Arbitration & Settlement

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Arbitration & Settlement

The role or arbitration or settlement between two disputed entities can be a company or individual is a legal activity to ensure that issues are resolved keeping the satifaction of both the parties,in amicable terms. In turn, outside Court settlement procedures like conciliation ensure fewer burdens on the Courts and also lessen the costs of litigation for the parties in dispute. Thus, these settlements have been welcomed by litigants and courts alike. Therefore, the Courts have not hesitated or disputed in giving finality to the terms of a settlement agreement, like an arbitral award, as under the Arbitration and Conciliation Act, 1996.

A settlement agreement is an agreement drawn out by a conciliator, when he sees that there is possibility of amicable compromise between the parties. A conciliator assists the parties to amicably settle the disputes between them.

The conciliator, on the basis of his notings during the conciliation proceedings and also on the basis of the written statements and the documentary evidence of the parties, draws up the terms of settlement agreement. The same is then forwarded to the parties for their comments, if any, and if necessary a reformulated settlement agreement is prepared on the basis of such comments.1

According to Section 73 (3) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as the Act) the settlement agreement signed by the parties is final and binding on them and the persons claiming under them. It follows, therefore, that a successful conciliation proceeding comes to an end only when the settlement agreement signed by the parties comes into existence. This type of an agreement has the legal sanctity of an arbitral award under Section 74 of the Act.