JURIST Guest Columnist Robert Gyenes discusses the UNCITRAL Working Group II (Dispute Resolution) in Vienna, which aims to negotiate an international mediation treaty or law…

The 65th meeting of the UN Commission on International Trade Law’s Working Group II recently closed its 12-23 September session in Vienna, Austria. It was the latest in a series of bi-annual meetings to prepare “an instrument dealing with enforcement of international commercial settlement agreements resulting from conciliation [PDF].”

Conciliation, occasionally referred to as mediation, is increasingly becoming the primary method of dispute resolution as the costs and formality of arbitration rises. This flexible alternative dispute resolution (ADR) process also cuts out many of the burdens of litigation, such as discovery or a need for preparing witnesses. The informal process gives companies an “ability to craft individualized justice” otherwise lost in an arbitration or litigation forum [PDF]. But once a settlement is reached in conciliation, there is no uniform system of international enforcement. Some states enforce them under statutes, but the majority treats a conciliation settlement as just another contract.

Working Group II has been trying to draft a uniform international enforcement mechanism since its 45th session in 2012. Part of the delay is caused by disagreement over what form the mechanism should take. There are viable two choices: either the mechanism will be a free-standing convention or it will be incorporated as an addendum to the 2002 Model Law on Conciliation, already in force among a small group of states. In the discussion below, I will address the benefits and disadvantages of both outcomes.

A New Convention or Extension of the 2002 Model Law on Conciliation?
Delegations in favor of a convention often cite the success of the New York Convention on Arbitration [PDF]. This was format was the original intention of Working Group II and in prior official reports, the 1958 New York Convention was cited as a model both in form and function [PDF]. Reverence for the New York Convention is not surprising. It has been a gold standard in enforcement mechanisms and international arbitration has greatly benefited from a clear legal framework across jurisdictions. The high adoption rate of the New York Convention adds to its success. With 156 currently contracting parties, a lawyer can be certain of enforcement in nearly any country in the world. For almost 60 years, this convention has accumulated a considerable amount of use and scholarship; naturally conciliation would want to emulate it.

Conventions tend to promote uniformity better than model laws. Generally states are free either to sign an international convention or not—their only ability to modify their acceptance limited to declarations or reservations. Under this all or nothing structure, a lawyer in the US or Germany is likely to understand what the enforcement regime is like in Tajikistan without any knowledge of the local language simply by looking up the restrictions and declarations a signing state has made. As a practitioner, that is a comforting feeling and is something easily communicated to clients.

Other highly anticipated conventions, however, have not seen the same high rate of adoption. For instance the 2005 Hague Choice of Court Convention is only in force among the European Union, Mexico, and Singapore. The 1971 Hague Convention dealing with foreign judgment recognition has only five parties. Therefore, simply on the basis that it takes the form of a convention, there is no certainty that this enforcement mechanism will be widely adopted.

The truth is, there is no perfect comparison to the New York Convention. As the Working Group II pointed out in its February 2015 Report, arbitration and conciliation are in different stages of evolution. Conciliation is the new kid on the block. In contrast, arbitration could draw on a longer history going back to a 1927 treaty dealing with arbitral award enforcement [PDF]. As one delegation noted in dissent, the New York Convention was “built upon the experience gained through long years of arbitration practice… in contrast there is a lack of experience in international conciliation, particularly across different legal traditions [PDF].” In total, we cannot predict with certainty how a conciliation convention would operate.

The other option for Working Group II is to draft the enforcement mechanism as an extension to the 2002 Model Law on Conciliation. The 2002 Model Law was UNCITRAL’s earlier attempt to harmonize the laws on international conciliation, providing a basic set of rules and procedure regarding the scope, nature and function of the conciliation process.

Adding the enforcement mechanism to the 2002 Model Law as an addendum would offer some distinct advantages. For example, model laws by nature are more flexible in their implementation because they are not limited to treaty declarations or reservations as their only means of dissent. Each domestic legislature passes their own version. Thus, states have the ability to harmonize the text of the model law with an existing preferred practice or any conflicting legal obligations. A benefit of this approach is that any nation otherwise hesitant to sign a convention would be able to implement a domestic law at its own speed and in its own voice. This approach would also allow for a “observational period” in which certain states could observe the enforcement mechanism’s nuances in practice. With more use of enforcement under a model law would come more familiarity and scholarship, helping to mature the field of conciliation.

The counter-argument is that model laws tend to have a lower adoption rate. This concern has some weight, particularly in the case of conciliation. The underlying 2002 Model Law on Conciliation has only been adopted by 16 nations (interestingly by 12 US states despite no federal counterpart). Adding an enforcement mechanism to a law in force in so few jurisdictions is likely to have a muted impact.

The flexibility to modify a model law is also a weakness. The 2002 Model Law, like other laws modified and passed by each individual legislature, is not uniformly implemented. Although the UN published a guide to enactment designed to combat this [PDF], states are free to deviate from the text. The result is that a practitioner must spend more time researching the law before recommending conciliation to their client, and thus creating the likelihood that in some cases conciliation will be avoided where it might have been utilized.

The Path Forward

That Working Group II started out debating a convention is significant because it will be difficult to deviate from that path. Nevertheless, there is a contingent against drafting a convention. The situation has threatens to stall progress in other areas of drafting. Lack of clarity on what exactly the Group is drafting affects how other articles are written. However, forcing a convention on unwilling delegations may get the Group to a final text, but it would also have a negative effect on the implementation of this mechanism. The new conciliation convention may end up relatively ignored, similar to the 1971 Hague Convention on Foreign Judgments. Conciliation settlement enforcement could remain a state-by-state process for many years to come.

Although it may be a difficult thought, perhaps Working Group II should more seriously consider drafting the mechanism as an addendum to the 2002 Model Law. While this choice essentially cedes an immediate worldwide adoption of a common policy because each state must implement it individually, it has other medium term benefits. Unlike a convention, it overcomes the flexibility concern. States are not forced to adopt each and every provision as they would under a convention. It may also spur additional adoption of the 2002 Model Law on Conciliation because it would add a very valuable enforcement mechanism. Most of all, there is no rush. A convention can always be drafted later, once conciliation scholarship and practice matures.

In the end, whatever the outcome, enforcement of conciliation settlement agreements is likely to remain an uncertain process in the near future. But the future does look bright, as conciliation continues to grow and find its place in the ADR spectrum. It is comforting that even if this first attempt is poorly received, perhaps a future convention can be “built upon the experience gained through long years of mediation practice” resulting in part by this Working Group’s work.

Robert Gyenes is a Former Chancellor Nordenberg International Law Fellow at the University of Pittsburgh and delegate to UNCITRAL Working Group II on behalf of the American Society of International Law.

Suggested citation: Robert Gyenes, UNCITRAL Working Group II Draft Mechanism on Enforcement of Conciliation Settlement Agreements, JURIST – Hotline, Oct. 26, 2016, http://jurist.org/hotline/2016/10/Robert-Gyenes-uncitral-group.php