In accordance with part 1 of article 140 of the Arbitration Procedure Code of the Russian Federation, a Settlement Agreement is concluded in writing and signed by the parties or their representatives if they have the authority to enter into a settlement agreement, specifically provided for in the power of attorney or in another document confirming the representative’s authority. The settlement agreement is drawn up and signed in the number of copies, which exceeds by one copy the number of persons who have entered into a settlement agreement; one of these copies is attached by the arbitration court, which approved the settlement agreement, to the case file.
The purpose of the Settlement Agreement is to resolve the dispute between its parties. Therefore, the court has the right to postpone the consideration of the case in order to give the parties time to conduct conciliation procedures, including the conclusion of a settlement agreement.
An amicable agreement can be concluded at any stage of the arbitration process and even at the stage of execution of a judicial act.
The issue of approval of a settlement agreement is considered by the arbitration court in court.
If a settlement is concluded during the execution of a judicial act, it is submitted for approval to the arbitration court of the first instance at the place of execution of the judicial act or to the arbitration court that adopted the judicial act and is considered by the court within a period not exceeding a month from the date of receipt of the court statements on its approval.
The settlement agreement approved by the court is subject to immediate execution and may be appealed to the arbitration court of the cassation instance within a month from the day the decision is made.
An amicable agreement is a civil law transaction which is subject to the conditions provided for in Article 432 of the Civil Code of the Russian Federation under which a contract is considered concluded, namely: if an agreement is reached between the parties in the required form on all the essential terms of the contract.
Procedural legislation does not impose strict requirements on the content of a settlement agreement. It must not contradict the law and not violate the rights and legitimate interests of others. However, given that the Settlement Agreement is a civil law transaction, entering into this transaction, it is worth considering a number of pitfalls that are not mentioned in the Arbitration Procedure Code. The terms of the settlement agreement must comply with the general provisions on obligations, the requirements of arbitration practice, and in some cases even the legislation on business companies.
Essential are the conditions on the subject of the contract, the conditions that are specified in the law or other legal acts as essential or necessary for contracts of this type, as well as all those conditions regarding which, at the request of one of the parties, an agreement must be reached. These include: information on the conditions, on the amount and on the timing of the fulfillment of obligations to each other or by one party to the other (part 2 of article 140 of the APC of the Russian Federation). Also, an amicable agreement may contain conditions for deferral or installment payment of obligations by the defendant, for assignment of rights of claim, for full or partial forgiveness or recognition of debt, for the distribution of legal expenses and other conditions that do not contradict federal law.
If the Settlement agrees that the Claimant forgives part of the debt (for example, forfeits or fines), I recommend that the text of the Settlement stipulate the terms of this forgiveness, in case of default by the Respondent, the partial forgiveness of the debt is canceled and the Respondent must pay the debt in full .
The settlement agreement allows the parties to independently resolve the issue of distribution of legal expenses. If the settlement agreement does not contain a provision on the distribution of legal expenses, the arbitration court shall resolve this issue when approving the settlement agreement in the general manner established by Article 110 of the Arbitration Procedure Code.
When approving the Settlement Agreement, the court is obliged to check the compliance of its conditions not only with the law, but also with the requirements of certainty and enforceability. A settlement that does not meet the requirements of certainty (containing ambiguity or alternativeness) is not subject to approval.
The court is not entitled to independently exclude certain conditions of the Settlement Agreement, which are contrary to the law in order to approve it in the remaining part, or to amend the settlement by adjusting its text and removing from it items of a service nature that are not contrary to the law.
If a party has not complied with the terms of the Settlement Agreement:
in accordance with part 2 of article 142 of the APC of the Russian Federation, a settlement agreement that has not been executed voluntarily is subject to enforcement on the basis of a writ of execution issued by the arbitration court at the request of the person who has entered into a settlement agreement.
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