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The Settlement Agreement as a Means of Resolving Cross-Border Commercial Disputes in Light of the Singapore Convention on Mediation and Russian law
In December 2018 the United Nations adopted the Convention on International Settlement Agreements resulting from Mediation, also known as the Singapore Convention on Mediation. It applies to international settlement agreements resulting from mediation. It establishes a harmonized legal framework for the right to invoke such settlement agreements as well as for their enforcement.
The Convention has been open for signature since August 2019. However, many States, including Russia and the EU, have not signed the Convention.
This paper analyses whether it makes sense for Russia and other States with a similar legal and economic system to take part in such an international conventon or to adopt legislation following the amendments to the UNCITRAL Model Law on the International Commercial Conciliation. The paper concludes that it is worthwhile for Russia to implement the mechanism for enforcing settlement agreements, resulting from international commercial mediation.
In itself, the absence in Russia and some other countries of the domestic mechanisms for the simplified enforcement of out-of-court settlement agreements does not exclude the possibility of a successful implementation of the Singapore Convention. Establishing such a mechanism for cross-border commercial settlement agreements does not require the prior availability of such mechanisms in all countries.
However, the implementation of the Singapore Convention entails a risk of abuse of the simplified procedure for enforcing a settlement agreement by dishonest parties against the other party, as well as the risk of its unfair use by both parties. For example, it could be used to cover illegal transactions, or for money laundering or tax evasion. The risk is related to the absence of unified global standards for conducting mediations, guarantees of its quality and requirements of the mediator. As result, some settlement agreements might have illegal content and might grossly violate the interests of one of the parties, third parties or public interests. However, the Singapore Convention contains a number of safeguards to counteract abuses and otherwise protect the legitimate interests of the state and individuals.
Nevertheless, taking into account the risk of abuse of the simplified mechanism for enforcement of the settlement agreement, consideration should be given to the possibility of establishing additional guarantees in the instrument to verify the content of such agreements.