The Tribunal found that the proposed tripartite settlement agreement had a broad enough interpretation to allow for the settlement of all “claims,” not just those relating to the original litigation, and that the “claims” related to the claim at issue. Eder J rejected the applicant`s argument that the initiative clause, as set out in the settlement agreement, is limited by context. It was recognized that the original dispute was only the quant of the unpaid invoice and the right to breach of contract and negligence at that time totally ignorant, but such a claim was not entirely unthinkable. An objective observer would not have thought it was impossible. It therefore distinguished itself from the argument in BCCI/Ali, where the basis of the subsequent claim was not recognized as legal by the House of Lords until after the creation of the transaction contract, making it an “unknown”. The transaction agreement should be clear on the date of possible compensation, all payment terms and means of payment. Other considerations include whether you wish to transfer the right to payment to related companies and, if so, whether the transfer may take place with or without the consent of the other party. When companies decide to resolve problems by mutual agreement, the settlement agreement should accurately reflect the compromise reached by the parties. Too often, the focus is only on the amount to be paid in exchange for the release of debts, but there are other equally important considerations that need to be addressed.
Most disputes are resolved, so it is important for legal teams to be aware of key issues related to the development of a transaction agreement. This is especially true now that companies around the world are facing the COVID 19 pandemic and the resulting pollution of supply chains and trade relationships. The applicant relied on the BCCI/Ali decision to argue that the scope of the release clause in the transaction agreement should be limited by the surrounding circumstances. In particular, the applicant referred to Lord Bingham`s “precautionary principle”; that, in the absence of clear language, the court will only slowly conclude that a party who wanted to give up rights and rights of which he knew nothing and which he could not have known. A settlement agreement on a legal fee of GBP 130,000 also covered a subsequent claim of 70 million LIVES for breach and negligence. The existence of a possible right to infringement and negligence was not suspected at the time of the transaction agreement. Properly interpreted, the broad release clause and the definition of claims cover rights beyond the original litigation. The context did not limit the scope of the transaction agreement.