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)