Turkey signs

the Singapore Convention: A New Era in Enforceability of Mediation Agreements

in Foreign Countries

The mediation procedures

have become a mandatory stage of commercial litigations in Turkish Law as of January

01, 2019. After only 4 months of practice, it appears that the success rate of mandatory

mediation procedures is %65, according to the data published by the Mediation

General Office of Justice Ministry of Turkey. As the national mediation

procedure seems to be useful thus far, Turkey took a new step and signed the United

Nations Convention on International Settlement Agreements Resulting from

Mediation be known as the "Singapore Convention on Mediation" ("Convention"),

which provides enforceability to international mediation agreements, on August

07, 2019 in Singapore.

I.

Introduction

The Convention has been drafted

by the United Nations Commission of International Trade Law ("Commission") and

adopted by the General Assembly during the 62nd plenary meeting held

on December 20, 2018. The main motivation of the Commission is "to become an essential instrument in the

facilitation of international trade and in the promotion of mediation as an

alternative and effective method of resolving trade disputes". Indeed, the

mediation has always been a low-cost, swift and efficient way to resolve a

dispute, in comparison to other dispute resolution methods, which can also be

observed from the data obtained in Turkey, from a micro perspective.

Heretofore, the mediation

agreement breaches were brought before different dispute resolution venues,

such as Courts or arbitrative alternatives, if any respective clause was placed

in the mediation agreement. Considering that mediation itself is a way to avoid

dispute through mutual agreement of both parties on certain topics; the bringing

breach of agreement to courts practically beats the purpose of mediation, as it

brings litigation back on the table again. Henceforward, direct enforceability

of the international mediation agreements in any event of breach might steer parties

of a commercial relationship into mediation.

II.

Scope of the Convention

The Convention is,

basically, designed for the international mediation agreements concluded after

a commercial dispute. However, the mediation agreements, even on commercial

disputes, are still required to have some certain qualifications for the

Convention to be applicable. Thus, the Convention is still inapplicable for commercial

mediation agreements other than the ones described in the articleA1/1 of the

Convention. Besides that, the mediation agreements, which are specifically

mentioned in Article 1/2 of the Convention are also excluded from the scope of

the Convention and accordingly, the Convention cannot be applied on them.

a.

Mediation agreements that are included to

the Convention

The mediation agreements

that are included into the scope have been clearly defined under Article 1/1 of

the Convention. The qualifications required for applicability of the Convention

have been described in the Article 2 of the Convention. With reference to the

first article of the Convention, the parties are required to have the qualifications

indicated below:

i.

The agreement should be borne from a mediation process

The motion of "mediation" has been defined in Article 2/1(3)

for the purpose of clarifying article 1/1. Accordingly, mediation has been

described as a process during which the parties are trying to reach a mutual

conclusion on the dispute with the assistance of a third party, the mediator. It

has been specifically mentioned that the mediator is not entitled to impose a

solution upon the parties. Accordingly, it can be understood that the mediator

only has the authority to lead the parties to a mutually beneficial solution.

Mediation, on the other

hand, has a slightly different definition in the Turkish Mediation Law numbered

6325 ("Mediation Law"), regulating that mediation is a process wherein the

parties gathers to find their own solution through communicating with and

understanding each other with the assistance of an objective and specialized

mediator who can offer solutions when the parties are not able to find their

own solution.

Comparing the mediation

definitions in the Convention and the Mediation Law, it is seen that the

understandings of two legislations are quite similar, except for the slightly

broader authorities of a Turkish mediator due to the capacity to "offer" a

solution. Other than this, the concept of mediation is regulated in a very

similar way in both the Convention and Mediation Law.

ii.

The agreement must be concluded in written form

A written agreement is one

of the musts for applicability of the Convention. Therefore the Convention has

a clear definition on the topic. While the wording implicates that the

mediation agreement can only be written on paper, Article 2/1(2) provides that recordings

of the content of the mediation agreement in any form is sufficient to fulfill

this requirement. The tools that record the communication include electronic

communication as well, provided that the information contained is accessible to

be used as a subsequent reference later on.

When it comes to the Mediation

Law, there is no particular wording that provides an obligation regarding

written or any other form with respect to the mediation agreement. However, the

mediation process implied in Mediation Law stipulates almost every stage to be in

written form.  Having said that, the

mediation process should be applied to, preceded and completed with separate

written reports, signed by the parties and the mediator. Therefore, regardless of

this issue not being clearly stipulated in Mediation Law, the written form can

be deemed to be mandatory in Turkish mediation procedures and it is not

acceptable to put down any record in any form, except written form.

iii.

The agreement must be resolving a commercial dispute

The convention does not have

a definition or explanation on what a commercial dispute is. Certain concepts

are excluded from the scope of the Convention, from which can be derived what a

commercial dispute is "not". However, as seen in Article 1/1 of the Convention,

in assessment of whether a dispute can be considered "international", the

locations of the place of business are regarded. Considering that

"international" aspect of the dispute is the first and foremost condition for

application of the Convention, which will be explained later on, it could be

said that a commercial dispute is any dispute that pertains to the business

affairs.

The definition of "commercial

dispute", in other respects, is defined in Turkish Commercial Code, stating

that every interaction related to a commercial undertaking is a commercial transaction.

Accordingly, every dispute related to a commercial transaction is also

considered as commercial dispute.

At this stage, we believe it

would be accurate to argue that, despite lack of a clear definition in the

Convention, a commercial dispute can be understood as "any dispute in relation

to a commercial undertaking in concordance with Turkish Commercial Code".

iv.

