The Supreme Court explained how to implement the settlement agreement

The Supreme Court decided: a court-approved settlement agreement that is not executed voluntarily is subject to enforcement. If part of the money has already been paid, the bailiff must still initiate enforcement proceedings on the basis of the execution list and, within the framework of it, find out all the circumstances. Read about how the Supreme Court came to this conclusion.

PJSC Sberbank of Russia entered into a settlement agreement with loan debtor Karina Ivanova*, which was approved by the court. The settlement agreement contained a debt repayment schedule, as well as a condition: if Ivanova does not pay the debt voluntarily, the bank will be able to forcibly collect money from her through bailiffs. To secure the obligation, the bank entered into a preliminary mortgage agreement with Ivanova for her basement, the initial sale price of which is RUB 6,642,000. In total, Ivanova owes the bank 10,163,466 rubles under the settlement agreement.

The debtor paid Sberbank of Russia PJSC to repay the obligation 431,371 rubles. according to schedule. However, the bank considered this insufficient and received a writ of execution, on the basis of which the bailiff initiated enforcement proceedings to foreclose on the basement.

Ivanova did not agree with this - after all, she fulfilled the terms of the settlement agreement in the amount of 431,371 rubles. – and filed an administrative claim in court to declare the bailiff’s decision to initiate enforcement proceedings illegal.

The Khanty-Mansiysk District Court rejected Ivanova's request. He came to the conclusion that the writ of execution was sent to the FSSP within the period established by law, the contested decision was made on the basis of this writ of execution, and therefore the rights of the administrative plaintiff were not violated.

The court of the Khanty-Mansiysk Autonomous Okrug-Ugra overturned this decision and adopted a new one, which satisfied Ivanova’s claims. He considered that the executive document did not comply with the requirements of the law and was not subject to enforcement in its meaning and content. This means, according to the appeal, that the bailiff’s decision to initiate enforcement proceedings is illegal.

The FSSP office for the Khanty-Mansiysk Autonomous Okrug-Ugra filed a cassation appeal, but the judge of the court of the Khanty-Mansiysk Autonomous Okrug-Ugra refused to transfer it to the court of cassation. But the Supreme Court accepted the complaint. He came to the conclusion that the lack of information about non-fulfillment of the settlement agreement is not a basis for the court’s refusal to issue a writ of execution and for the bailiff’s refusal to initiate enforcement proceedings. Circumstances related to execution are subject to clarification during enforcement proceedings. Therefore, the Supreme Court canceled the appeal ruling and upheld the decision of the first instance court (No. 69-КГ17-25).

When making a decision to initiate enforcement proceedings, the bailiff does not have the right to change the subject of execution compared to the judicial act. But during enforcement proceedings, he must respond to changes in factual circumstances, for example, to the repayment of a debt. He must do this primarily through the institution of clarification of the executive document.

– Natalya Kolerova, lawyer, project manager at S&K Vertical Law Firm

“The Supreme Court pointed out the bailiff’s mistake - he should have initiated enforcement proceedings for the amount indicated in the execution list, and subsequently reduced this amount by the amount already executed voluntarily,” says BMS Law Firm lawyer Vladimir Shalaev . “Therefore, the administrative claim was not subject to satisfaction, and the decision of the Supreme Court was legal and justified,” confirmed lawyer, adviser to Muranov, Chernyakov and Partners, Olga Benedskaya . She also recalled the definition of the Constitutional Court No. 1286-O-O, which states: the issuance of the executor only fixes the rights and obligations of the parties established by the court and does not create new encumbrances for the debtor; the issuance of an executor for the entire amount payable under the settlement agreement does not prevent the debtor from presenting evidence of partial execution of the settlement agreement during enforcement proceedings. And Ksenia Stepanishcheva, senior lawyer of the Moscow CA “Kovalev, Tugushi and Partners” , said that this position was reflected in recent judicial practice (for example, No. 33-4612/2017, No. 13-43/2017, No. 11a-250/2016 ).

*Name and surname have been changed by the editors.

Settlement agreement, Judicial practice, Courts and judges
Supreme Court of the Russian Federation
Law “On Enforcement Proceedings”
Enforcement proceedings

Legal basis

The legal regulation of the procedure for the execution of a settlement agreement approved by the court, including forced execution, is quite broad in the range of used articles of the Civil Procedure Code of the Russian Federation.

