A Settlement Agreement is the successful outcome of conciliation proceedings. It is a written document that records the terms upon which parties have agreed to resolve their dispute.
Legal Basis: It is governed by Section 73 of the Arbitration and Conciliation Act, 1996.
The Process: When the Conciliator observes elements of a settlement, they formulate the terms and share them with the parties. Once the parties reach an agreement, they sign the written settlement agreement. The Conciliator then authenticates the document.
Legal Status (Section 74): This is the most crucial aspect for exams. A settlement agreement signed by the parties and authenticated by the Conciliator has the same status and effect as an arbitral award on agreed terms.
Enforceability: Because it is treated as an arbitral award, it is final and binding on the parties. It can be enforced as a decree of a civil court under Section 36, meaning the winning party does not need to file a new suit to execute the terms.
Confidentiality: Under Section 75, the settlement agreement must be kept confidential, except where its disclosure is necessary for implementation and enforcement.
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