International initiatives in the field of investment and commercial mediation. Russia's position in this movement

On 7 August 2019, the international community welcomed the adoption of the United Nations Convention on International Settlement Agreements Resulting from Mediation (New York, 2018) (“the Singapore Convention on Mediation or the Convention”).

As UNCITRAL explains on its website, “The Convention is an instrument for facilitating international trade and encouraging mediation as an alternative and effective method for resolving trade disputes. As a binding international instrument, it is expected to bring certainty and stability to the international mediation framework and thereby contribute to the achievement of the Sustainable Development Goals (SDGs), especially SDG 16.”

The main idea of ​​the Singapore Convention is to provide simplified enforcement of settlement agreements reached in the course of mediation, by analogy with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention of 1958.

The Singapore Convention defines minimum standards for the form of settlement agreements and the procedure for their conclusion during mediation.

As of the current date, September 2022, 55 countries have acceded to the Singapore Convention, including Belarus, Israel, the USA and China.

Russia, Europe (with some exceptions) and Japan have not acceded to the Singapore Convention. Russia has not yet decided on this issue and the official position regarding the Convention is not clear.

Russia participates in the UNCITRAL Working Group III on Investor-State Dispute Resolution Reform, which aims to create convenient mediation clauses for investment treaties and develop new rules on the mediation of investment disputes involving the state.

To a large extent, the documents of this Working Group rely on the latest developments of the Singapore Convention, the UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation (May 2022), take into account the UNCITRAL Mediation Rules (2021), the Investment Mediation Rules ICSID (2022), and Rules for the Mediation of Investment Disputes Involving the State of the IBA (2012).

Russia also took an active part in the development of the Singapore Convention itself.

In this regard, given the active participation in the discussion of the rules for mediation of investment disputes and in the development of the Singapore Convention, it seems illogical that Russia has not yet acceded to the Singapore Convention on Mediation.

Perhaps the answer lies in the fact that, with regard to the direct enforcement of mediation agreements, Russian legislation has gone somewhat further than the Singapore Convention.

Russia allows direct enforcement of mediation agreements certified by a notary. The advantage of direct execution of a mediation agreement certified by a notary is that the debtor must initiate a separate legal process to invalidate the mediation agreement.

At the same time, in accordance with the Singapore Convention, a debtor that has accepted obligations under a settlement agreement may raise objections to its execution at the stage of the recognition and enforcement process. In this sense, the debtor is more protected under the Singapore Convention.

For example, the debtor may argue that the agreement is void, inoperative or unenforceable under applicable law; that the mediator has seriously violated the standards of mediation, and without such a violation, that party would not have entered into an agreement.

Thus, the creditor has more opportunities under Russian law in relation to a mediation agreement than in comparison with the Singapore Convention, and the debtor has less.

However, in order to apply this tool under Russian law, the mediation agreement must be subject to Russian law and be certified by a Russian notary.

Given this difference in approaches to the execution of a mediation agreement under Russian law and the Singapore Convention, Russia's accession to the Singapore Convention will require changes in Russian legislation regarding the procedure for the execution of international settlement agreements reached in the course of mediation.

Changing the Russian legislation on mediation in order to make it comply with the unified international standards of UNCITRAL is a good step towards the development of harmonious international relations.

Under Russian law, a mediation agreement can be formalized as an amicable agreement in court, which gives the amicable agreement the force of a court decision. On this basis, an executive document can be obtained. However, reference to the law of one of the parties (Russian law) cannot always be accepted in international relations.

A settlement agreement may also be accepted as an arbitral award on agreed terms, and any law may be chosen. However, this method will require the parties to finance the arbitration, the appointment of arbitrators.

Thus, taking into account the above arguments, joining the Singapore Convention for Russia is a profitable and progressive step aimed at unifying and harmonizing the conditions for international mediation.

In addition, the benefits of this accession also include the following:

1) According to surveys, the international business community would be more confident in the institution of commercial mediation if this institution were supported by enforcement measures at the international level,

2) 55 countries have joined the Convention, including Belarus, Israel, the USA and China. It should be noted that mediation is very developed in the USA, Israel and China. In Belarus, the statistics of mediation are several times higher than in Russia. Russia's accession to the Singapore Convention would show the business community a progressive attitude towards the institution of mediation and would increase investor confidence in the Russian legal environment, would have a positive impact on the development of the institution of mediation in Russia,

3) In order for Russia to be more attractive to foreign investors, it needs to participate in international movements to improve the quality of dispute resolution. Mediation is a modern and effective tool for dispute resolution. Its active application will relieve the burden on the courts, which in turn will affect the quality of the litigation,

4) The Singapore Convention is an excellent reference point in the requirements for settlement agreements, in the requirements for the mediation procedure. Joining it will show investors that Russia joins these demands, supports them,

5) By joining the Singapore Convention, Russia will show its progressive attitude and become an example for Europe and Japan, which still have doubts about joining the Convention (for a number of reasons, including, according to some information, the desire to promote their own acts),

6) Accession to the Singapore Convention will entail the need to reform and improve the legislation in the field of mediation in Russia, which will positively affect the development of Russian mediation.

Taking into account the provisions of the Singapore Convention, Russia could accede with the proviso that the Convention would apply only if the parties agreed to its application in the contract. This does not require Russia to universally apply the Convention to all investment agreements it has concluded, but gives the parties the opportunity to determine this issue for themselves in each specific case.

Positions on these issues will be presented for discussion in UNCITRAL Working Group III on Investor-State Dispute Resolution Reform. If the community of mediators and lawyers has additions on this position, we will be happy to discuss and take them into account.

Daria Zhdan-Pushkina

The Mediation Center Solis

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