The dispute must be international.

Article 1/1 provides a

detailed structure on what "international dispute" is. The element of "international"

has been divided into two prongs.

The first is the parties' having

places of businesses in different State. The second is the parties' having places

of businesses in the same State, with two optional additional conditions being

met. That is to say; if the substantial part of the obligations under the

mediation agreement is performed in a State different than the place of

business, the dispute is considered as an international one. On the other hand,

if the subject matter of the meditation agreement is most closely connected to

a place other than the place of business, then this would suffice for the

dispute to be deemed international, as per the Convention.

Having those requirements

compared to Turkish Civil Private International Law, it is seen that the

internationality element has been regulated in a very similar to the Turkish

Civil Private International Law.

b.

Mediation agreements that are not included

to the Convention

Article 1/2 of the

Convention introduces several circumstances topics where the Convention will

not be applied. To begin with, the first principle - as explained above - is the

mediation agreement being concluded as a result of a commercial dispute.

Besides the first principle,

the Convention does not include in its purview the mediation agreements that

are concluded as a result of disputes that are related to (i) personal, (ii)

family, or (iii) household transactions of either party. This issue is important

since, in Turkish Law, if one party is merchant, then the transaction is deemed

to be a commercial one too. The Convention however excludes such transactions

from its scope. In addition, mediations agreements concluded as a result of

family law, inheritance law or employment law related disputes are excluded

from the purview of the Convention as well.

Article 1/3 of the

Convention excludes mediation agreements on certain specific matters as well. That

is to say; if a mediation agreement has been approved by a court or concluded

in the course of a court proceeding, the Convention is not applicable to those

mediation agreements. In the same vein, if the mediation agreement is

enforceable as a judgement, the same goes for those mediation agreements as

well. Finally, the mediation agreements that are recorded and enforceable as

arbitral award cannot be subjected to the Convention either. Put succinctly any

mediation agreement that has ever been made subject to any dispute resolution

method is excluded from the purview of Convention.

III.

Legal Outcome of the Convention with

Respect to Enforceability of Mediation Agreements

The Convention renders the mediation agreements having

the characteristics explained above enforceable under the procedural rules of

the enforcing State and conditions laid down in the Convention.

To be able to enforce a mediation agreement, the party

relying on to the mediation agreement must provide a signed copy of the

settlement agreement and necessary evidence documenting that the agreement has

been concluded as a result of a mediation process. The Convention provide few

examples to these evidence, such as mediator's signature on the mediation

agreements, and not stated as numerus

clausus and can be tailored according to the conditions of the present

case. The competent authority can always require any necessary document in

order to verify that the requirements of the Convention are met, as per Article

4/4 of the Convention.

The Convention will be applicable to the mediation agreements

that are issued after the Convention enters into force, i.e. six months after

deposit of the third instrument of ratification, acceptance, approval or

accession, which is already completed done by 45 signatory States.

Grounds for refusal of

enforcement: The party

against whom the mediation agreement is being enforced can object to enforcement

of the mediation agreement, provided that;

i.

Either

party of the mediation agreement was under some incapacity,

ii.

The

mediation agreement to be enforced is null and void,

iii.

The

mediation agreement to be enforced is not binding or final,

iv.

The

mediation agreement to be enforced has been subsequently changed,

v.

The

obligations of the mediation agreement have already been performed,

vi.

The

obligations of the mediation agreement are not clear or comprehensive,

vii.

The

enforcement of the mediation agreement would be contrary to the terms of the

mediation agreement itself,

viii.

If

the mediator made a serious breach of the standards that are applicable to the

mediator or the mediation, without which breach that party would not have

entered into the mediation agreement, and

ix.

There

is a doubt on the mediator's impartiality or independence that has a material

impact or undue influence on a party without which failure that party would not

have entered into the mediation agreement.

The competent authority on

the other hand can refuse the enforcement in case;

i.

The

enforcement would be a contrary to the public policy of the enforcing State

ii.

The

subject matter is cannot be subjected to the mediation as per the local laws of

the enforcing State.

IV.

Effects of the Convention to Turkish Law

Turkey is adopting a position encouraging mediation to

lower litigation-related costs and time spent on long and complex litigation

procedures. To that end Turkey signed the Convention on August 7, 2019 and the

Convention will be deemed to be a part of Turkish Law after its due

ratification.

In comparison of the Convention and mediation

regulations in Turkish Law, it is evident that the provisions are very similar

each other with respect to legal understanding, overall system and motions.

Further, the Convention provides that enforcement actions will be taken

according to the State's local law in compliance with the conditions of the

Convention.

As a result of the Convention, there will be no need

to file cases based on breach of contract to enforce mediation agreements and

the mediations agreements that have the qualifications and characteristics explained

will directly be enforceable under Turkish legal system. Then again Turkish

Enforcement Law has several different types of enforcement procedures and the

Convention does not impose any method of enforcement, leaving this issue to the

States. As this is the case, in Turkey these mediation agreements should be

enforced as a Court decision, which is the procedure applied to the mediation

agreements signed by both the parties and their attorneys and concluded as a

result of mandatory mediation procedures. Also Article 4/5 of the Convention

provides that the competent authority of the enforcing State should act

expeditiously and the most expeditious method in Turkish Law regarding the

enforcement procedures is the one allowed for the court orders.

Authors: Gönenç

Gürkaynak, Esq., Tolga Uluay and Doruk Altın of ELIG Gürkaynak Attorneys-at-Law

(First published

by Mondaq on September 18, 2019)