Enforcement of Settlement Agreement India

It has become clear that the treatment and applicability of IMSA should not focus on the timing of the appointment of an arbitrator who will give the settlement agreement the status of an arbitral award. It is time to abandon the legal fiction created between consents granted after – unlike in the past – the opening of arbitration. The terms of these agreements are mostly concluded without court oversight, and the court has little or no influence on the content and form of the settlement agreement. The timing of the court appointment therefore has only a limited impact on the content of an IMSA. Article 30 of the UNCITRAL Model Law on International Commercial Arbitration promotes the settlement of disputes through mediation between the parties. An agreement between the parties ensures that disputes end amicably and that each party is satisfied. In addition, settlement procedures such as mediation reduce the burden on the courts, reduce legal costs for parties, and are more likely to preserve business relationships. However, unlike the UK or Singapore, India is not a country in favour of mediation. Various Indian courts have disapproved of the legislature for the error of the law. A constant challenge to mediation as a means of resolving an international trade dispute is that the result of successful mediation is an International Mediation Agreement (IMSA), which traditionally has no better legal status than any other treaty. At present, there is no mechanism for the direct application of ASMIs at the international level.

This means that if one of the parties to an IMSA refuses to comply with the parties` agreement, the other party must rely on one of the available methods discussed below. The official press release states: “In the context of the current convention, companies seeking to enforce a mediation agreement across borders can do so by going directly to the courts of the countries that have signed and ratified the treaty, rather than having to apply the settlement agreement as a treaty in accordance with each country`s internal process.” Accordingly, prior to the entry into force of the Singapore Mediation Agreement, settlement agreements entered into by “arbitration” were likely to be enforceable in India under Part III of the Arbitration Act, agreements concluded through mediation could only be performed as contracts. This legal vacuum is now closed with India`s ratification of the Singapore Mediation Convention, which provides for the application of settlement agreements reached through mediation. First, one might think that, since settlement agreements contain the terms of consent consented to by the parties, there does not appear to be any reason to grant a request to set aside an arbitral award on the agreed terms (settlement agreements). However, given that settlement agreements have been given the status of arbitral awards, the courts are of the view that claims under section 34 of the Act naturally follow. Perhaps the real question we need to ask ourselves is: Do we want an international mechanism to speed up the implementation of the LSMI? If the answer is yes, we need to determine what formal requirements must be met before accelerated application can be granted. In some cases, the parties have attempted to enforce the settlement agreement in accordance with the law. In the case of Shri Ravi Aggarwal v. Shri Anil Jagota, both parties agreed to conduct private mediation and requested that the agreement be implemented in accordance with sections 30, 73 and 74 of the Arbitration and Conciliation Act 1996.

The court refused because Part III of the Arbitration and Conciliation Act applied only to settlement agreements that had been reached by mutual agreement in a duly constituted conciliation procedure. UNCITRAL is preparing an international instrument for the implementation of IMSA. This process is still ongoing and there is still no clear idea of what form such an instrument could take. current methods of enforcement of internationally negotiated settlement agreements – through litigation or arbitration; empowerment of legislation; and consent awards – are considered insufficient. To that end, UNCITRAL had worked on the creation of a new legal instrument for the accelerated implementation of those agreements. A settlement agreement can be understood in simple terms as a contract concluded by the parties who settle their disputes. Since mediation is now a process in which the parties decide voluntarily, a mediation settlement agreement can be reached after both parties have mediated. In other words, in a negotiated settlement agreement, everything that the parties have agreed to is reduced in writing. It is a document that obliges the parties to respect the conditions agreed following mediation. The Singapore Mediation Convention, officially known as the United Nations Convention on International Settlement Agreements Resulting from Mediation, entered into force on 12 September 2020. The Convention provides a unique and effective framework for the recognition and enforcement of mediation agreements for the settlement of international commercial disputes – similar to the framework provided by the 1958 New York Convention for arbitral awards. [1] As of September 12, 2020, the Convention had 53 signatories, including the United States, China and India.

Therefore, a weak enforcement mechanism runs counter to the very purpose of mediation, making the whole process unproductive and impassive. Therefore, private mediation in India is not preferred as an OER process and often takes a back seat. Section 73 of the Act authorizes an arbitrator to enter into a settlement agreement that is final and binding on the parties. Paragraph 74 elevates the status of this settlement agreement to the status of an arbitral award. The Delhi High Court upheld the same in the Case of Anuradha SA Investments LLC & Anr. v. Parsvnath Developers Limited & Ors 2017 (4) ARBLR 72 (Delhi). § 30 is effective only if the parties have decided to settle a dispute after the opening of arbitration proceedings. If the parties have opted for private mediation, in the pursuit of a mediation clause or otherwise, settlement agreements will not be treated as arbitral awards. Thus, they are performed as simple contracts between the parties. The lack of an enforcement mechanism, coupled with a strong arbitration framework, has rendered the mediation system in India ineffective and unnecessary.

This gives a significant lack of confidence and uncertainty to the parties who choose mediation in India. Only a comprehensive law, namely an “Indian Mediation Act”, such as an Arbitration and Conciliation Act, can purify muddy water). Countries like Singapore can provide guidance for the development of mediation law in India. Although the Singapore Mediation Convention does not emphasize the use of the word “mediation” to describe how a settlement can be reached (as mediation and conciliation are used interchangeably in several jurisdictions), Indian law distinguishes between mediation and conciliation. For example: In addition to the Code of Civil Procedure of 1908 and the Arbitration and Conciliation Act of 1996, the Commercial Courts Act also encourages mediation agreements in commercial matters to some extent. The Indian government amended the Commercial Courts Act 2015 by way of an ordinance. This change required pre-institutional mediation before bringing a commercial action on issues that do not require immediate interim measures. Through this process, any settlement agreement reached is reduced in writing and signed by the parties and the mediator. This settlement agreement has the same status as an arbitral award on the agreed terms. The 2006 Rules of Civil Procedure on Alternative Dispute Resolution and Mediation, formulated by the Bombay High Court, provide for both “arbitration settlement” and “mediation settlement”. .