Recognition and Enforcement of Mediated Settlement Agreements Internationally: Enhancing the Use of Arbitration

Abstract

This paper proposes solutions de lege lata and de lege ferenda to ensure the expedient international enforceability of the settlement agreements, in particular, resulting from mediation.

If a settlement agreement was concluded before the commencement of the arbitration, and then it was formalized in an arbitral award on agreed terms, there is a risk that a foreign court will refuse to enforce it, since the existence of an unresolved dispute may be considered as a prerequisite for arbitration.

At the level of participants in civil law turnover, the problem can be solved (unless prohibited by the applicable law) by including in the mediated settlement agreement of a condition precedent: the agreement will acquire legal force only if the arbitral tribunal approves it, i.e. makes an arbitral award on the agreed terms.

However, it is proposed for UNCITRAL to formulate a recommendation to the Contracting Parties to apply the New York Convention 1958 to those arbitral awards on agreed terms, which were rendered as a result of the parties' recourse to arbitration solely for making such an award under the conditions, when the dispute has already been settled by them in an amicable agreement, in particular, resulting from mediation.

It is also proposed accordingly to amend paragraph 1 of Art. 30 "Settlement" of the UNCITRAL Model Law on International Commercial Arbitration so that an arbitral award on agreed terms may be rendered by the arbitral tribunal also if the parties, without resorting to arbitration, settled the dispute by agreement during the mediation procedure and then applied to arbitration solely for the purpose of making such an arbitral award on agreed terms.

Keywords: recognition and enforcement, settlement agreement, mediation, favor conciliationis, arbitral award on agreed terms, consent award