Contributed By Pérez-Llorca
Court approval is not required to settle a lawsuit due to the litigants’ right of disposition of the matter at issue in the proceedings. Should the parties reach an agreement, the claimant can file a written statement by means of which he declares his abandonment of the proceedings or that he is waiving the action or the right upon which the pleas are founded.
The parties can also allow for the agreement to be sanctioned by the court for the purpose of closing the proceedings which, in turn, will have the same outcome as the now unnecessary court decision.
In order for the parties to ensure that the settlement agreement remains confidential, it is a common practice to include a confidentiality clause upon which the parties oblige themselves not to disclose the terms of such agreement.
If the agreement is sanctioned by the court, it can be enforced easily as the enforcement proceedings are equivalent to the enforcement proceedings following a court’s decision.
On the other hand, to enforce settlement agreements that have not had the approval of the court, the party who seeks their enforcement must initiate judicial proceedings in order to prove the existence of the agreement and that the other party has infringed the settlement agreement so that the court can declare an infringement and order the party to comply with the agreement.
Settlement agreements can be set aside on the same grounds as contracts.