ARTICLE 8 – RESERVATIONS

1. A Party to the Convention may declare that:

(a) It shall not apply this Convention to settlement agreements to which it is a party, or to which any governmental agencies or any person acting on behalf of a governmental agency is a party, to the extent specified in the declaration;

(b) It shall apply this Convention only to the extent that the parties to the settlement agreement have agreed to the application of the Convention.

2. No reservations are permitted except those expressly authorized in this article.

3. Reservations may be made by a Party to the Convention at any time. Reservations made at the time of signature shall be subject to confirmation upon ratification, acceptance or approval. Such reservations shall take effect simultaneously with the entry into force of this Convention in respect of the Party to the Convention concerned. Reservations made at the time of ratification, acceptance or approval of this Convention or accession thereto, or at the time of making a declaration under article 13 shall take effect simultaneously with the entry into force of this Convention in respect of the Party to the Convention concerned. Reservations deposited after the entry into force of the Convention for that Party to the Convention shall take effect six months after the date of the deposit.

4. Reservations and their confirmations shall be deposited with the depositary.

5. Any Party to the Convention that makes a reservation under this Convention may withdraw it at any time. Such withdrawals are to be deposited with the depositary, and shall take effect six months after deposit.

ARTICLE 9 – EFFECT ON SETTLEMENT AGREEMENTS

The Convention and any reservation or withdrawal thereof shall apply only to settlement agreements concluded after the date when the Convention, reservation or withdrawal thereof enters into force for the Party to the Convention concerned.

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).

Ana Sousa

Mariana Silva e Costa

1. Articles 8 and 9 of the Singapore Convention make reference to the reservations States are allowed to make and the effects thereof. It is therefore important to understand what a reservation is.

Reservations are an institute of Public International Law[1] which results from the will of States to exempt themselves from certain obligations imposed in a Treaty or to define the understanding they give to those same obligations. It is an element of particularism of the situation of a State before the Treaty or Convention[2].

The Vienna Convention on the Law of Treaties (“VCLT”) defines reservation in Article 2(1)(d). The reservation alters the State’s relationship with the other parties and vice versa, to the extent provided for by that reservation, but does not affect the other parties in their relations inter se (Article 21 of the VCLT). It is in this sense that it is said that there is a derogation of the provisions and not a revocation, because they are removed in relation to the state that formulates the reservation, but continue to apply to the others, which means that they are not eliminated from the legal system of all signatory states[3].

As regards reservations, they imply two conflicting interests. On the one hand, that of extending the Convention to the greatest number of States, which leads to accepting different kinds of arrangements to increase the possibility of acceptance by the States. On the other hand, the integrity of the Convention itself and the sovereignty of the other States points to an unanimous regime. At present, a more flexible position is adopted where the first interest prevails, so that most treaties provide for the possibility of reservations[4]. However, it is only possible if and in the terms in which the Treaty allows it, as well as if it is not incompatible with the purpose and object of the treaty (article 19 b) and c) of the VCLT).

First of all, it should be pointed out that if no reservation is made, the Singapore Convention is automatically applied unless the parties stipulate otherwise in the mediation convention (Article 5(1)(d)). However, Article 8 allows signatory States to make two types of reservations, provided they make them expressly. No reservations other than those in (a) and (b) are permitted.

These solutions were the result of the disagreement that arose in the Working Group, since there was no consensus between an opt-in or an opt-out system. Given that an opt-out system would lead to the immediate application of the Convention to mediation agreements, the advocates of this position argued the objective of ensuring compliance with mediation agreements and the similarity with the system of the New York Convention[5].

Other members of the Working Group pointed to an opt-in system, not applying the Convention unless the parties so defined, out of respect for the principle of the autonomy of the parties and their consensus[6]. To this end, they stressed not imposing something that the parties did not expect, the empowerment of the parties in mediation[7] and the importance of the parties knowing the Convention and making an informed choice[8]. And, if this encouraged more States to sign the Convention, which without this option would not do so, they argued that it was a solution to consider[9]. However, this would imply a limitation on the application of the Convention, as parties are statistically less likely to change the status quo of not applying the Convention[10].

Thus, subparagraph (a) allows States to opt out of the application of the Convention to agreements to which those States, any governmental agencies or any person acting on behalf of a governmental agency is a party. This implies the exercise of the opt-out right by the States themselves, since it implies the exclusion from the application of the Convention to those entities ab initio.

