Drafting peace agreements

Drafting of settlement agreements

The Registration Service Company offers comprehensive services for drafting settlement agreements in the course of pre-trial dispute resolution, litigation and enforcement proceedings. 

Pursuant to Article 78 of the Commercial Procedure Code, a settlement agreement is concluded, it can only relate to the rights and obligations of the parties regarding the subject matter of the claim and is signed by the parties and third parties claiming the subject matter of the dispute.

A settlement agreement changes the position of the parties, forcing them to make mutual concessions. We believe that peace is preferable to litigation if the parties have a genuine intention to fulfill the agreement. However, sometimes this tool is used against the aggrieved party, who is aware of the state of enforcement of court decisions in Ukraine, and most of which remain unenforced, and who wants to recover what he or she has lost at least by making concessions.

The advantage of a settlement agreement is that it reduces the costs and time required to resolve a dispute. It is known that the practice of enforcement of court decisions is quite negative for the parties and does not allow them to compensate for all the real losses caused by litigation.

What should be taken into account when drafting a settlement agreement:

• the claims in respect of which the settlement agreement is concluded;
• clarity of conditions for preventing further disputes;
• understanding of the consequences of entering into a settlement agreement, in particular, the inability to file the same lawsuit on the same grounds;

The terms of the settlement agreement should relate only to the subject matter of the claim and not to third parties not involved in its conclusion. The parties are prohibited from imposing any conditions that induce the conclusion of a settlement agreement.

As explained by the HCCU Plenum in its Resolution No. 9 "On Certain Issues of Practice" dated 17.10. 2012 No. 9 "On Certain Issues of Practice of Enforcement of Decisions, Rulings, and Resolutions of Commercial Courts of Ukraine", the resolution approving the settlement agreement is an enforcement document pursuant to paragraph 2 of part two of Article 17 of the Law of Ukraine "On Enforcement Proceedings" and as an enforcement document must contain in its operative part not only an indication of approval of the settlement agreement, but also other signs and information provided for by law (Article 86 of the EPC and Article 18 of the said Law), in particular, regarding the terms, amount and terms of fulfillment of the parties' obligations, etc. Failure to comply with the relevant requirements means that the resolution approving the settlement agreement cannot be considered an enforcement document to be enforced by the State Enforcement Service.

Pursuant to Article 18 of the Law of Ukraine "On Enforcement Proceedings", the enforcement document must contain:

1. the name and date of issuance of the document, the name of the authority, the name and initials of the official who issued it
2. date of adoption and number of the decision under which the document was issued;
3. full name (for legal entities) or name (surname, proper name and patronymic) (for individuals) of the creditor and the debtor, their location (for legal entities) or place of residence or stay (for individuals), identification code of the business entity of the creditor and the debtor (for legal entities), individual identification number of the creditor and the debtor (for individuals - taxpayers) or number and series of the passport of the creditor and the debtor for individuals - citizens of Ukraine, who, due to their religious or other beliefs, have refused to accept an identification number, have officially notified the relevant state authorities and have a stamp in their passport of a citizen of Ukraine, as well as other data, if known to the court or other body that issued the enforcement document, that identify the creditor and the debtor or may facilitate enforcement, in particular, the debtor's date of birth and place of work (for individuals), location of the debtor's property, accounts of the creditor and the debtor, etc;
4. the operative part of the decision;
5. date of entry into force of the decision;
6. the deadline for submitting the enforcement document for execution.

Thus, in order to avoid any misunderstandings in the execution of settlement agreements, it is necessary to contact lawyers who specialize mainly in litigation and contract law.

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