Mediation at the Intersection with Contract Law: The Settlement Agreement
25 Pages Posted: 2 Jun 2013 Last revised: 11 Jun 2013
Date Written: June 1, 2013
As it is enunciated in the title, this paper is focused on the settlement agreement which is the outcome of mediation. According to the terms and definitions given in the Introduction, the aim of this paper is to analyse the effect of defects of consent, such as economic duress and undue influence, on the validity of a settlement agreement, the latter being a contract and, as such, being governed by the common law of contracts. The binding effect of a settlement agreement is also examined with regard to the issue of the enforceability of a settlement agreement as a judgment or as an arbitral award. To this end, reference has been made to the EU Mediation Directive (Directive 2008/52/EC) , namely to article 6 and to the implementation of this article in England and Wales, where, according to the Civil Procedure Rules (Amendment) 2011, Part 78-Rules 78.24 and 78.25, the settlement agreement is enforceable as a court order, i.e. a "mediated settlement enforcement order", the latter being considered as a consent order, because it is based on the explicit consent of the parties to make their mediated settlement agreement a court order.
With regard to the enforceability of a settlement agreement as an arbitral award, this issue is addressed by referring to the UNCITRAL Model Law on International Commercial Conciliation, article 14 which is a vague, open-ended provision and leaves to the enacting States the task of implementing a procedure for the enforcement of a settlement agreement. Then, Article 30 of the UNCITRAL Model Law on International Commercial Arbitration is taken into consideration, since it provides for the making of an award on agreed terms (also known as a consent award) which records the settlement reached by the parties, during arbitral proceedings. However, the question of the enforcement of a settlement agreement reached by the parties through mediation remains unanswered, mainly because it implies the appointment of an arbitrator after the dispute has been settled. Although some articles of the New York Convention of 1958 on the Recognition and Enforcement of Arbitral Awards are mentioned in order to find an answer to the question of the enforceability of a settlement agreement as an arbitral award, it has been concluded that a revision of the New York Convention is advisable through a UNCITRAL recommendation which could clarify the applicability of the Convention to international arbitration awards entered into with the consent of both parties, as a result of mediation, by an arbitrator appointed after the conclusion of the mediation.
Keywords: mediation, settlement agreement, common law of contracts, enforcement
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