter of the dispute and the place where the mediation agreement was reached before declaring whether domestic law should apply to it.

Let’s imagine the following hypothetical situation: the parties reach an agreement in an international mediation, concluded in country X, which deals with a dispute regarding an industrial property right. The parties chose the law of country Y to apply to the agreement. They then applied to the competent court in country Z to enforce the agreement reached. It turns out that under the domestic laws of countries X and Y, disputes over industrial property rights are actionable. However, under the national law of country Z, disputes over such rights are not capable of settlement by mediation. Therefore, at the outset, the court of country Z would have to refuse enforcement of the agreement under Article 5(2)(b) of the Convention. However, if the court of country Z carries out a closer examination of the agreement, it will find that there is no connection between the subject-matter of the mediated dispute and that country. Therefore, the competent court of country Z should not refuse to enforce the agreement.

It is possible to conclude from all of the above that the competent authority, when applying Article 5(2)(b) of the Convention, must consider the content of the agreement reached, namely what is the subject matter of the dispute that the parties intended to settle, before concluding whether or not it is enforceable.

Note that, for the success of the mediation and the agreement reached, it is necessary to separate the positions of the parties from their interests, since a divergence which, at first sight, concerns an unavailable right, once this separation between positions and interests has been made, may result in an agreement that does not affect that right under national law. The hypothetical situation presented in the preceding paragraph is also intended to raise discussions around the possible obstacles that the application of subparagraph (b) could bring about for the parties themselves in a situation where the application of the internal law of the country where the agreement is to be performed would mean that the subject-matter of the dispute was not capable of settlement by mediation, whereas the parties, in order to settle their dispute, applied a law of a different country where that subject-matter was capable of settlement by mediation.

[1] “Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: (a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country”: Article 5(2)(a) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

[2] Herman Verbist, “United Nations Convention on International Settlement Agreement Resulting from Mediation”, Belgian Review of Arbitration, Wolters Kluwer 2019, volume 2019, no. 1, 2019, p. 7; James Claxton, The Singapore Convention: Mediation in a New York State of Mind, Rikkyo University, 2019, p. 2.

[3] Dorcas Quek Anderson, “The Singapore Convention on Mediation – Supplying the Missing Piece of the Puzzle for Dispute Resolution”, Forthcoming Journal of the Malaysian Judiciary, Singapore Management University School of Law, Research Paper No. 1/2020, 2020, p. 18.

[4] Héctor Flores Sentíes, “Grounds to Refuse the Enforcement of Settlement Agreements under the Singapore Convention on Mediation: Purpose, Scope, and their importance for the success of the Convention”, Cardozo Journal of Conflict, volume 20, no. 4, 2019, p. 1251.

[5] In this regard, see Dorcas Quek Anderson, “The Singapore Convention on Mediation – Supplying the Missing Piece of the Puzzle for Dispute Resolution”, 2020, p. 18.

[6] Felipe Pavan Callejas, The Singapore Convention on Mediation: What Everyone Should Know About It, Trabajos Finales de Máster, Universitat de Barcelona, 2019, p. 17.

[7] Nadja Alexander and Shouyu Chong, “Article 5(2). Public Policy and Subject Matter-Related Grounds for Refusal”, in The Singapore Convention on Mediation: A Commentary, Global Trends in Dispute Resolution, volume 8, Kluwer Law International, 2019, p. 2.

[8] In this particular case, it is necessary to note that Portugal is not a signatory of the Singapore Convention (unlike the New York Convention) and it is not known when or if it will actually join it. Thus, this Convention does not currently apply in Portugal.

[9] Article 1249 of the Civil Code rules out rights which cannot be disposed of by their holders and matters relating to unlawful business.

[10] Dulce Lopes and Afonso Patrão, Lei da Mediação Comentada, 2nd Edition, Almedina, 2019, p. 85.

[11] Mariana França Gouveia, Curso de Resolução Alternativa de Litígios, 3rd Edition, Almedina, 2015, p. 86.

[12] Jorge Morais Carvalho, “A Consagração Legal da Mediação em Portugal”, Revista Julgar, no. 15, 2001, p. 286.

[13] Mariana França Gouveia, “Meios de Resolução Alternativa de Litígios: Negociação, Mediação e Julgados de Paz”, in Estudos Comemorativos dos 10 Anos da Faculdade de Direito da Universidade Nova de Lisboa, volume II, Almedina, 2008, p. 728.

[14] Jorge Morais Carvalho, “A Consagração Legal da Mediação em Portugal”, Revista Julgar, no. 15, 2001, p. 286.

[15] Shouyu Chong and Felix Steffek, “Enforcement of international settlement agreements resulting from mediation under the Singapore convention – Private international law issues in perspective“, Singapore Academy of Law Journal, no. 31, 2019, p. 37.