As regards subparagraph b), the possibility to have an opt-in system, although it may affect the effectiveness of the Convention, was a necessary concession to enable the Working Group to continue negotiations, allowing real autonomy of the parties in mediation. Furthermore, there is always the possibility that this reservation may be withdrawn later, when the State feels more confident with the Convention[11] and the mediators themselves may advise the parties to include this opt-in clause in their mediation agreements[12].

In conclusion, a State may change the subsidiary rule to an opt-in system through subparagraph (b), which means that parties who want the Convention to apply must specify this. They can also make the reservation in paragraph (a), excluding ab initio the application of the Convention to agreements to which the entities described above are party.

Apart from these reservations, the subsidiary system is an opt-out system under Article 5(1)(d), as the Convention applies unless the parties express otherwise in the mediation agreement[13].

As for the procedure for making reservations, this is expressed in Article 8(3), (4) and (5), stating that reservations may be made at any time and defining their entry into force depending on when they are made. These and the respective confirmations must be deposited with the depositary. As for withdrawal, it may be made at any time, taking effect six months after deposit.

Article 9 refers to the effects of these reservations and their withdrawal. As already seen, given the exhaustive nature of reservations, their effects will always relate to the application or non-application of the Convention. On the other hand, such reservations or withdrawals will only apply to agreements concluded after the date on which the Convention, the reservation or the withdrawal takes effect for the party to the Convention concerned[14].

2. States have very different characteristics from one another, not only at a legal level but also historically and culturally, which often implies the practice and use of reservations in Public International Law[15].

However, the formulation of reservations can present dangers insofar as these reservations disregard basic principles of public international law, rules of treaty law, or even the purpose of the treaty itself[16].

What can the development of these reserves bring to the States’ advantage?

The option of making use of reservations in (a) or (b) will enable States to guard against a situation of the parties not knowing about the Convention and its effects at an earlier stage of its application, with the possibility of lifting them when they feel more confident about this[17]. This is because these reservations may be withdrawn at any time.    

It ends up allowing States to design a tailor-made system that provides for and protects them in the face of their concerns, which may be motivating for the ratification of the Convention, since States might not even consider ratifying it if they could not do so in a personalized manner with reservations[18]. In essence, the major defect that can be pointed to this possibility of making reservations – the fact that it limits the universal application and effectiveness of the Convention – can be mitigated by this idea: the desire to want a convention and a system that is the same for all may lead to fewer states participating in it, so universal application fails miserably. Thus, the great goal of making people choose to mediate international disputes instead of opting for courts may only be truly achieved through these reservations.[19]

Another advantage is that these reservations allow the parties or States to protest against a mediation agreement that does not express their wishes and desires[20], thus preventing the Convention’s system of enforceability from applying.

What can be disadvantageous for the States in drawing up these reservations?

First, it undermines a global application of the Convention. Perhaps the feature of the Convention that poses the greatest challenge to achieving broad global application is the permission granted to states that ratify the Convention to choose to apply it only on a “opt-in” basis, that is, only to the extent that the parties to an agreement specifically agree that the Convention should apply.

Additionally, the fact that the Convention may operate on an opt-in regime in some states but not in others has the potential to result in an imbalance between the parties: if an agreement is enforceable against one party because its home jurisdiction does not apply the opt-in system but is not enforceable against the other because its home jurisdiction does. In this case, the stronger party can potentially exercise its bargaining power to compel the other contracting party to agree to participate; or the other way around, depending on which scenario would be more beneficial to it.

Furthermore, if the key to increasing the global use of international mediation is to change perceptions and create greater confidence in the process, simply the existence of a widely ratified international enforcement regime (even if not comprehensively applicable) may be sufficient to achieve this goal[21].

3. Saudi Arabia, Belarus and Iran have made their own reservations, and in all there is a clear intention not to apply the Convention to disputes between the State and investors. Let us look at each state in particular[22].

The Republic of Belarus signed the Singapore Convention on 7 August 2019. Nevertheless, there is still no date of ratification, acceptance, approval or accession. Following what is permitted under Article 8(1)(a), of the Convention, the Republic of Belarus will not apply the Convention to agreements to which it is a party, or to which any government agency or person acting on behalf of a government agency is a party. The reservation reads as follows: “In accordance with the article 8 of the Convention the Republic of Belarus shall not apply this Convention to settlement agreements to which it is a party, or to which any governmental agencies or any person acting on behalf of a governmental agency is a party”. 

