Paper presented at the AfAA 2nd Annual International Arbitration Conference, 15th - 16th April 2021

The Singapore Convention

On 12 September 2020, the United Nations Convention on International Settlement Agreements Resulting from Mediation, the Singapore Convention, entered into force. The overarching purpose of the Convention is to create a mechanism for the enforcement of international settlement agreements resulting from mediation. The convention was described by the Prime Minister of Singapore, Mr. Lee Hsien Loong, as the “missing third piece” in the international dispute resolution enforcement framework. Currently, 53 states have signed the convention, including three states in MENA namely Jordan, Qatar and Saudi Arabia.

Mediation in MENA

Mediation in the Arab Middle Eastern region is rooted in the Islamic tradition of settling disputes with the help of a third party. Against this backdrop, many states in the region continue to promote commercial mediation through legislation and the creation of mediation institutions.

For example, in 2006, Jordan enacted legislation to regulate mediation of civil disputes.  The law provides for mediation by both judges of the court of first instance and private mediators. 

Also in 2006, Qatar established the Qatar International Center for Conciliation and Arbitration. In 2012, it promulgated the QICCA Conciliation Rules, which were largely inspired by the UNCITRAL conciliation rules. The Qatar International Court and Dispute Resolution Centre, established in 2010, also provides mediation services.

In 2009, the Bahrain Chamber for Dispute Resolution, which provides both arbitration and mediation services, was established. In 2019, in anticipation of the Singapore Convention, it adopted mediation rules.

In 2014, Saudi Arabia created the Saudi Centre for Commercial Arbitration. It adopted Arbitration and Mediation Rules together with a Code of Ethics for Mediators. Recently, the Centre also launched the Emergency Mediation Program to assist businesses in financial distress due to the impact of COVID-19 with the resolution of their disputes.

Finally, in the UAE, there are several institutions that provide mediation services. The Centre for Amicable Settlement of Disputes, which was established in Dubai in 2009, is linked to the Dubai courts. Mediation services are also offered by the Dubai International Financial Centre Courts and the DIFC-LCIA Arbitration Centre, which provides mediation services under the LCIA Mediation Rules.

Do Parties in MENA mediate?

There is good legislative and institutional support for parties who wish to mediate in the MENA region. However, statistics from regional institutions that offer mediation and arbitration indicate that commercial mediation remains underused. The Cairo Regional Centre for International Commercial Arbitration registered 13 mediation cases since its inception compared to 1303 arbitration cases. In 2019, the DIFC-LCIA registered 13 mediation cases compared with 67 arbitration cases. Between 2018 and 2020, QICCA administered 11 mediations and 77 arbitrations.

Justice Delayed

There may be many reasons why institutional mediation is still relatively underused by commercial parties in the region. One underlying reason could be the ease with which defendants in certain jurisdictions can delay the resolution of meritorious claims in court through dilatory tactics. These delays are exacerbated where there is a backlog of cases. Moreover, enforcement is complex and protracted in certain jurisdictions especially if sought against, for example, real property.

The World Bank’s Doing Business[1] contract enforcement ranking measures the time and cost for resolving a commercial dispute through a local first-instance court until payment. Egypt is ranked 166 out of 190 ranked countries with an average duration of 1010 days. Jordan is ranked 110 and with an average of 642 days. Qatar is ranked 115 with an average of 570 days. Bahrain is ranked 59 with an average of 635 days. Saudi Arabia is ranked 51st with an average of 575 days. The UAE is ranked 9with an average of 445 days.

In jurisdictions where contract enforcement is difficult and prolonged, there is a further incentive for defendants to engage in delay tactics in the hope that the ‘nuisance value’ created will reduce or offset the value of the claim from the Claimant’s perspective. This, in turn, reduces their incentive to engage in mediation.

Cost Sanctions

Many of the region’s civil procedure codes do not yet provide for Courts to impose cost sanctions on parties who have failed to engage in mediation or good faith settlement discussions of obviously meritorious claims. Because the cost of litigation is relatively low, some businesses may choose to contest meritorious debt claims in court as a means of managing cashflow.  

By contrast, under part 36 of the England and Wales Civil Procedure Rules if a party refuses to settle a meritorious claim it may be penalised in costs. Moreover, in PGF II SA v. OMFS Company the Court of Appeal held that the defendant’s refusal to respond to an invitation by the claimant to mediate was unreasonable, which also led to adverse cost consequences.

Conclusion

If the correct incentives to mediate are not imposed, the Singapore Convention may not have the desired impact in the MENA region, notwithstanding the undoubted benefits of ease of enforcement of mediated settlements. Even if mediation is not compulsory, reform of the civil procedure codes to include penalties for dilatory tactics and to streamline enforcement processes could incentivise mediation and improve contract enforcement.

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* Counsel, Freshfields Bruckhaus Deringer LLP co-authored by Leila Kazimi, DR Intern, Freshfields Bruckhaus Deringer (Dubai) 

[1] Data collected as at May 2019.