Israel, a jurisdiction historically characterized by extensive litigation, has recently made significant strides in promoting mediation as a primary tool for dispute resolution. Consequently, a substantial proportion of disputes are now resolved through mediation.
Mediation, as a process, facilitates voluntary and amicable dispute resolution with the assistance of a neutral third-party mediator who guides the parties toward a mutually acceptable resolution under strict confidentiality, without imposing any predetermined outcome on them.
In recent years, there has been a notable shift in the ratio of court-resolved legal proceedings to those resolved through mediation, with a growing preference for the latter. However, as mediation becomes more prevalent, the absence of a comprehensive legal framework in Israel for international commercial mediation has become increasingly evident, particularly in cross-border disputes involving Israeli and foreign parties that are often brought before foreign courts and tribunals.
This significant gap was addressed on an international level through the Singapore Convention, the United Nations Convention on International Settlement Agreements Resulting from Mediation, which Israel signed in 2019 after actively participating in its drafting. The convention aims to establish mediation as a prevalent and accessible tool in the international arena, similar to its use in domestic contexts, thereby promoting the adoption of mediated settlement agreements in international commercial disputes. The primary objective of the Singapore Convention is to provide disputing parties with legal certainty, ensuring that mediated settlement agreements are honored across signatory states without relying on individual state laws. Furthermore, the convention grants ratifying states mechanisms to swiftly enforce international mediated settlement agreements within their territories and to invoke the convention as a defense in legal proceedings.
This means that once parties to an international dispute reach a mediated settlement under the convention’s framework in a ratifying state, they can seek enforcement through national courts efficiently and expeditiously. Additionally, they may invoke the convention’s provisions as a defense in legal proceedings.
Moreover, the provisions of the convention apply to national courts by default unless an exception specified in the convention applies. Article 5 sets out the general rule that a competent authority in a ratifying state must grant relief at the request of a party to a mediated settlement, while also specifying the circumstances under which relief may be denied. For instance, enforcement may be refused if one of the parties lacked legal capacity, if the settlement is unenforceable, non-final, or has already been executed, if it is drafted in an unintelligible manner, if it was subsequently modified, if the mediator had a conflict of interest, or if granting relief would contradict public policy.
The convention is designed to enable sophisticated parties engaged in international commerce not only to utilize mediation when disputes arise but also to incorporate it into their agreements as a designated dispute resolution mechanism. This allows mediation to proceed without encountering cross-border legal obstacles arising from conflicting or burdensome national laws.
Accordingly, the convention applies strictly to commercial matters and does not extend to personal disputes that inherently require the application of specific local laws, such as family law, labor law, and inheritance law, or cases where one of the parties to the mediated settlement is a private consumer. In such instances, local legal frameworks play a critical role in ensuring that the applicable law aligns with the relevant cultural and legal context.
According to the explanatory notes presented to Knesset members on September 30, 2024, the convention seeks to align the international mediation process with the enforcement framework for foreign arbitration awards, which already benefits from an efficient international enforcement regime. Prior to the convention, due to the lack of regulation in international commercial mediation, parties to international commercial transactions opted not to use mediation to resolve disputes, despite its many advantages, including lower costs and flexibility in procedural matters.
On November 12, 2024, the government resolved to ratify the Singapore Convention, subject to the following reservations and conditions:
- The convention will apply only if the parties to the mediated settlement have agreed to its application.
- For mediated settlements involving the State of Israel or any government ministry (including affiliated agencies and other state entities), the application of the Singapore Convention will require prior approval from the Deputy Attorney General (International Law) for transactions valued at 5 million ILS or more, and prior approval from the Attorney General for transactions valued at 100 million ILS or more.
The ratification of the convention, alongside the enactment of the International Commercial Arbitration Law, underscores Israel's commitment to advancing alternative dispute resolution mechanisms for complex international commercial disputes. It brings Israeli law to the forefront of the international stage, significantly reducing court backlogs and promoting Israel’s foreign trade relations.
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For more information or questions on international mediation or any related matter, please contact Orli Naschitz.
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