The Singapore Convention (United Nations Convention on International Settlement Agreements Resulting from Mediation) is a recent United Nations Treaty intended to promote international economic integration. The Treaty provides a regulatory framework for the right to invoke and enforce settlement agreements among parties of states that ratify the agreement. The Convention enhances international trade by promoting mediation as an alternate and faster method of resolving trade disputes.
The Treaty was adopted on December 2018 and opened for signature on by August 7, 2019. Forty-six countries, including the Kingdom of Saudi Arabia, signed the Treaty becoming the first UN treaty to receive the highest number of signatories upon its commission. Singapore’s Prime Minister, Lee Hsien Loong, officiated the ceremony hailing the document as a powerful affirmation of multilateralism that establishes a mechanism for the enforcement of cross border meditated settlement agreements.
The Kingdom of Saudi Arabia was represented by Bader Al-Haddab from the Ministry of Commerce and Investment Undersecretary for Policies and Regulations who signed the Convention on behalf of the Kingdom, on August 7, 2019.
Summary of the Provisions of the Singapore Convention
Article 1: Provides for the scope of application of the Convention stating that it shall apply to international settlement agreements resulting from mediation concluded in writing by parties seeking to resolve a commercial dispute. It also provides the exemptions for its application such as in agreements concluded to resolve disputes arising from trade by a consumer for household purposes, inheritance, or employment laws. Agreements concluded through the court process are also exempted from the scope of the Treaty.
Article 2: Provides essential definitions of terms used in the Convention. This helps in providing clarity in and comprehensive understanding of the terms in situations where a party has multiple or no places of business.
Article 3: Addresses the key obligations of the Parties to the Convention with respect to enforcement and allowing a disputing party to appeal a settlement agreement. The article mandates disputing parties from member states to recognize a settlement agreement as proof that a dispute raised has been resolved.
Article 4: Lists the requirements for reliance on the settlement agreement. This includes the submission of a signed agreement and evidence that the agreement resulted from meditation. Since member countries have different forms of communication, this article acknowledges electronic communication and translations of agreements where the agreement is not written in the official language of the Party.
Article 5: Provides ground for action when a competent party refuses to grant enforcement.
Article 6: Provides for parallel application where an arbitral tribunal, court, or competent Party may adjourn its decision following the grant of the relief sought under the Convention.
Article 7: Where a settlement agreement is to be relied upon, this section allows flexibility to an interested party to avail themselves in the manner and to the extent allowed by the law.
Article 8: Outline the two reservations of the Convention. The first reservation allows a party to exclude the scope of the Convention to which government agencies are a party and the second allows for a declaration to be made to the extent that the parties have agreed.
Article 10: Appoints the Secretary-General of the United Nations as the depository of the Convention
Article 11: Governs the signature, ratification, acceptance, approval, and accession to the Convention by members
Article 12: Permits regional integration of organizations comprising of sovereign states and with competence over matters governed by the Convention to sign, ratify, approve, and accede to the Convention. This provides the organizations with rights and obligations of being a part of the Convention.
Article 13: Governs the application of the Convention to parties that do not have an existing unified legal system
Articles 14, 15, and 16: Govern the entry into force amendments, and any denunciations made under the Convention
What does the Singapore Treaty Mean for Saudi Arabia?
Being part of the Arabian Peninsula, the legal system in Saudi Arabia is founded on the provisions of the Islamic Sharia law. However, the need for international economic integration liberalized the Saudi legal system through the adoption of arbitration as a conflict resolution mechanism. The New York Convention and Saudi’s Arbitration Law of 2012 introduced the Kingdom to a new era of dispute resolution. The Kingdom, which signed the Singapore Convention in 2019, adds to its international treaties of promoting regional integration creating the following benefits.
- Signing the Singapore convention is a great milestone to the Kingdom of Saudi Arabia, which has relied on meditation as a means of dispute resolution. The Treaty provides the Kingdom with an internationally recognized dispute resolution mechanism that will boost its cross border trade and investment.
- Since the Kingdom of Saudi Arabia has been its doors to foreign direct investment through liberalization of its trade policies, the Singapore Convention will provide a regulatory foundation to support the rise of mediation into the main international dispute resolution arena alongside arbitration.
- Saudi Arabia signed the Treaty in support of the growth of the institutional arbitration and mediation industry from the highest levels of decision-makers in the Kingdom, in pursuit of raising the Kingdom’s legislative and legal environment to a level consistent with the latest international standards applicable in this field.
- The affirmative action to sign the Treaty was based on the 2030 objectives, which prioritize strengthening the Kingdom’s investment standing by implementing international legal and commercial standards with the aim of creating a favorable environment for long-term domestic and foreign investment.
- Lastly, since the Treaty is an international binding instrument, it will bring added advantage bound to build assurance and stability to the Kingdom’s economy, contributing to Sustainable Development Goals.
The Future of Dispute Resolution in Saudi Arabia
International dispute resolution mechanisms through arbitration and mediation are being adopted globally as a way of promoting cross border integration. The basic idea behind the endorsement of the Treaty was to have the modern legal system provide a range of dispute resolution options for disputing parties to pick the mode of justice that is most suited to their needs, subject matter, and desired outcomes. The Singapore Convention hopes to provide an international law that provides parties with the desired dispute resolution options. After signing the Treaty, the next process will be ratifications process. According to Article 14 of the Singapore Convention, the Treaty will only be enforceable six months after three countries ratify it.
To get more information on the impact of the Singapore Convention on Saudi Arabia’s economy, contact us or call us on 966 (0) 920004626.