Stones from Other Mountains: Trends of International Commercial Mediation,（2023.10-VI）

[Editor’s notes]

Stones from Other Mountains: Trends of International Commercial Mediation is a special column launched by the Shanghai Commercial Mediation Center (hereinafter referred to as the “SCMC”) in 2022, and has five issues published so far. It mainly introduces the development of ADR in the United States, the European Union, Singapore, Hong Kong Special Administrative Region (HKSAR) and other places.

With a view to following the latest development of overseas commercial mediation, and laying the solid foundation for the internationalization of commercial mediation in China, this issue will introduce in detail the latest amendments of the UNCITRAL Mediation Rules and the UNCITRAL Model Law on International Commercial Mediation, the latest development of extraterritorial ADR legislation and mediation institutions, and The Singapore Convention on Mediation: A Framework for the Cross-Border Recognition and Enforcement of Mediated Settlements by Timothy Schnabel, a member of the negotiating delegation of the Singapore Convention on Mediation in the United States.

This issue was written by Pan Xiong, Deputy Director of the Youth Committee of SCMC, and Bao Shipeng, Assistant Lawyer of Shanghai JunHe Law Firm.

Professionals who are concerned about commercial mediation are welcome to contribute actively.

I. Recent amendments to UNCITRAL legislation on mediation

(i) Recent amendments to the UNCITRAL Mediation Rules

In order to facilitate parties to reach agreement on disputes arising in the course of their commercial relations through mediation procedures, UNCITRAL formulated the UNCITRAL Mediation Rules in 1980 and provided a set of model provisions for mediation proceedings. Thereafter, based on the general acceptance and use of international commercial mediation in the international community, UNCITRAL adopted the United Nations Convention on International Settlement Agreements Resulting from Mediation (hereinafter referred to as the Singapore Convention on Mediation, a detailed description of which can be found in the Stone from Other Mountains: Trends of International Commercial Mediation) in 2018, so as to further address the issue of uncertainty in the enforcement of settlement agreements. The UNCITRAL Mediation Rules were revised in 2021 to support the implementation of the Singapore Convention on Mediation, which plays an exemplary role in improving the mediation rules of mediation institutions in various countries and regions.

The specific amendments to the 2021 edition of the UNCITRAL Mediation Rules are set out below:

1. A definition of mediation has been added. Mediation refers to a process, whether referred to by the term mediation, conciliation or an expression of similar import, whereby parties request a third person or persons (“the mediator”) to assist them in their attempt to reach an amicable settlement of their dispute.

2. The “Article 3: Number and appointment of mediators”:

   Deleted the detailed provisions on how the parties should appoint a mediator when there is more than one mediator;

    Added the qualifications to be taken into account when appointing a mediator, as opposed to "independent and impartial" in the former version:

     (a) The professional expertise and qualifications of the prospective mediator, experience as a mediator and ability to conduct the mediation;

   (b) Any relevant accreditation and/or certification awarded to the prospective mediator by a recognized professional mediation standards body;

     (c) The availability of the mediator.

   Added provisions on how to appoint a substitute mediator.

3. Article 8 Settlement agreement (New Version) provides how to determine whether an electronic communication satisfies the requirements for the parties to sign a settlement agreement.

4. Article 8 Settlement agreement (New Version) stipulates that, by signing the settlement agreement, the parties agree that the settlement agreement can be relied upon for seeking relief under the applicable law.

5. Article 9 Termination of mediation (New Version) prescribes a circumstance in which the mediation shall terminate, that is, at the expiration of any mandatory period in the applicable international instrument, court order or mandatory statutory provision, or as agreed upon by the parties.

6. Article 10 Arbitral, judicial or other dispute resolution proceedings (New Version) provides that mediation may take place under the Rules at any time, regardless of whether arbitral, judicial or other dispute resolution proceedings have been already initiated.

7. Article 11 Costs and deposit of costs (New Version) broadens the scope of “costs”, which also includes any other expenses that may have been accrued out of the mediation, including in relation to translation and interpretation services.

8. Article 12 Role of the mediator in other proceedings (New Version) clarifies that the parties shall not present the mediator as a witness in any such proceedings.

9. Article 13 Exclusion of liability has been added in the Rules, which provides that save for intentional wrongdoing, the parties waive, to the fullest extent permitted under the applicable law, any claim against the mediator based on any act or omission in connection with the mediation.”

More detailed model mediation clauses,  declaration of disclosure and statement of availability have been added to the new version.

(The full text of the new UNCITRAL Mediation Rules 2021 is available on the UNCITRAL website.)

