When parties to a legal dispute reach an agreement to settle their differences outside of court, they often opt for a settlement agreement. This document outlines the terms and conditions of the agreement and serves as a binding contract between the parties. However, in certain situations, it may be beneficial to turn the settlement agreement into an arbitration award. This article will explain the benefits of doing this and how to go about making a settlement agreement an arbitration award.
Benefits of Turning a Settlement Agreement into an Arbitration Award
One of the primary benefits of turning a settlement agreement into an arbitration award is that it gives the agreement the force of law. In other words, if one of the parties fails to uphold their end of the agreement, the other party can take legal action to enforce it. Additionally, because arbitration awards are typically final and binding, the parties cannot appeal the decision or challenge its validity.
Another benefit of turning a settlement agreement into an arbitration award is that it makes the agreement more enforceable internationally. Most countries have signed onto the New York Convention, which allows for the enforcement of arbitral awards across borders. Therefore, turning a settlement agreement into an arbitration award can make it easier to enforce in different countries.
Steps to Turning a Settlement Agreement into an Arbitration Award
Step 1: Choose an Arbitral Institution
To turn a settlement agreement into an arbitration award, you will need to choose an arbitral institution that can handle the conversion process. These institutions are typically neutral third-party organizations that oversee the arbitration process and issue the arbitration award.
Step 2: Initiate the Arbitration Process
Once you have chosen an arbitral institution, you will need to initiate the arbitration process. This involves submitting a request for arbitration to the institution and providing the settlement agreement as evidence of the dispute. The institution will then review the request and determine whether the agreement is suitable for conversion into an arbitration award.
Step 3: Reach an Agreement on the Terms of the Award
Assuming the institution agrees to convert the settlement agreement into an arbitration award, the parties will need to come to an agreement on the terms of the award. This typically involves agreeing on the language of the award, the date it will be issued, and any other relevant details.
Step 4: The Arbitration Award is Issued
Once all the details have been agreed upon, the arbitral institution will issue the arbitration award. This award will serve as an enforceable, legally binding contract between the parties.
In conclusion, turning a settlement agreement into an arbitration award can offer many benefits, including increased enforceability and reliability. By following the steps outlined above, parties can convert their settlement agreement into a legally binding arbitration award, providing an added measure of security and certainty to their agreement.