Part 2 of Article 13 of the said code considers the extension of the validity of adopted judicial regulations. In accordance with its provisions, such acts are mandatory for various authorities, citizens, and officials. In addition, based on the provisions of this part of this article, court decisions made are subject to mandatory execution exactly as worded. This forms the basis for the binding nature of the settlement agreement accepted by the parties to the dispute and approved by the court.

Article 220 of the Civil Procedure Code of the Russian Federation states that a settlement agreement adopted by the court forms the basis for the court’s decision to terminate proceedings in a controversial case. Moreover, on the basis of Article 221 of the same code, again after concluding a settlement agreement, the parties cannot go to court on the same issue on which the consideration of the dispute was terminated on the basis of the settlement agreement.

If one of the parties avoids fulfilling the agreement, it is possible either to terminate the settlement agreement or to obtain, in accordance with Article 428 of the Civil Procedure Code of the Russian Federation, a writ of execution, which will become the basis for the forced execution of the settlement agreement.

In accordance with the provisions of this article, a writ of execution can be issued either within the period established by law after the entry into force of the court decision, or, if provided for by the court decision, immediately for subsequent transfer to the bailiffs if urgent execution of the court decision is necessary.

When forced execution entails a new claim against the defendant

A court ruling and receipt of a writ of execution do not always bring the applicant’s demands closer to being fulfilled. This happens if:

the plaintiff's claims cannot be satisfied in fact;
the settlement agreement cannot bind the defendant.

And here lies another nuance in the application of our laws. It may seem incorrect and unfair to say that a settlement agreement is not binding. However, this is true if the defendant agrees on the debts, and all his property consists of:

shares in the authorized capital of enterprises;
pledged property, especially a mortgage.

The peculiarity of the settlement agreement is that all judicial proceedings were terminated with its approval (Article 139 of the Arbitration Procedure Code of the Russian Federation). Collection under the settlement is carried out voluntarily, as under an agreement. Or in the executive case - if the defendant objects.

Neither a voluntary nor a compulsory enforcement order allows for the disposal of the defendant’s special property.

The refusal to issue a certificate can be appealed on appeal.

Why is it difficult to comply with the global agreement for shares in capital?

If the defendant does not have official property, except for authorized shares, and in settlement agreed to repay the debt, he simply cannot be obliged to return anything.

According to Art. 25 of the Law “On Limited Liability Companies” dated 02/08/1998 No. 14, foreclosure on shares in the capital of a company can only be carried out by a separate court decision. The court must evaluate the bailiff's work and check whether there is any other property.

It turns out that it is impossible to force the settlement agreement to be fulfilled in relation to capital shares. The plaintiff is forced to file a lawsuit. The court is in practice on his side.

The simultaneous decisions of the Plenums of the Supreme and Supreme Arbitration Courts No. 90 and No. 14 of December 9, 1999 say that one can limit oneself to a request for a different method of execution.

How to obtain a writ of execution in case of partial execution

Is a writ of execution issued in a settlement agreement? When answering this question, we note that this document is issued at the request of a participant in the process, subject to the entry into force of the ruling on approval. As the Supreme Court of the Russian Federation noted, in this case the absence of evidence of improper execution does not matter.

If the parties agree on an installment plan for the execution of the settlement agreement, the executive document must contain the terms of the reached truce. Within the framework of the initiated proceedings, the bailiff must establish in relation to which obligations there is a delay; in the absence of a delay, enforcement measures are not applied. When initiating proceedings, the claimant should pay the funds to the account of the bailiffs. Please note that in case of partial fulfillment of obligations, proceedings are initiated for the full amount of the debt specified in the writ of execution. Subsequently, when the debtor provides documents confirming partial fulfillment of obligations, the amount of recovery is subject to reduction.

When establishing security for the execution of a settlement agreement by collateral of real estate, the claimant, if the debtor violates the conditions agreed upon by the parties, has the right to obtain a writ of execution and foreclose on the objects of the collateral. If the terms of the agreement are properly fulfilled, the debtor has the right to present to the bailiff evidence of the proper fulfillment of the obligations assumed - in this case, forcible foreclosure of real estate is not legal.

In conclusion, we note that a writ of execution for the execution of a settlement agreement is issued only after the determination of approval has entered into force. To obtain this document, you must send a corresponding petition to the court that approved the reconciliation of the parties. The fact that the parties have properly fulfilled their obligations does not matter to the court.

Cases of forced execution of a settlement agreement

Enforcement of a settlement agreement when considering this case in civil proceedings is possible in two cases.

