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The Singapore Convention, an ally in international trade

When the dispute involves a commercial transaction involving two or more countries, there is a mechanism to resolve it, which is the Singapore Convention, originally called the United Nations Convention on International Settlement Agreements Resulting from Mediation.

This regulatory text was approved in December 2018. y "has application in international settlement agreements resulting from mediation, concluded by the parties to resolve a commercial dispute". This text provides a homogeneous and practical framework for the execution of commercial agreements and transactions entered into between subjects of different countries. It is, therefore, a legal guarantee to settle and put an end to disagreements, making the solution of international commercial disputes feasible and legal.

International business transactions are frequent and long-standing activities in the world.. Regulating them to avoid conflicts between countries has also been an ongoing task for trade law and international competition bodies. In that joint effort, the United Nations issued a convention between States to regulate sales contractsto reduce the costs related to them.

As part of the work carried out at the Singapore ConventionThe invitation to mediation is considered a flexible mechanism for reaching negotiations and agreements. In this sense, "the parties create their own process and work towards their own agreement; they can debate legal and non-legal issues until they find the most convenient solution"..

The Convention may be adopted by all States or regional economic integration organizations.. The intention of its creation was to offer clarity, certainty and stability to solve through mediation the conflicts that could be generated as a result of the commercial activity between nations. All its recommendations are aimed at meeting the Sustainable Development Goals of the United Nations, especially in achieving peace and justice through the construction of solid and reliable institutions.

Prior to being signed, mediation as a legal remedy The dispute resolution clause in these cases was not regulated or recognized as a mechanism to facilitate transactional agreements. Therefore, when any dispute arose, the parties involved resorted to the dispute resolution clauses agreed upon in the previous agreements.

Key legal issues on the Singapore Convention

The main legal considerations taken into account by this Convention on Mediation are:

  • The Convention shall apply to all international settlement agreements and which have been concluded in writing for the purpose of settling a dispute, subject to the agreement of the parties.
  • It establishes the obligations of the parties with respect to the enforcement of settlement agreements and the right of the disputing parties to invoke a settlement agreement. In that sense, each of the parties involved may choose the procedural mechanisms to be used in the event that the Convention does not establish any position related to a specific issue.
  • The Convention shall not apply to settlement agreements concluded to resolve disputes arising out of transactions in which a consumer is involved for personal, family or household purposes or relating to family law, inheritance law or labor law. The same applies to agreements that may be enforceable as a judgment or arbitration award, in order to avoid an overlap between legal decisions and legal mechanisms.
  • In order to enforce a settlement agreement, the interested party must submit to the authorities the aforementioned agreement signed by the parties, as well as the evidence confirming the outcome of the mediation. The competent authority is empowered to require any additional documentation to verify compliance with the provisions of the Convention.
  • The competent courts may refuse ex officio to grant relief in cases where the dispute cannot be resolved through mediation, or where the granting of relief would be contrary to public policy.
  • Parties to the Convention may make reservations excluding from the application of the Convention settlement agreements to which they are parties or in which any State agency or person acting on behalf of such institutions are involved.
  • The parties have the power to decide to apply the Convention only to the extent to which they have agreed, since the instrument allows for this type of flexibility, taking into consideration that its purpose is mediation. This flexibility also applies to the definition of the specific time period within which reservations must be formulated and withdrawn.

At Alan Aldana & Abogados we have a professional team qualified to advise on alternative means of conflict resolution, such as mediation in matters of commercial transactions in accordance with the aforementioned international convention.

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