For its part, the Islamic Republic of Iran declared, after signing on 7 August 2019, that it was going to make clear its understanding regarding the provisions of the Convention in order to avoid interpretations to it contrary to national laws and regulations. Thus, and going further than the other States, using the opt-in solution of both subparagraphs of Article 8(1), it determined that the Convention does not apply to agreements to which the State is a party, or to which a government agency or any person acting on behalf of a government agency is a party, and to mediation agreements made by the parties, unless they decide otherwise.

The reservation reads as follows:

– “The Islamic Republic of Iran shall have no obligation to apply this Convention to resolution agreements to which it is a party, or to which any government agency or any person acting on behalf of a government agency is a party, to the extent specified in the declaration;

– The Islamic Republic of Iran shall apply this Convention only insofar as the parties to the dispute settlement agreement have agreed to the application of the Convention;

– The Islamic Republic of Iran may have the option to make reservations after ratification;

– The Islamic Republic of Iran, in accordance with the relevant provisions of the Convention, reserves the right to adopt laws and regulations to cooperate with States.”

Nevertheless, there is still no date of ratification, acceptance, approval or accession.

Finally, Saudi Arabia inserted its reservation after ratification. This reservation reads as follows “the Kingdom of Saudi Arabia hereby declares that the Convention shall not apply to settlement agreements to which it or any of its governmental agencies is a party, or any person acting on behalf of those governmental agencies”. The signing is also dated 7 August 2019 and the date of ratification is May 5, 2020[23] [24].

[1] André Gonçalves Pereira and Fausto de Quadras, Manual de Direito Internacional Público, 1997, p. 231.

[2] André Gonçalves Pereira and Fausto de Quadras, Manual de Direito Internacional Público, 1997, p. 231.

[3] Eduardo Correia Batista, Public International Law, 2015, p. 196.

[4] Jorge Miranda, Curso de Direito Internacional Público, 2006, p. 76 and ff.

[5] Edna Sussman, The Singapore Convention Promoting the Enforcement and Recognition of International Mediated Settlement Agreements, 2018, p. 49.

[6] Edna Sussman, The Singapore Convention Promoting the Enforcement and Recognition of International Mediated Settlement Agreements, 2018, p. 49.

[7] Ahdieh Alipour Herisi, Aftermath of The Singapore Convention: A Comparative Analysis Between The Singapore Convention And The New York Convention, 2019.

[8] Hal Abramson, New Singapore Convention on Cross-Border Mediated Settlements: Key Choices, 2019.

[9] Jan O’neil, The New Singapore Convention: Will It Be the New York Convention for Mediation?, 2019.

[10] Nadja Alexander and Shouyu Chong, The Singapore Convention on Mediation: A Commentary, 2019, p. 161.

[11] Eunice Chua, The Singapore Convention on Mediation – A Brighter Future for Asian Dispute Resolution, 2019, p. 203.

[12] Rob Palmer and Georgia Quick, The Singapore Convention on Mediation, 2019.

[13]Ahdieh Alipour Herisi, Aftermath of The Singapore Convention: A Comparative Analysis Between The Singapore Convention And The New York Convention, 2019.

[14] Nadja Alexander and Shouyu Chong, The Singapore Convention on Mediation: A Commentary, 2019, p. 167.

[15] João Grandino Rodas, Havendo Reserva, o Texto Obrigatório do Tratado Não é Igual para Todos, 2016, p. 4.

[16] Mariana Godinho Gomes, “A Problemática das Reservas e Respetivas Objeções a Tratados Multilaterais”, 2018.

[17] Eunice Chua, The Singapore Convention on Mediation – A Brighter Future for Asian Dispute Resolution, 2019, p. 203.

[18] Jan O’neil, The New Singapore Convention: Will It Be the New York Convention for Mediation?, 2019.

[19] Bruce Love, New UN Singapore Convention drives shift to mediation of trade disputes, 2019.

[20] Agada Elachi, The Singapore Convention on Mediation: Lessons and Prospects, 2020, p. 6.

[21] Jan O’Neill, “The new Singapore Convention: will it be the New York Convention for mediation?”, 2018.

[22] This analysis refers to the state of affairs in 2020.

[23] United Nations Treaty Collection, Chapter XXII Commercial Arbitration and Mediation, in 4. United Nations Convention on International Settlement Agreements Resulting from Mediation, 2018.

[24] Mushegh Manukyan, Singapore Convention and Investor-State Disputes: Belarus’ and Iran’s Reservations, 2019.