The settlement agreement is not fully implemented by one of the parties

In this case, the reasons for this current situation may be:

complete and conscious evasion of one of the parties to the concluded agreement from its execution;
impossibility of performance due to a number of objective circumstances (for example, at the time of concluding a settlement agreement, one of the parties had the opportunity to fulfill its terms, but after the signing and approval of such an agreement, the opportunity ceased to exist due to objective reasons: the party that was obliged to fulfill its obligations , lost her ability to work).

A writ of execution will be issued in both cases, however, in the second, the order of actions of bailiffs can be determined by the court, including determining the date for the start of enforcement proceedings.

Partial default

As in the case of complete non-fulfillment discussed above, the court independently has the right to determine the possibility of issuing a writ of execution, despite the fact that this document is issued upon a petition received from a person interested in the full execution of the settlement agreement.

In the case of partial non-fulfillment, the court, before issuing a writ of execution, considers the current situation and, if possible, offers the parties those options for resolving the dispute that can help resolve it quickly.

Legal grounds for issuing a writ of execution under a settlement agreement

Compulsion to execute a settlement agreement occurs within the framework of enforcement proceedings. The legal grounds for forced collection are enshrined in the following regulations:

Code of Civil Procedure of the Russian Federation;
Agroindustrial complex of the Russian Federation;
Federal Law “On Enforcement Proceedings” dated October 2, 2007 No. 229-FZ.

By virtue of Art. 39 of the Code of Civil Procedure of the Russian Federation, when considering a case, the parties have the right to independently resolve the dispute by drawing up a settlement agreement and its approval according to the rules of Art. 173 Code of Civil Procedure. A judicial ruling on approval is an act that gives the terms of reconciliation the legal force of a decision, which entails the termination of consideration of the case on the merits in accordance with Art. 200 Code of Civil Procedure of the Russian Federation. In addition, the parties, by virtue of Art. 221 of the Code of Civil Procedure are deprived of the right to re-apply for judicial protection on a similar subject and grounds. The Civil Procedure Code does not contain norms regulating the procedure for forcing compliance with the terms of the truce. In this case, it is necessary to act by analogy with Part 2 of Art. 142 of the Arbitration Procedure Code of the Russian Federation.

Execution of a settlement agreement before its approval by the court is not a basis for refusing its approval and subsequently issuing a writ of execution. In such a situation, the debtor should provide the bailiff who initiated the proceedings with evidence of settlements with the creditor.

By virtue of clause 19 of the Resolution of the Plenum of the Armed Forces of the Russian Federation “On the application...” of November 17, 2015 No. 50, regardless of compliance with or violation of the settlement agreement, the writ of execution is subject to execution at the request of the interested party. In its clarifications, the RF Armed Forces indicate that clarification of the circumstances of compliance with the conditions does not fall within the competence of the court and is entrusted to bailiffs as part of the collection

Deadlines

In accordance with the provisions of Article 428 of the Civil Procedure Code of the Russian Federation, today the issuance of writs of execution occurs only after a special judicial act has been issued, on the basis of which such writs are issued. According to the effect of existing judicial acts, writs of execution are divided into those issued within a specified period after the entry into force of a court decision (within thirty days from the date of issue of such a decision) and those issued immediately after the issuance of a judicial act.

Which writ of execution will be issued in order to enforce the settlement agreement is determined only by the court after studying all the circumstances of the case.

As for the timing of the forced execution of a settlement agreement previously approved by the court, everything here depends only on the work of the bailiffs.

In accordance with Part 1 of Article 36 of Federal Law No. 229-FZ “On Enforcement Proceedings,” the bailiff is given a period of up to two months to fulfill the requirements contained in the writ of execution. However, if the text of the issued writ of execution contains references to deadlines for implementation on the basis of federal legislation, then execution is carried out within the period established by such legislation.

The deadlines for the execution of a document issued by the court do not include deadlines for deferring and installment execution of this document, as well as for postponing enforcement actions.

Consequences of the settlement agreement for the debtor and creditors

After the document is approved by the court, the debtor and creditors are obliged to strictly fulfill its terms. The following consequences occur for the parties:

the restructuring schedule is canceled if it was previously approved in the bankruptcy case;
the moratorium on repaying creditors' claims is lifted, and the debtor is obliged to start making payments;
encumbrances and restrictions on the disposal of property and income of the debtor are lifted;
no sale of assets is carried out;
The manager’s powers are terminated, and he will not receive a percentage from the sale of property.

The debtor who signed the agreement is not declared bankrupt. Consequently, he will not face the consequences of bankruptcy, including prohibitions on holding managerial positions, the obligation to notify about his bankruptcy status when receiving new loans.