On the Possibility of Application of Article 333 of the Civil Code of the Russian Federation to a Settlement Agreement: «Double» Exemption from Liability or Ensuring a Balance of Interests of the Parties

The article analyzes the possibility of application of Article 333 of the Civil Code of the Russian Federation to a settlement agreement approved by a commercial (arbitrazh procedure) court. A settlement agreement may act as a procedural method of implementing the right of a party to an agreement to exempt the counterparty from liability and at the same time contains liability measures in the event of a violation of its terms. Taking into account the transactional nature of the settlement agreement, the inclusion of a condition on the payment of a penalty for failure to comply with the payment schedule is justified. An analysis of judicial practice on application of Article 333 of the Civil Code of the Russian Federation to a party’s violation of the terms of a settlement agreement indicates its heterogeneity. There is a difference of opinion in the scientific literature on the norm of Article 333 of the Civil Code of the Russian Federation, which allows the court to reduce the amount of the penalty. The application of Article 333 of the Civil Code of the Russian Federation on the reduction of penalties to an already concluded settlement agreement, which contained an exemption from liability of the debtor for failure to pay on time for delivered goods, completed work or rendered services, allowed the authors to conclude that there was a «double» exemption from liability. A settlement agreement is an agreed expression of the will of its parties; therefore, the commercial (arbitrazh procedure) court does not have the right to actually change the terms of the settlement agreement. The terms of the settlement agreement may be changed only as a result of an appeal of the judicial act by which it was approved.

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