Settlement Agreement News

There have been 2 recent decisions in relation to Settlement Agreements.

When considering the wording of a settlement agreement, the Courts will usually interpret it with respect to its conventional meaning. In the case of Khanty-Mansiysk Recoveries Ltd v Forsters LLP [2016] EWHC 522 (Comm), the settled claim was defined as: “… any claim, potential claim, counterclaim, potential counterclaim, right of set-off, right of contribution, potential right of contribution, right to indemnity, potential right to indemnity, cause of action, potential cause of action or right or interest of any kind or nature whatsoever, whether known or unknown, suspected or unsuspected, however and whenever arising in whatever capacity or jurisdiction, whether or not such claims are within the contemplation of the Parties at the time of this Agreement arising out of or in connection with the Action or the invoice dated 1 July 2010…..and referred to in the Action.” Some time after entering into the settlement agreement, the Claimant sued in relation to a matter that only came to light subsequently. However, given the wording of the general release clause, the Court held that the Claimant’s claim had already been compromised by the settlement agreement, as it was clear and unambiguous from that clause that it also compromised claims that the Claimant was not aware of at the time he entered into the settlement agreement. Given this case, it is imperative that considerable care is exercised when drafting general release clauses and that the clause does not compromise future unknown claims

In the case of J Murphy & Sons Ltd v W Maher and Sons Ltd [2016] EWHC 1148 (TCC), the Court held that adjudication would apply with respect to resolving a dispute in relation to the settlement agreement, despite the fact that there was no express provision for it within the agreement, but only by virtue of the fact that adjudication provisions were contained within the sub-sub-contract. What this case highlights is that if a party wants to ensure that there is a right to refer any disputes over a settlement agreements to adjudication, then they need to ensure that there is express provision for it within the settlement agreement.

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Posted in General Employment Law, Settlement Agreements and tagged , .