Court Settlement

A court settlement is an agreement made by the parties to a pending case to end the dispute through mutual concessions (Code of Civil Procedure Arts. 313-315). A settlement has the legal effects of a final judgment and ends the case.

Conditions

• A settlement may be made on matters the parties may freely dispose of.
• It may be made at any time until the judgment becomes final, including at the appeal stage.
• It may cover all or part of the subject matter; matters outside the subject matter may also be included.
• A conditional settlement may be made; the court assesses whether the condition is met.

Effects

• A settlement has the legal effects of a final judgment; a new case cannot be filed on the same matter.
• The court decides in line with the settlement; that decision is enforceable.
• If litigation costs and attorney fees are not agreed in the settlement, the court allocates them; see Litigation Costs.
• A settlement may be set aside for defects of consent (mistake, fraud, duress).

Difference from Waiver and Acceptance

• Waiver: The claimant abandons its claim in whole or in part; a unilateral act.
• Acceptance: The defendant accepts the claimant’s claim in whole or in part.
• Settlement: An agreement involving mutual concessions by both parties.

Settlement Outside Court

A dispute can also be resolved before a case is filed. An agreement reached in mandatory mediation, if signed by the parties, their lawyers and the mediator, is treated as a judgment-equivalent document without an enforceability annotation. The parties may also sign an out-of-court settlement protocol and end the dispute by waiving the case; the tax and cost consequences of the protocol should then be planned separately.