(ii) Recent revisions to the UNCITRAL Model Law on International Commercial Mediation

As recognizing that mediation is increasingly being used as an effective means of settling commercial disputes, UNCITRAL developed the Model Law on International Commercial Conciliation in 2002, which was revised in 2018 and renamed UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation (hereinafter referred to as the “Model Law”). The Model Law was introduced on December 20, 2018, at the same time as the Singapore Convention on Mediation, and UNCITRAL believes that the revision of the Model Law will greatly assist States in improving their legislation on the use of modern methods of mediation and in the development of it. Accordingly, this article will briefly introduce the changes relating to the Model Law (2018), as set out below: 

1. The main amendment in this Act is the addition of new uniform rules on the enforcement of settlement agreements resulting from mediation, so as to address one of the obstacles to the use of mediation, namely, the cumbersome and time-consuming nature of the enforcement of settlement agreements.

2. “Section 1 General provisions” has been added, describing the scope of application of the Law and definitions. The new scope of application includes “international settlement agreements resulting from mediation”.

3. “Section 3  International settlement agreements” has been added:

     Clarify the scope of application of this section;

   Clarify that a settlement agreement refers to an international agreements resulting from mediation and concluded in writing by parties to resolve a commercial dispute;

Clarify requirements for reliance on settlement agreements;

Clarify the requirement that a settlement agreement shall be signed by the parties or, where applicable, the mediator, is met in relation to an electronic communication;

Clarify the circumstances in which the competent authorities of this State may refuse to grant relief at the request of the party.

(Full text of the Model Law is available on the UNCITRAL website)

II. Recent developments in extraterritorial ADR legislation and representative mediation institutions

(i) United States

1. Progress on mediation legislation in the United States in recent years

The United States is one of the first signatories to the Singapore Convention on Mediation, and its mediation legislation consists of both federal and state legislation. The current development of the mediation system in the United States is mainly based on the updating of the state mediation system, such as the amendment of the mediation rules by the California Rules of Court in 2023, the revision of the Uniform Mediation Act of the state of Ohio in 2021 and other revisions. The author will briefly introduces the contents of the above two laws concerning the mediation system, as follows:

(1) California Rules of Court (2023)

The mediation rules in this Act are mainly provided in Title 3, Civil Rules, Devision 8, Alternative Dispute Resolution, which consists of four chapters, stipulating the definition of mediation, mediation procedures, qualifications and conduct of mediators, procedures for addressing complaints against mediators, conditions and procedures for the transfer of litigation to mediation, the selection of mediators, and documents and materials for mediation. The Rules provides important guidelines for the better promotion of civil mediation in California.

(2) Ohio Uniform Mediation Act (2021)

This Act consists of ten articles that stipulates definitions, application, mediation communications, and the obligations and rights of mediators to provide guidance for civil mediation in Ohio. This Act clarifies the definition of mediation communication privilege, which means that mediation communications are not subject to discovery or admissibility into evidence in litigation. In addition, the Act establishes investigative duties for mediators.

2. Recent developments of JAMS in the United States

JAMS is a recognized mediation institution, it is the abbreviation for: Judicial Arbitration and Mediation Services of America, Inc. (JAMS) 

(For a detailed introduction to JAMS, see Stones from Other Mountains: Trends of International Commercial Mediation 2022.5-II)

Here's what's been happening at JAMS in recent years:

(1) In March 2022, JAMS Orange County Resolution Center was recognized by the Orange County Coalition for Diversity in the Law (OCCDL) as one of the top ten legal organizations in Orange DEI.

(More recent highlights around the content of dispute resolution on the JAMS website)

(2) In July 2021, JAMS (London) held a seminar series named “Cocktails and Conversations”, looking at the future of alternative dispute resolutions.

(3) In October 2020, JAMS participated in the American Bar Association's (ABA) 2020 Annual Mediation Week series, focusing on the role and function of the mediation system under the impact of the COVID-19 pandemic, and promoting growth and communication in the mediation community.

(ii) United Kingdom

1. Mediation legislation in the United Kingdom in recent years

In 2021, the UK Ministry of Justice published A Guide to Civil Mediation, highlighting the benefits of civil mediation and provide guidance on seeking a suitable mediator. The Guide sets out clearly the definition of mediation, the types of disputes suitable for mediation, mediation procedures, conduct of mediators, and the enforceability of settlement agreements. In addition, the United Kingdom formally signed the Singapore Convention on Mediation on May 3, 2023. The Convention now has 56 participating states.

