U.S. Proposes Convention to Enforce Mediated Settlements to UNCITRAL

Earlier this month, the United Nations Commission on International Trade Law (UNCITRAL) approved its draft UNCITRAL Convention on transparency in treaty-based investor-State arbitration at its 47^th session in New York City.

The UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration adopted by the Commission in 2013 provide a procedural framework for making information available to the public on investment arbitration cases arising under relevant investment treaties concluded after 1 April 2014. Application of the Rules on Transparency to arbitration cases arising under treaties concluded before that date is currently subject to consent by disputing parties or treaty parties on a case by case basis. The purpose of the convention on transparency is to provide a mechanism for the application of the Rules on Transparency to arbitration cases arising under the almost 3,000 investment treaties concluded before 1 April 2014. With UNCITRAL’s approval, the convention on transparency will now be submitted to the United Nations General Assembly for final consideration and adoption at its 69th session this Fall.

Since then, the United States presented proposal A/CN.9/822 to UNCITRAL which suggests Working Group II for arbitration and conciliation begin creating a convention to enforce mediated settlement agreements that resolve international commercial disputes.  In the proposal, the U.S. argues that such a convention is merited because international mediated settlements are generally more difficult and burdensome to enforce than arbitral awards despite that conciliation is increasingly being used to resolve disputes across the globe.

According to the U.S.,

… the United States proposes that Working Group II develop a multilateral convention on the enforceability of international commercial settlement agreements reached through conciliation, with the goal of encouraging conciliation in the same way that the New York Convention facilitated the growth of arbitration. Just as the New York Convention has been successful in part due to its relative brevity and simplicity, an analogous convention on conciliation should also avoid unnecessary complexity.

With respect to the scope of a convention, the United States proposes that the Working Group address the following issues, among others:

• Providing that the convention applies to “international” settlement agreements, such as when the parties have their principal places of business in different states;
• Ensuring that the convention applies to settlement agreements resolving “commercial” disputes, not other types of disputes (such as employment law or family law matters);
• Excluding agreements involving consumers from the scope of the convention;
• Providing certainty regarding the form of covered settlement agreements, for example, agreements in writing, signed by the parties and the conciliator; and
• Providing flexibility for each party to the convention to declare to what extent the convention would apply to settlement agreements involving a government.

The convention could then provide that settlement agreements falling within its scope are binding and enforceable (similar to Article III of the New York Convention), subject to certain limited exceptions (similar to Article V of the New York Convention).

A July 8th Federal Register notice states a public meeting “to obtain the views of concerned stakeholders on what any such convention should provide and how the various issues identified in the proposal should be addressed,” is scheduled to be held on July 31^st in Washington, DC.  Individuals who cannot attend the meeting may submit comments via email.

Disputing would like to thank Michael McIlwrath, Senior Counsel – Litigation at GE Oil & Gas in Florence, Italy, for alerting us to this development!

Photo credit: Nomadic Lass / Foter / Creative Commons Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0)