International mediation: how to make a commercial agreement enforceable across borders

International commercial mediation is one of the most effective tools for resolving disputes between companies from different countries without going to court. Yet there’s an aspect many underestimate: an agreement reached through mediation is of little use if it cannot later be enforced in the counterparty’s jurisdiction.

For those managing international business relationships — entrepreneurs, managers, in-house counsel — knowing how to structure a mediation agreement that “holds up” across borders is a real competitive advantage. Here are the key points.

Which law governs the mediation agreement?

When two companies from different countries reach an agreement through mediation, that document is, for all intents and purposes, an international contract. And as with every international contract, it needs clarity on the applicable law.

In Europe, parties are free to choose which law governs their agreement — even a “neutral” law from a third country. This freedom of choice is the most important principle to know.

The practical recommendation is simple: always include in the mediation agreement a clause specifying the applicable law, separate from the corresponding clause of the original contract. The mediation agreement is a standalone document and requires its own rules.

If the parties do not choose, automatic criteria apply: in the case of mediation agreements, they may generate uncertainty.

The reason is technical but the effect is practical: without an explicit choice, there is a risk of not knowing which law governs the agreement and its validity. Preventing this problem during the mediation phase is essential.

Finally, watch out for regulated sectors (for example banking, insurance, competition, privacy and data protection): in these areas mandatory rules apply, which can affect the validity of the agreement, regardless of the law chosen by the parties.

Where does the mediation take place? The seat matters

Many think the seat of international mediation is purely a logistical matter. This is not the case: the seat determines which rules apply to the proceeding and which standards the mediator must meet; it also has an influence on the law applicable to the agreement.

For Italian companies, choosing Italy as the seat, for example, is often advantageous: the Italian system requires strict training and impartiality standards for mediators, plus mandatory legal assistance.

With the spread of online mediation and hybrid procedures, it is therefore important to declare the seat of the proceedings in the opening record, even when the mediation takes place remotely.

Always indicate the seat in the final agreement: a seemingly formal detail, but one with concrete consequences for enforcement.

Mediation in Europe: still a fragmented framework

Within the European Union, rules on cross-border mediation are not yet fully harmonized. Each member state has its own procedures for making a mediation agreement enforceable, and differences between them can create practical obstacles.

The main European reference is Directive 2008/52/EC, which introduced common principles for civil and commercial cross-border mediation. Among other things, the Directive emphasizes the confidentiality of the proceeding, the effects of mediation on limitation periods, and the enforceability of agreements reached by the parties.

More recently, in 2023 the European Commission presented a proposed Regulation to harmonize the rules on commercial mediation and encourage recourse to mediation in cross-border disputes. The goal is also to facilitate the circulation of agreements between member states, reducing practical obstacles to enforcement.

The EU framework is therefore evolving: businesses, lawyers and mediators must closely monitor regulatory developments and adjust their strategies in good time.

The operational advice: decide in advance in which country to have the agreement approved (i.e., made officially enforceable), bearing in mind that an agreement approved by a court in a European country can be enforced within the EU, but will no longer allow reliance on the Singapore Convention.

The reason is that Article 1(3) of the Singapore Convention excludes settlement agreements approved by a court or concluded in the course of judicial proceedings, if enforceable as a judgment. When, under Article 6 of Directive 2008/52/EC, the content of the agreement is made enforceable through a judgment, decision, or authentic instrument, the agreement becomes a judicial measure: from that point, European instruments apply, not the Convention. The two enforcement channels are alternatives; the choice precedes the approval.

The Singapore Convention: enforcing the agreement without going to court

The Singapore Convention (2018, in force since 2020) is the UN instrument that allows a commercial mediation agreement to be enforced directly in the counterparty’s state, without having to initiate judicial proceedings. It is to mediation what the New York Convention is to international arbitration.

No EU country has yet acceded, but key trading partners for Italian companies — including Turkey, Saudi Arabia, Singapore, Japan, Israel and Brazil — have adopted the Convention.

The crucial point: reciprocity is not required. An Italian company can enforce a mediation agreement directly in one of these countries, even though Italy has not acceded.

Practical advice: include in the agreement an opt-in clause to the Singapore Convention. It is mandatory in some countries (for example Japan and Israel) and strongly recommended for all others, because it reduces the risk of challenges.

Checklist: how to structure an effective international mediation agreement

Here are the six points to cover to turn a thoroughly negotiated agreement into an internationally enforceable instrument:

• Applicable law — Include a dedicated clause specifying which law governs the mediation agreement.
• Seat of mediation — State it expressly, even in online or hybrid procedures.
• Mediator’s signature — Have the mediator co-sign the agreement, as proof of its origin.
• Singapore Convention clause — Include an explicit opt-in for direct enforcement abroad.
• Clear obligations — Precisely describe who must do what, by when, and in which currency.
• Enforcement strategy — Decide in advance whether to have the agreement approved judicially or aim for international circulation via the Convention.

International mediation is not an “informal” alternative to litigation. With the right precautions, it is a tool with its own cross-border enforcement regime, increasingly relevant for those operating in international trade and business dispute resolution.