(British signature on the Singapore Convention on Mediation)

2. The latest developments in CEDR

The CEDR is a recognized mediation institution, it is the abbreviation for: Centre for Effective Dispute Resolution (CEDR), UK (For a detailed introduction to CEDR, see Stone from Other Mountains: Trends of International Commercial Mediation 2022.6-III)

The following is a list of CEDR's recent work and activities:

(1) Release of mediation audit report (2023)

CEDR releases its mediation audit report (2023) (The Tenth Mediation Audit). This is the tenth time that CEDR has surveyed civil and commercial mediators on a range of issues including their personal background, mediation practice and experience, professional standards and regulation, and the focus of the field in the coming years.

(2) Launch of the Diversity & Inclusion Mediation Charter

CEDR officially launched The Diversity & Inclusion Mediation Charter on January 27, 2022. CEDR believes that mediators representing all segments of society are best equipped to mediate and that there should be no barriers to entry into the profession based on personal characteristics; currently, the mediators are not appointed based on gender, race, and age, and CEDR should work to increase the diversity of mediators to reflect society circumstances more accurately.

(iii) Singapore

1. Singapore's promotion of mediation legislation in recent years

In 2020, Singapore amended the Mediation Act launched in 2017 to provide detailed provisions on the accreditation scheme for mediation service providers, the relationship between mediation and litigation proceedings, and the enforceability of settlement agreements, with a view to further enhancing the influence of commercial mediation in the country. In the same year, the Supreme Court of Singapore introduced the Supreme Court Act in response to the Singapore Convention on Mediation, which provides for an ancillary regime for the enforcement of international settlement agreements in Singapore.

(Mediation Act 2017, as amended in 2020)

2、The latest development of SIMC in Singapore

The SIMC is a recognized mediation institution, it is the abbreviation for: Singapore International Mediation Center (SIMC). (For a detailed introduction to SIMC, see Stones from Other Mountains: Trends of International Commercial Mediation 2022.6-Ⅳ)

The following is a list of SIMC's recent works and activities:

(1) Participation in Singapore Convention Week

2023 Singapore Convention Week, organized by Singapore Ministry of Law in collaboration with a number of Singaporean and international institutions, includes a series of events concerning legal and dispute resolution, such as the SIAC Seminar organized by the Singapore International Arbitration Centre (SIAC), and MNCs for Mediation, SIMC's key event.

(2) Improvement of diversified dispute resolution mechanisms

The Litigation-Mediation-Litigation Agreement (LML Agreement) was signed between the Singapore International Commercial Court (SICC) and SIMC in January 2023 to provide users of dispute resolution services with a clearer and more flexible choice among the three main ways to dispute resolution, namely, mediation, arbitration, and litigation.

(iv) HKSAR

1. Mediation legislation in the HKSAR

(1) Promulgation of the Hong Kong Mediation Code in February 2010

The Code sets out the responsibilities of parties to mediation in Hong Kong, and establishes the mediation procedure and the common standards for mediators. The Code plays an important role in ensuring the quality of mediation services and has been adopted by several mediation service providers.

(2) Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Ordinance 2017

In 2017, Hong Kong amended its Arbitration and Mediation Ordinance to clarify the relevant procedures of third party funding in arbitration and mediation, which are permitted under Hong Kong law. The Arbitration Ordinance (Cap. 609) and the Mediation Ordinance (Cap. 620), coming into operation on 1 January 2013 and providing a regulatory framework for mediation in Hong Kong without impeding the flexibility of the mediation process, were amended to clarify the relevant procedures of third party funding of arbitration and mediation, which is permitted under Hong Kong law.

In addition, Hong Kong and the Ministry of Commerce of the People's Republic of China have signed an Investment Agreement under the Mainland and Hong Kong Closer Economic Partnership Arrangement, thereby further improving the relevant investment dispute mediation mechanism.

(3) Adoption of the Guangdong-Hong Kong-Macao Greater Bay Area Cross-Boundary Disputes Mediation Model Rules in 2022

At the 4th Guangdong-Hong Kong-Macao Greater Bay Area Legal Departments Joint Conference on December 16, 2022, the Guangdong-Hong Kong-Macao Greater Bay Area Cross-Boundary Disputes Mediation Model Rules were formally endorsed and came into effect on December 30, 2022, which aim to lay down the best practices for the resolution of cross-border disputes through amicable, voluntary, confidential and non-adversarial mediation, for reference of the mediation institutions and mediators of the three places when formulating their detailed mediation rules. The parties are encouraged to introduce services such as legal discovery, neutral assessment, and expert opinion in the mediation process.

