Global dispute solutions – will UNCITRAL create a treaty for the enforcement of settlement agreements?


Financier Worldwide Magazine

October 2016 Issue

October 2016 Issue

Trade agreements may be a hot topic of political dispute, but there is no doubt that international trade itself is here to stay and will continue to grow. All large corporations and many small and medium size businesses that consider themselves to be domestic are in fact engaged in international trade either on the supply side, in the provision or receipt of services, or in connection with business done over the internet. And in all of these contexts, disputes arise. Over the last half a century, the most important development in international dispute resolution has been the establishment of international arbitration as a system for normalising the rule of law in business transactions.

The engine for the growth and acceptance of international arbitration has been the New York Convention, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Drafted on 10 June 1958, it was signed by the US in 1968 and has been signed by over 153 countries. Arbitration is so important because the New York Convention provides for very limited defences to the enforcement of arbitral awards and thus expedition is possible. This is not the case for the judgments of courts around the world. There is now work on a treaty relating to the recognition of foreign judgments by courts (Judgments Project of the Hague Conference on Private International Law). However, to date, court judgments of foreign countries have not been readily enforced in domestic court systems and often entail a re-examination of the merits of disputes. For that reason, arbitration is the dispute resolution mechanism of choice for thoughtful contracting parties and their advisers around the world.

With the growth of arbitration has come the development of arbitral institutions such as the London Court of International Arbitration, the International Chamber of Commerce in Paris, the International Centre for Dispute Resolution (related to the American Arbitration Association) and a host of centres around the world including Hong Kong, Singapore, China, Miami and New York, generating local business and supporting private international dispute solutions. And with the proliferation of international arbitration has come tests for the efficiency and cost savings of the process.

In US domestic disputes, both in arbitration and litigation, one method for cost-cutting and timely resolution of business disputes has been mediation. Many courts have mediation programmes and most arbitral institutions encourage the disputants to consider mediation. International mediation of disputes has not been a realistic alternative to international arbitration because a settlement agreement under international law is simply a contract and enforcement would require the parties to litigate or arbitrate the settlement contract, in essence starting over.

That may soon change and, if so, a new and important alternative will be created for businesses around the world. Working Group II (Arbitration and Conciliation) of the United Nations Commission on International Trade Law (UNCITRAL) is working on an instrument – either a treaty, guidelines or model law – that will permit the expedited enforcement of conciliated settlement agreements possibly in a way similar to the New York Convention’s enforcement of arbitral awards. The intent is to focus on business disputes that are resolved with the assistance a third-party neutral either in mediation or conciliation and result in a written settlement agreement.

Business (particularly US based business) wants to have a mediation alternative for resolving international disputes. Businesses like having the alternative of reaching a self-directed solution to problems they face and avoiding the enormous costs of discovery in litigation or the lesser but still significant costs of disclosures in arbitration. Professor S. I. Strong has conducted a survey in which 74 percent of the respondents believed that a convention on enforcement of conciliated settlement agreements would encourage the use of conciliation (with another 18 percent believing that it could possibly do so).

Working Group II had its latest meeting in Vienna in September 2016 and has made significant progress toward drafting the instrument – tentatively drafted as a treaty pending resolution of the form it will take. The current draft excludes family and employment matters, and requires that the disputing parties be from different countries or that the dispute involve cross-border obligations. The most important requirement is that the settlement of the dispute be the result of a process that involves a neutral. It is clear from the meetings that the participating countries want to make sure there is a process for assuring that a settlement results from an arms-length effort to resolve an actual dispute. That way the parties cannot simply convert ordinary contracts into enforceable international instruments. There appears to also be some concerns that relate to money laundering. But there have also been discussions about the role of mediators and conciliators and their likely unwillingness to certify the ‘fairness’ of any mediated result.

There is a developing consensus and an apparent desire in the business community for this effort to succeed. We may know more at the conclusion of the Global Pound Conference this year taking place in over 40 cities worldwide, where all constituents in ADR will be asked what they want and envision for ADR processes. Change may be coming and it would be a powerful incentive for the growth of international mediation.

Meanwhile, back in the US, there are efforts afoot to use the existing structure of the New York Convention to enable conversion of settlements into enforceable arbitration awards. New Jersey is considering legislation of this type. This is a pioneering effort to encourage international commerce and reduce the costs and time involved in dispute resolution by permitting the expedited enforcement of settlement agreements that are converted pursuant to the statute into arbitral awards.

Significant changes and exponential growth of mediation of international disputes is truly just on the horizon. The desire is already present; the mechanisms for enforcement will soon come.


Laura A. Kaster is a mediator and arbitrator at Appropriate Dispute Solutions. She can be contacted on +1 (609) 921 0095 or by email:

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