What is a settlement agreement?
Article 39 of the Code of Civil Procedure of the Russian Federation indicates that a settlement agreement is one of the ways to end a dispute. It represents an agreement between the parties to waive litigation on the basis of voluntary settlement of claims and approval of mutual concessions.
Reference! A settlement agreement is a civil contract that must be approved by the court. Therefore, it must contain conditions that do not contradict current legislation.
An agreement is often concluded on the division of property of spouses during a divorce, if the husband and wife were able to come to a common decision.
An out-of-court agreement is concluded before filing a claim in court. It is formalized in writing. It is recommended to have it certified by a notary.
A judicial settlement agreement can be concluded at any stage of the dispute consideration before the final decision on the case is made. After its conclusion, the court ceases to consider the case.
Who pays the state fee in a settlement agreement?
In Art.
333.40 of the Tax Code of the Russian Federation states that the state duty in this case can be returned, but not in full. The amount of the refund will range from 30 to 70%, depending on which court is considering the case. If the claim is abandoned and a settlement agreement is concluded, the defendant does not reimburse court costs (Article 101 of the Code of Civil Procedure of the Russian Federation). In the contract, participants in the process can indicate who should pay the costs, including court representatives.
Q. Tell us about the practice of conciliation procedures
A. The institution of conciliation procedures is more developed in the West: the Russian business community treats it with a great deal of distrust: after all, the implementation of what the parties agree on occurs voluntarily.
There is some unjustified skepticism in this: after all, the APC protects the parties with the help of a mechanism for enforcing the settlement agreement if necessary.
However, one way or another, the parties were able to sit down at the negotiating table: with a mediator or a judge, or even without named persons, the plaintiff and defendant were able to come to an agreement.
As evidence of the completion of conciliation procedures, the parties enter into a settlement agreement.
And this is where the difficulties begin. Firstly, until recently the legal nature of this document was not completely clear , a legal definition was not given anywhere, and lawyers argued quite actively over the question of whether the settlement agreement should be considered a transaction and whether all the rules on transactions from the Civil Code should be applied to it.
The point in this dispute (looking ahead, let’s say that in many others) was put by Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated July 18, 2014 N 50 “On the reconciliation of the parties in the arbitration process”
(hereinafter referred to as Resolution No. 50).
The then still existing Supreme Arbitration Court explained that “a settlement agreement is an agreement of the parties, that is, a transaction , as a result of which to this agreement, which is one of the means of protecting subjective rights, in addition to the norms of procedural law, the norms of civil law on contracts are subject to application, including including the rules on freedom of contract.”
It would seem that since a settlement agreement is a transaction, then it can be contested separately. However, paragraph 21 of Resolution No. 50
states that “challenging a settlement agreement approved by the court (
parts 1, 5 of Article 141 of the Arbitration Procedure Code of the Russian Federation
) separately from challenging the judicial act by which the settlement agreement was approved is impossible.”
A similar practice existed before the release of Resolution No. 50
, for example, the FAS of the East Siberian District indicated that
the settlement agreement is a procedural action of the arbitration court , therefore, the revision of the settlement agreement is possible only by appealing by an interested party to the determination to terminate the proceedings in connection with the approval of the settlement agreement in the manner prescribed by law.
The plaintiff’s argument (represented by the Office of the Federal Bailiff Service for the Republic of Sakha (Yakutia)) that the settlement agreement is a civil law transaction and can be challenged separately, the FAS VSO rejected as based on an incorrect interpretation of substantive and procedural law ( see Resolution FAS East Siberian District dated May 16, 2011 in case No. A58-3951/10
).
Thus, if the settlement agreement is approved by the court, the dissatisfied party has two options: file a complaint against the relevant court ruling or (if appropriate circumstances exist) file an application to review the case based on new or newly discovered circumstances).
There may also be difficulties with third parties involved in the process. As reasonably noted in paragraph 11 of Resolution No. 50
,
a third party who declares independent claims regarding the subject of the dispute has the right to participate in the conclusion of a settlement agreement , since such a third party enters into the case practically as a plaintiff.
Clause 12 of Resolution No. 50 is causing controversy
, according to which third parties without independent claims also have the right to act as participants in a settlement agreement.
This position is fundamentally incorrect; third parties, without independent demands, are involved in the process only because the decision in this case may entail certain consequences for them; they are not parties to the disputed legal relationship.
Consequently, the court, in its ruling approving the settlement agreement, does not have the right, for example, to oblige a third party to fulfill the defendant’s obligations for him.
A third party who does not make independent claims cannot participate in the adoption of a settlement agreement , since he can neither admit the claim nor renounce it.
In this case, it is important to note that not only the participants in the process, including third parties, have the right to appeal a judicial act, but also entities whose rights were affected by the court decision (see, for example, Resolution of the FAS Volga District dated October 28, 2013 on case No. A12-457/2013
).
And here we come to the understanding that the approval of a settlement agreement is not always the end point in the dispute between the parties .
How to conclude a settlement agreement?
The procedure for completing the document is as follows:
| Stage | Peculiarities |
| Conclusion initiative | The initiator can be any party or third party participating in the case. |
| Drawing up and signing a document | The number of printed copies must correspond to the number of parties to the case. One of them is handed over to the judge for review. |
| Making a determination | The official checks the document for compliance with current legislative standards. If no violations are found, a determination of approval or refusal is made. |
| Execution of definition | All parties to the contract must fulfill the conditions specified in it. |
The document can be appealed by any of the participants in the process within a month after the ruling is made.
The court will not approve the contract if its terms contradict the law or violate the rights and interests of third parties.
Petition for a settlement agreement
If conciliation actions are used, then it is necessary to send a request to the official to review the contract. A sample document can be downloaded below. The form and content of the settlement agreement is established by Art. 153.9 Code of Civil Procedure of the Russian Federation.
Download a sample settlement agreement in civil proceedings
The document must include the following information:
- participant data;
- details of the case under consideration;
- conditions and terms of fulfillment of obligations;
- date of signing the document.
The parties to the agreement must confirm that they have no claims against each other if their obligations are fully fulfilled.
