The NYC and SCM: under the microscope

There is a time gap of 60 years between the NY Convention (1958) and the Singapore Convention (2018). The initial striking difference between these two international instruments is the number of jurisdictions in which each Convention is currently in force. So far, the NY Convention has been ratified by 172 States, while only 12 States have ratified the Singapore Convention. The widespread success of the NY Convention arguably paved the way to the global affirmation of arbitration as a primary and prominent means to resolve international disputes. 

The impact that the Singapore Convention might achieve in the future remains to be seen. There is, however, a second important element which marks a significant difference between the two Conventions: these two instruments cannot be said to be aligned in their scope:

• Despite its name, the NY Convention does not cover only the final product of arbitral proceedings (viz. the award); it also covers the recognition and enforcement of arbitration agreements by which the parties agree to defer their dispute (already arisen or which may arise) to arbitration (Article II).
• The Singapore Convention does not have quite the same scope. According to its Article 1, the Convention “applies to an agreement resulting from mediation and concluded in writing by parties to resolve a commercial dispute”, which must be “international” in nature. In other words, it is apparent that the Singapore Convention is intended to cover only the result of the mediation attempt; that is, the potential international mediation settlement agreement which is precisely the end product of a successful mediation.

This key difference already creates an imbalance in the protection granted by the two Conventions to arbitration agreements and mediation agreements. The consequence of this is that, in case of escalation or multi‑tier clauses providing for mediation as a pre‑arbitral step, the potential lack of compliance by one party with such pre‑arbitral step will be dealt with and ultimately resolved by national courts, either by having regard to the law of procedure of the court seized with that issue or by arbitral tribunals applying the lex arbitri.

In other words, no protection is afforded by the Singapore Convention to the pre‑arbitral mediation step. Experience shows that issues touching on the lack of compliance with pre‑litigation or pre‑arbitral steps are often resolved by courts and/or arbitral tribunals. To do so, they resort to the traditional canons of interpretation of contractual provisions in order first to establish whether the common intention of the parties at the time of the execution of the multi‑tier clause was that the pre‑litigation or pre‑arbitral steps should be conceived as mandatory or optional.

This article attempts to show  that in complex situations where an interplay exists mediation and arbitration that the protection offered by the NY Convention and the Singapore Convention is neither all‑encompassing nor complete. The parties and their counsel should be encouraged to raise awareness of the intricacies of these two Conventions. In so doing, they will be able to extract the best solutions from the options made available to them in each particular case and improve the management of their disputes.

Read the full article in the Winter 2023 issue of Ciarb’s Resolver.

About the author:  Paolo Marzolini MCIArb is a Partner at Patocchi & Marzolini. He acts as counsel representing clients and sits as arbitrator in Switzerland and a number of other jurisdictions under various sets of arbitration rules. He has been involved in several major international arbitrations and has experience acting as a mediator, counsel in mediations as well as a member of dispute boards in complex construction projects.

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