In recent years, the legislator has been trying to popularise amicable methods of dispute resolution. This trend applies to all kinds of civil, criminal and even administrative cases. This is, of course, a positive trend, which relieves the burden on the courts and speeds up trials.
Alongside mediation, one of the most popular methods of amicable dispute resolution is court conciliation, better known as a call for a settlement attempt. This is a procedure before a civil court, the aim of which is for the parties to acquaint themselves with each other’s positions and to end the dispute with a settlement agreement.
However, from a practical point of view, is it worth attempting such a settlement or is it better to file a lawsuit straight away?
Civil cases, the nature of which permits it, may be settled by a settlement concluded before a lawsuit is filed – so says the Code of Civil Procedure. The key word in this sentence is “may”, which means that it is not necessary for a person with a claim or other right to opt for this form of procedure to file a lawsuit.
IN WHICH CASES CAN A SETTLEMENT BE MADE?
It is important to note that a settlement can only be reached under this procedure in cases “whose nature permits it”. As a general rule, this will therefore include cases for payment, compensation or damages, delivery of goods to the owner, maintenance and all cases involving property.
However, it is not possible to settle disputes concerning rights which the parties cannot dispose of themselves. Thus, it is not possible to conclude, for example, a case for divorce, parental authority or the determination of the deceased’s heirs.
IS IT WORTH IT?
Before deciding to file a lawsuit, it is therefore important to carry out an account of the advantages and disadvantages that may arise from preceding it with a request for a settlement attempt.
Let’s start with the pros:
1. less formalities
The request for an attempt at settlement is considerably informalised. In order to initiate proceedings, you must file an application with the court. Unlike a lawsuit, in an application for an attempted settlement you do not have to present any evidence. It is sufficient to specify the matter to which it relates and to propose to the other party a way of ending the dispute.
Remember, however, that only by preparing the motion correctly will you be able to achieve all the benefits of a settlement attempt. The most favourable solution is a motion, which is actually a differently titled statement of claim. When drafting it, it is advisable to seek the assistance of a solicitor or legal counsel.
2 Possibility of enforcement
A settlement reached before the court substitutes a judgment. This means that if your opponent does not comply with the settlement, you can refer the matter to a bailiff for enforcement.
This is the advantage of a court settlement over an agreement outside of court. Of course, you can always settle out of court by a simple agreement. However, such an agreement does not allow you to quickly refer the case to a bailiff for enforcement, nor does it benefit from the so-called ‘res judicata’. However, such an agreement does not allow you to quickly refer the matter to enforcement or enjoy the so-called “res judicata”, which may lead to another dispute over the same issue.
Conciliation is cheap. Almost nothing in this world is free, but the settlement fee of 1% of the value of the claim is a tempting alternative to the court fee of 5% of the value of the claim.
4. One hearing and it’s over.
A writ of attempted settlement necessitates the appointment and attendance at only one hearing (conciliation session), which is highly informalised. During it, no evidence is taken and no witnesses are called. The judge asks our opponent whether he or she is willing to settle. If so, the judge plays the role of mediator, helping to agree a compromise settlement and providing any necessary advice. Finally, the parties sign the worked out settlement agreement and that is the end of the case.
5. More time to sue
Suspension of the statute of limitations on a claim for the time between the filing of the request for a settlement attempt and the conclusion of the proceedings.
Property claims are subject to a statute of limitations after a certain period of time. Depending on the contract or other source from which your rights arise, the limitation period ranges from one to as much as six years. Your lawyer will determine the exact date of the statute of limitations on your claim, but if the statute of limitations is approaching, by filing a request for a settlement attempt you can “buy time” to gather evidence and establish a specific strategy for a later lawsuit. Until recently, the filing of a request for a settlement attempt interrupted the limitation period completely, which meant that the limitation period was reset to zero and started to run from the beginning, so that the effect of a filed request in this context is no longer as spectacular as it was only a few months ago. Nevertheless, in emergency situations it is still worthwhile.
6. Protection against litigation costs
In commercial cases, irrespective of the outcome of the case, the court may order the costs of the litigation to be paid by the party who abandoned the attempt to resolve the dispute voluntarily before the action was brought or if he or she refrained from attending the conciliation meeting. Preceding the filing of a lawsuit in a commercial case with a request for a conciliation attempt therefore minimises the risk of incurring significant costs later in the process.
Now the downsides:
1. Uncertainty as to the outcome of the proceedings. Due to the voluntary nature of a settlement as a result of a writ of summons, your opponent may simply not be willing to do so. In that case, you will come out of the proceedings with nothing and delay the moment to file a lawsuit. A writ of summons therefore makes practical sense mainly in cases where there is a willingness to settle and the parties are arguing not about a principle but about less significant details.
2 The need to compromise. It is used to be said among lawyers that a good settlement is one with which both parties are not entirely satisfied. And this is indeed the case. It is usually necessary to at least minimally reduce one’s demands in order to convince the other party to settle. The participation of a professional attorney in such negotiations is therefore very helpful, as it can help us negotiate the most favourable settlement terms.
In conclusion, a settlement attempt is a very helpful legal tool, but whether it would be beneficial and advisable to use it in a given case requires a detailed analysis of the situation and risks. The lawyers at Sabuda – Sawinski Adwokaci i Radcowie prawni s.c. will be happy to advise you on this issue.