‘Tis the Season to Mediate or Arbitrate?

December 21, 2020

As an extraordinary year draws to a close and a brighter one (hopefully) beckons, we consider whether the compromises and sacrifices everyone has had to make to mitigate the effects of COVID-19 will inspire a greater willingness to rely on non-contentious means to resolve international commercial disputes.  ‘Tis the season to be merry and mediate?  Or will international arbitration continue to be the dominant means for resolving cross-border commercial disputes in 2021?

Key Takeaways

  • Great strides have been made in the regulation and promotion of mediation as a means for resolving disputes. This includes the establishment of the Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention).
  • The Singapore Convention came into force on 12 September 2020
    and has been signed by 53 countries so far, including major economies like the United States, China, India, South Korea.
  • However, only six countries have ratified the Singapore Convention, comprising Belarus, Ecuador, Fiji, Qatar, Saudi Arabia, and Singapore. Thus, the vast majority of international mediation agreements will not be enforceable under the Convention, but will be dependent on local court procedures.
  • In contrast, international arbitration continues to benefit from the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), which has entered into law in 166 countries, including all the states dominant in international commerce.
  • It is therefore fair to assume that companies, state owned entities and indeed governments doing business abroad will continue to rely on international arbitration as the principal means for resolving complex disputes, with mediation sometimes used in conjunction with arbitration in so-called arb-med-arb proceedings or, when the circumstances allow, as a complete alternative to arbitration.
  • The circumstances in which mediation (or direct party negotiations without a mediator) could be appropriate include where all the parties want to resolve the dispute amicably and can be relied upon to comply voluntarily with the terms of a settlement agreement.


Mediation is a process by which parties attempt to resolve a dispute amicably with the assistance of a third party (ie the mediator) who has no authority to impose a solution on the parties.  For the process to be successful, the parties must be willing to attempt to resolve their dispute
through guided discussions on the issues in dispute coupled with a focus on their shared interests. The entire process is voluntary and usually can be terminated at any stage. 

In contrast, arbitration is a process in which a neutral third party (ie the arbitrator or a three-person tribunal) is empowered, usually through the terms of a contract agreed before any dispute has arisen, to rendera reasoned award binding on the parties. The great advantage of arbitration is that arbitral awards are enforceable practically anywhere in the world pursuant to the New York Convention. 

Since a settlement agreement is one which the parties have agreed to comply with voluntarily, in theory an enforcement procedure should not be necessary.  But just as goodwill and harmony can subside at this time of year soon after the gift wrapping has been put away or the guests sent home, a party may live to regret a mediated settlement to which it has previously agreed.  Alternatively, there may be a dispute as to the proper interpretation of the mediated agreement or whether its terms have been satisfied.  In these circumstances, enforcement might be necessary.
Traditionally, this has required the bringing of a court action. This can be a lengthy and expensive process, particularly if the assets being enforced
against lie in a country (or countries) different to that of the enforcing party. 

The Singapore Convention – a Promising Start

The Singapore Convention seeks to achieve for mediated settlement agreements what the New York Convention has done for international
arbitration by providing a framework for the recognition and enforcement of mediated settlement agreements arising from international commercial disputes.  

A court subject to the Singapore Convention is required to enforce a mediated settlement agreement in accordance with its rules of procedure unless one of the limited grounds for refusing enforcement has been established, which include: 

  • a party to the settlement agreement was under some incapacity;
  • the settlement agreement is null and void, inoperative or incapable of being performed;
  • the settlement agreement is not binding or final according to its terms;
  • the obligations in the settlement agreement have been performed or are not clear or comprehensible;
  • there was a serious breach by the mediator of applicable standards of conduct (which remain undefined) without which the challenging party would not have entered into the settlement agreement;
  • the mediator failed to disclose circumstances that might raise justifiable doubts as to the mediator’s impartiality or independence and such failure to disclose had a material impact or undue influence on a party without which the challenging party would not have entered into the settlement agreement; or
  • the requested relief is contrary to the public policy of the state party to the Singapore Convention.

