Settlement agreements and mediation in a dispute

What is happening

A dispute with a key supplier is in its second year, an expensive expert examination has been ordered, and both sides need the relationship. The directors are willing to meet but do not know how to record a compromise so that it does not collapse within a month.

The debtor admits the debt but asks for time to pay. The creditor is prepared to agree if it has a safeguard: if a payment is missed, the whole sum becomes recoverable at once without fresh proceedings.

Judgment has been given, but enforcement has stalled: the debtor has little money and the bailiffs are slow. A settlement at the enforcement stage may yield more than waiting.

What the law says

• A settlement agreement may be concluded at any stage: at first instance, on appeal, in cassation and during enforcement. It is approved by the court and brings the proceedings to an end.
• The court checks that the agreement does not breach the law or the rights of others. Its terms must be specific and capable of performance; vague wording leads to approval being refused or to problems at enforcement.
• If a settlement agreement is not performed voluntarily, it is enforced compulsorily: the court issues a writ of execution, and from there the rules of Federal Law No. 229-FZ of 2 October 2007 "On Enforcement Proceedings" apply.
• When a settlement agreement is approved, part of the court fee paid is refunded to the claimant from the budget under the Tax Code; the proportion depends on the stage at which the agreement is reached.
• Mediation is conducted under Federal Law No. 193-FZ of 27 July 2010 "On the Alternative Procedure for Settling Disputes with the Participation of an Intermediary (Mediation)": the mediator does not decide anything but helps the parties reach agreement, and information disclosed in the process is confidential.
• The Commercial Procedure Code (APK) and the Code of Civil Procedure also provide for court-annexed conciliation by a judicial conciliator drawn from retired judges; the court may adjourn the case while conciliation takes place.

What we do

• We assess the merits and the prospects of the case so you know what you bring to the table and what a concession is worth.
• We prepare a negotiating strategy: what is essential, what can be conceded and what safeguards are needed.
• We negotiate with the other side or its lawyers, including at meetings between the directors.
• We draft the settlement agreement: amounts, schedule, payment mechanics, consequences of default and allocation of costs.
• We support mediation or court-annexed conciliation, preparing your position and attending sessions with you.
• We present the agreement to the court for approval and answer the court's questions.
• We monitor performance and, in the event of default, obtain a writ of execution.

What we will need from you

• The case or dispute materials: the contract, claim letters, statement of claim, defence and any court rulings.
• Your view of the relationship with the counterparty: whether it matters to preserve it and what the commercial interests are.
• The acceptable bounds of a compromise: the minimum amount, an acceptable schedule, non-monetary terms.
• Any information you have on the other party's financial position.
• A resolution of the management body, if the articles require one to conclude the agreement.