Civil Engineering Reference
In-Depth Information
the date falling eight weeks after the date on which the mediation ends. he end of the
mediation is defined as being the date when: (1) all of the parties reach an agreement
resolving the dispute; or (2) the parties agree to end the mediation; or (3) a party with-
draws from the mediation; or (4) 14 days after the mediator's tenure ends (by death,
resignation or otherwise) if a replacement mediator has not been appointed.
18.2 Settlement agreements
18.2.1 General
In the event that a settlement is achieved in the course of a mediation, it is normal
practice to record the terms of settlement in a formal written agreement which is then
signed by parties before bringing the mediation to an end.
It is important to ensure that the settlement agreement deals with all matters in dis-
pute between the parties and sets out fully the terms of settlement agreed. It should
deal with matters such as payment of VAT, tax, interest, legal costs and the disposal of
any proceedings underway in court, arbitration or any other forum. It should cover
the mechanisms to implement the settlement, including who is to do what, by when
and what is to happen if a party fails or delays in taking action required or a dispute
develops as to the terms of settlement. It would often include provisions covering con-
fidentiality of the terms of settlement and sometimes of the existence or content of
the dispute.
18.2.2 Interpretation of settlement agreements
Of course, settlement agreements are entered into in most cases outwith the context
of mediation and there have been a number of cases in the courts related to the inter-
pretation of settlement agreements. The basic principle is that these are dealt with in
the same way as any contract and interpreted in accordance with the normal rules on
contract interpretation. However, particular care is needed to ensure clear drafting as
there will be a 'reluctance to infer that a party intended to give up something which
neither he, nor the other party, knew or could know that he had', according to Lord
Bingham in
BCCI
v.
Ali
(2002). Lord Clyde in the same case said:
Generally if they intend their agreement to cover the unknown or unforeseeable,
they will make it clear that their intention is to extend the agreement to cover such
cases. If an agreement seeks to curtail the possible liabilities of one party, he, if not
both of them, will generally be concerned to secure that the writing clearly covers
that curtailment.
In other words, it is perfectly possible in a settlement agreement to compromise future
claims, for example, to reach a full and final settlement which covers not only defects
currently known about but also future, latent defects. However, to do so, the wording
of the settlement agreement must make it clear that this is the intention of the parties.