In addition, the Singapore Convention recognizes the res judicata effect of a settlement agreement.  The courts of contracting parties to the
Convention are therefore required to allow a party to invoke a settlement agreement if another party seeks to pursue a claim in relation to a matter that has already been resolved under its terms.

The Benefits of Arbitration Vis-a-Vis Mediation

The benefits of arbitration as a dispute resolution mechanism are well-known.  They include:

  • enforceability of arbitral awards, with the New York Convention
    having been ratified by 166 states;
  • arbitrator selection, which enables the parties to choose subject matter experts;1
  • neutrality of the forum;2
  • finality of the award, with only limited grounds for challenging an arbitration award and no general right of appeal;
  • confidentiality;3
  • speed;4 and
  • cost-effectiveness.5

Mediation possesses many of these strengths, and in some cases to a greater degree (e.g. such as the ability to control the time and cost of the proceedings).  Mediation may also be preferable to arbitration in cases where parties wish to control the ultimate outcome of the dispute instead of risking an adverse decision by a tribunal. 

However, the enforceability of mediated settlement agreements pales in comparison to arbitral awards.  Being a new treaty, the Singapore Convention only has six states which have signed and ratified the Convention as of the date of writing, and it could take decades before its worldwide reach approaches that of the New York Convention.

In addition, there may be circumstances where parties may be unable to achieve an amicable settlement through mediation and tougher action may be required.  For example, the counterparty may be unwilling to
participate meaningfully in mediation; there may be important principles in dispute that need to be clarified; limitation periods may be at risk of expiring, the gap between the parties may be too wide to be resolved amicably; or there may be concerns about the dissipation of assets during an attempted mediation.  In such situations, there may be a need to resort to arbitration.  Formal legal proceedings may also help focus minds and encourage the adoption of more reasonable positions in parallel negotiations. 


Whether we will see a significant increase in mediations in the new year will depend in part on the rate at which states sign up to the Singapore Convention.  Even more significant, however, will be whether commercial parties consider mediation to be a viable means for resolving international commercial disputes, which will often depend
on the precise circumstances and the nature of the relationship between the parties. Ultimately, mediation or negotiations without the assistance of a mediator can only work if both parties are willing to participate
constructively in the process and settle their disputes amicably. 

Dechert can assist with the drafting of dispute resolution clauses and represent clients as counsel in the conduct of international mediations and arbitrations.  Members of Dechert's International Arbitration Group
also serve as arbitrators, thereby providing unique insights on how cases can be effectively argued before arbitral tribunals to maximise the chances if success.

We take this opportunity to wish everyone happy holidays and a joyous and rewarding 2021, which will be hopefully largely immune to the ill-effects of COVID-19.


1)  In contrast, parties to court litigation have no say over which judge is appointed, who may or may not be familiar with the subject matter of the dispute.

2)  This is likely to be preferable to having to submit contractual disputes to the national courts of only one party.

3)  With that said, if confidentiality of an arbitration is desired, it should be stated expressly in contract subject to national laws that do not imply such an obligation automatically (such as Australia). In contrast, the confidentiality of an arbitration is implied by law in places like Singapore and England, for instance.

4)  Court trials in most jurisdictions typically taking longer than arbitrations to conclude, especially if interlocutory and appellate procedures are taken into account.

5)  While arbitrators, unlike judges, need to be paid by the parties, evidentiary hearings contribute to the bulk of the costs incurred by the parties and are usually significantly shorter in length in international arbitration compared to litigation. Choong, Mangan and Lingard, A Guide to the SIAC Arbitration Rules (OUP, 2nd Ed, 2018), paras 15.04 to 15.07.


This briefing was written by Mark Mangan and Daniel Gaw. For more information and guidance on these issues, please contact anyone within the Dechert international arbitration group across our network of offices, including the following members of the Singapore international arbitration team.


Subscribe to Dechert Updates