(Full text of Guangdong-Hong Kong-Macao Greater Bay Area Cross-Boundary Disputes Mediation Model Rules is available on the official website of the Department of Justice of Hong Kong)

2. The latest development of HKMC

Recognized mediation organizations in Hong Kong includes Hong Kong Mediation Accreditation Association Limited (HKMAAL), Hong Kong Institute of Accreditation for Mediation (HKIAC), Hong Kong Mediation Centre (HKMC), Joint Mediation Helpline Office (JMHO), etc. (For details of these mediation organizations, please refer to “Stones from Other Mountains: Trends of International Commercial Mediation 2022.6-Ⅳ)

This issue focuses on the Hong Kong Mediation Council (HKMC)

HKMC's goal:

(1) Promote mediation or other alternative dispute resolutions (ADR);

(2) Encourage members to cooperate with relevant organizations or professional bodies;

(3) Promote the exchange of data and opinions on mediation and other alternative dispute resolutions (ADR);

(4) Education and training.

HKMC activities include:

(1) Organize symposiums and conferences on various types of mediation and other alternative dispute resolutions (ADR);

(2) Conduct training of mediators and encourage the public to resolve disputes through mediation;

(3) Publish a members' newsletter and promote the Dispute Resolution magazine;

(4) Promote the development of mediation through various committees such as family, construction, insurance, business and public utilities;

(5) Set standards for the work of mediation services.

HKMC's recent activities and endeavors is as following:

(1) On May 5, 2023, HKMC participated in the “Mediation First” Pledge Campaign under the theme of “Working Together for a New Journey”. The Vice-Chairman of HKMC was one of the speakers at the event.

(2) On 5 June 2022, HKMC supported the organization of the 2022 Mediation Conference on the theme “Mediation First: Harmony for the Future”.

III. Professional Opinions

This issue’s Professional Opinions is excerpted from The Singapore Convention on Mediation: A Framework for the Cross-Border Recognition and Enforcement of Mediated Settlements by Timothy Schnabel, J.D., Yale Law School. Dr. Timothy Schnabel represented the United States in the negotiation of the Singapore Convention on Mediation. In this paper, he provides on the purpose of the Convention, the debates during the UNCITRAL negotiations, and discloses what was negotiated but not ultimately included in the treaty from a negotiator's perspective. The article was translated by Michael Wang from Shanghai Office of Sidley Austin LLP. This article contains excerpts concerning the understanding of the scope of application of the Convention. (This article was originally published in the Pepperdine Dispute Resolution Law Journal, Vol. 19, No. 1, 2019.)

The text of Timothy Schnabel's article is summarized below:

First, the settlement agreement must be resulted from mediation. For the purposes of the Convention, the only requirement for a settlement agreement to be “resulted from mediation” is that the parties of the dispute reaches an amicable settlement agreement with the assistance of a third person who does not have the power to impose a settlement.

Secondly, the settlement agreement must be international at the time it is concluded, regardless of whether the relevant criteria could have been met earlier during the mediation or at the time relief is sought. Thus, for example, a settlement agreement may be international even if the mediation itself is not international under the current Model Law (e.g. if a party changes its place of business during the mediation, thus creating an international element at that stage).

Third, the settlement agreement must be commercial. The Working Group had initially agreed to limit the application of the Convention to commercial disputes, and the only problem was whether and how to define the commercial nature of the settlement agreement (e.g. by way of illustrative enumeration, as used in the Model Law), and what the exclusions were.

Fourth, a settlement agreement may not fall within a specific exclusion. As for the type of dispute, settlement agreements to resolve consumer disputes are excluded from the application of the Convention, regardless of whether the other conditions for the application of the Conventionare met. Similarly, settlement agreements reached through mediation relating to family law, labor law or inheritance are also excluded. These exclusions not only ensure that the UNCITRAL document avoids overlapping with the work of the Hague Conference on Private International Law, but also exclude types of disputes that raise concerns among parties about unequal bargaining power, which may discourage some States from adopting the Convention.

[References]

1. Timothy Schnabel, Michael Wang, The Singapore Convention on Mediation: A Framework for the Cross-Border Recognition and Enforcement of Mediated Settlements, International Law Studies, No. 6, 2020.

[Related website]

1. United Nations Commission on International Trade Law (UNCITRAL)

https://uncitral.un.org/zh    

2. Judicial Arbitration and Mediation Services, Inc. (JAMS)

https://www.jamsadr.com/

3. Center for Effective Dispute Resolution (CEDR)

https://www.cedr.com/

4. Singapore International Mediation Center (SIMC)

https://staging.simc.com.sg/dispute-resolution/mediation/

5. Hong Kong Mediation Center (HKMC)

https://mediationcentre.org.hk/tc/home/home.php

[Links to laws and regulations]

1. United Nations Convention on International Settlement Agreements Resulting from Mediation

https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/zh/mediation_convention_c_0.pdf

2. UNCITRAL Mediation Rules (2021)

https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/22-01369_mediation_rules_ebook_1.pdf

3. UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation (2018)

https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/22-01363_mediation_guide_e_ebook_rev.pdf