Settlement Agreement Waiver Clause

The defendant law firm advised an oil exploration company with respect to the acquisition of oil exploration licenses by transferring shares in a Russian company. A dispute has broken out over an unpaid invoice of GBP 130,000 for legal advice and a guarantee from a managing director. The dispute culminated in a tripartite settlement agreement between the defendant, the company and the manager. The company then found that the transfer of shares in the Russian company had not been effective and was eventually placed in liquidation. The applicant acquired the company`s claim from the liquidators and sought to bring an action against the defendant for breach and negligence in the context of the legal advice relating to the acquisition of shares. The Tribunal was asked to consider whether the settlement agreement on the unpaid invoice should be interpreted in such a way that it had settled the present claim. Consequently, the waiver clause was annulled by the General Court. As a result, the employer lost its contractual protection against the worker`s rights, which enabled it to assert the above-mentioned arrears with the employer. The company went into liquidation in 2015 and a turnaround company sued Forsters for more than £70 million for alleged negligence in providing its legal advice. The Commercial Court was asked to consider beforehand whether Forsters could rely on the existence of the settlement agreement to defend this claim.

The worker took the case to court to challenge, among other things, the validity of the waiver clause. At first instance, the Brussels Labour Court annulled the conciliation agreement because of the worker`s lack of consensus ad idem ono. As a result, the Labour Court did not take into account the above-mentioned waiver clause. The validity of waiver clauses in settlement agreements is rigorously assessed by the Belgian courts and, in practice, often gives rise to discussions between employers and their (former) workers. The Commercial Court decided that, in the statement of reasons for the settlement agreement, the claim was covered by its terms and that Forsters was exempt from all potential claims. Eder J rejected the applicant`s argument that the context limits the extended scope of the release clause as formulated in the settlement agreement. It was accepted that the original dispute concerned only the amount of the unpaid invoice and that the right to infringement and negligence was totally unsuspected at that time, but such a claim was not totally unimaginable. An objective observer would not have thought it was impossible. It was therefore distinct from the appeal in BCCI against Ali, where the basis of the subsequent claim was only legally recognised by the House of Lords after the settlement agreement had been concluded, making it an “unknown unknown”. The clause in Forster`s case was extremely broad and, in the circumstances of its particular case, Forsters could use it to lower this potential claim for negligence.

Employers should view this decision as an important reminder of the need to take the time to verify whether the declassification and waiver provisions are properly formulated in a settlement agreement. The Tribunal found that the draft tripartite settlement agreement, if properly interpreted, was broad enough to satisfy all “claims”, not just those that referred to the original dispute and that the “claims” fell within the present claim. To be valid, a settlement agreement must comply with various conditions, including the absence of ad idem consensus between the parties, reciprocal concessions by the parties (granting of a “little more” in addition to the legal rights of the parties), etc. A worker may waive his rights under his contract of employment only if he concludes a valid settlement agreement with his employer. Particular attention should be paid to the wording of the waiver clause: it should be sufficiently clear, precise and non-interpretative. . . . .