By Erin Gleason Alvarez
The United Nations Commission on International Trade Law (UNCITRAL) Working Group II met at its 68th session in New York from February 5 through 9 to finalize draft convention and model law documents. The focus of these instruments is on the enforcement of international commercial settlement agreements resulting from mediation.
Working Group II was initiated by UNCITRAL in 2014 in order to explore whether it is feasible to develop mechanisms for the enforcement of mediated agreements in international commercial disputes. Since then, there have been several sessions to explore the most appropriate path forward.
The need for this Working Group grew out of concern that parties to mediated agreements may not be afforded the same protections as those available in international commercial arbitration. The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), entered into force in 1959, obligates States to recognize and enforce arbitral awards made in other contracting States.
To accommodate parties’ desire to mediate international commercial disputes, practices have emerged to try to transform a mediated settlement agreement into an arbitral award. In addition to practical concerns over enforceability, these steps add significant process to mediation, which parties tend to like because it is simpler than arbitration (among other reasons). Other recourse for enforcement of mediated settlements in international commercial disputes can include pursuing claims for enforcement of the agreement under contract law. But this may also be difficult in the international context, depending upon the jurisdiction where enforcement is sought. Protracted cross-border litigation to enforce a mediated settlement is counterintuitive at best.
Thus the proposed model law and convention seek to alleviate these concerns, recognizing the increased use of mediation in the international commercial context and the benefits that the mediation process affords parties. The instruments, as they are currently drafted, address both enforcement concerns and the possibility for a party to invoke a settlement agreement as a defense. To date, changes have not yet been uploaded to the UNCITRAL website that would show the most recent revisions to the draft model law and convention. The most recent drafts are available here.
By way of background, a “model law” is a template of sorts, for States to consider adopting locally. A “convention” on the other hand is an instrument that is binding on States and other entities (so long as they are signatory to the document).
What does all of this mean for parties to mediation? For now, it means waiting for further developments. UNCITRAL must ultimately approve the instruments before any adoption or ratification processes may commence. The Commission will commence review this summer.
Erin Gleason Alvarez is Principal at Gleason Alvarez ADR, LLC. She serves on the CPR Institute Panel of Distinguished Neutrals and co-chairs the CPR Institute Mediation Committee. Erin previously acted as the former Global Head of ADR Programs for AIG.
Erin now serves as mediator and arbitrator in commercial and insurance disputes and may be reached at email@example.com.