This is an extract of our Recording Negotiated Settlements document, which we sell as part of our Alternative Dispute Resolution Notes collection written by the top tier of City Law School students.
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Recording Negotiated Settlements (re negotiation & mediation)
-Once a settlement has been agreed, it needs to be recorded.
-Recording settlement = the final part of ADR process.
In exam, 'recording negotiated settlement' will come from either
NEGOTIATION OR MEDIATION.
o Point about negotiation & mediation ? non-adjudicative, they provide the client with ownership over the outcome.
o HENCE: it must be for the client to determine whether to settle, and, if to settle, on what terms.
-Suppose that you reach agreement:
o VITAL FOR EXAM: IDENTIFY THE PRECISE POINT at which you on the litigation pathway when you reach settlement
i.e. have proceedings yet begun?
-Best practice dictates that: A settlement that is reached should be
and (4) recorded.
o If not final or comprehensive: a new dispute can arise, can end up back in court.
o A settlement must contain provision as to costs
-Lawyer's responsibilities re recording a settlement , should ensure that:
a) The terms are comprehensive, covering everything at issue b) Each term is clear and sufficiently detailed c) The client understands the agreement; lawyer should explain to client what each side must do/not do under the agreement d) The client accepts the agreement.
e) The terms are appropriately recorded [[see options below]]
f) The terms are appropriately enforceable. Lawyer should explain to client what steps may be taken if either side does not comply with the agreement.
-And professional obligations to protect client's interests, without regard to the lawyer's own interests: solicitors under SRA code, barristers under BSB Code of
-Where any party is a child or lacks mental capacity: will probably be necessary to appoint a litigation friend under CPR 21; and necessary to seek court approval of the compromise (21.10).
Forms of recorded outcome:
-The form is often governed by the original agreement to enter ADR.
-Arbitration ? should result in an award.
-Mediation agreement may include a statement that any compromise binding only if made in writing.
-In the absence of an express provision:
An adjudicative process ? will lead to a written decision, eg an arbitration award.
o A non-adjudicative process -> can lead to a written report from a 3rd party
(eg ENE), but this will not provide a final outcome, but will inform further discussion between the parties.
o Ombudsman, produces a letter.
o Mediation and negotiation ? normally result in an oral agreement
Enforceable terms for recording settlement:
-Record outcome that is legally enforceable.
-(1) an oral contract: non-adjudicative ADR processes often lead to an oral contract
UNLESS there is a 'subject-to-contract' clause.
o Once both parties say they have reached agreement and the basic requirements of a contract exist ? there is an enforceable contract.
-(2) a written contract:
o Non-adjudicative processes also commonly lead to a written contract, either because: (a) the process was conducted in writing (wholly/partly); or (b)
because the oral agreement is reduced to a written contract.
o An oral agreement where parties state they will only be bound on signing a written agreement ? only becomes binding when doc is signed.
-(3) an award with statutory authority: because the ADR process is governed by statute/regulation.
-(4) a court order:
o an ADR process can be wholly or partly incorporated into a court judgment,
but only where proceedings have been issued (see below, court order).
-(5) other legal docs: terms could be incorporated into some other appropriate form,
eg a deed or conveyance.
-Where a court is involved (once proceedings have started) ? the terms can normally be enforced by returning to court within the existing proceedings.
-Where a court is not involved ? it may be necessary to issue new proceedings for breach of contract to enforce the settlement.
Methods of recording settlement agreements
-(1) Exchange of letters: used where proceedings have not been issued; so court order is not an option.
-(2) Contract or deed: may be desirable to have a contract in a separate doc rather than an exchange of letters. Eg where the terms are complex, or parties want a formal separate legal doc, or where there will be an ongoing commercial relationship. Deed may be more appropriate in relatively limited circumstances.
-(3) settlements where there are existing court proceedings, several ways of recording settlement:
o Judgement entered for immediate payment of sum agreed with costs
Judgement entered for the agreed sum and costs, subject to a stay of execution pending payment by stated instalments.
o Court informed that the case has been settled upon terms endorsed on counsel's briefs (informal) ??
o Court informed that case has been settled, the terms being recorded in a contract.
o Entry of a consent order, setting out the agreement in the form of undertakings by both parties.
o Consent order staying all further proceedings upon the agreed terms.
o Consent order providing for 'no order' save as to costs, but setting out the agreed terms in recitals.
o Tomlin Order.
(4) endorsement on briefs: terms are written onto the backsheet of the barrister's brief. In very simple settlement cases, no additional written record may be needed.
Normally, lawyer for each party signs the other's endorsement. Parties may also sign. Same wording should be used on both briefs.
o The effect of endorsement on briefs: the endorsement is evidence of an oral agreement.
(5) Interim order:
o Only possible once proceedings have been issued, and if there has been an application for an interim order.
o Negotiations prior to interim applications may result in the settlement of the whole case rather than just the interim injunction.
o When the application is called on before the judge, an order may be made staying, adjourning, or dismissing the claim, on the basis of the terms agreed by the parties.
o Only applies in very limited circumstances.
(6) Consent Order
Only where proceedings have been issued;
o Can only be made with consent of the parties.
o Main benefit: can be enforced with the full range of court enforcement powers, without need to start a new claim to enforce a separate contract
(the settlement agreement).
o Administrative consent orders: very limited circumstances, consent order by a purely administrative process.
o Drafting of consent orders:
o normally drafted using the wording agreed in the settlement agreement;
o Must be expressed as being 'by consent' and must be signed by legal reps of both parties.
o can only make an order within the court's jurisdiction (eg for damages/costs/
declaration; court cannot make an order it does not have the power/jurisdiction to make, even if the terms are agreed by the parties. Eg,
cannot order the parties 'to agree' or 'to accept' or 'to discontinue' a claim.
o Court can only make an order based on the issues in the case; parties may need to ask for permission to amend the Statements of case.
o If the settlement agreement includes matters outside the powers of the court or outside the issues in the case ? use a Tomlin order.
o Should contain provision re costs ? if no provision for costs made in the
Order, each side will bear their own.
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