Judicial principles and studies
Arbitration Clause in Light of Settlement / Reconciliation Agreement
A settlement between parties constitutes a compromise under Article 647 of the Civil Code, limited to the rights it addresses; it implicitly waives the original arbitration clause for the settled dispute unless the settlement contains a new arbitration clause.
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Judicial principles and studies
Updated: 10 September 2026
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A settlement between parties constitutes a compromise under Article 647 of the Civil Code, limited to the rights it addresses; it implicitly waives the original arbitration clause for the settled dispute unless the settlement contains a new arbitration clause.
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Subject
The points address the effect of a settlement/release agreement on an arbitration clause contained in the original contract. They state that a settlement is a compromise under Article 647 of the Civil Code, which terminates the dispute by mutual agreement and that its effect is limited to the rights it addresses.
Summary
- Parties' agreement to end a prior dispute by concluding a settlement and release constitutes a new agreement and amounts to an implicit withdrawal from the original arbitration agreement with respect to the settled dispute. - A dispute arising from the terms of the settlement is not automatically subject to the arbitration clause in the original contract; an arbitral tribunal lacks jurisdiction over such a dispute after the release is executed, due to absence of an arbitration agreement linked to the settlement. - For a settlement-related dispute to be arbitrable, the settlement must contain an express arbitration clause or the parties must enter a separate arbitration agreement regarding that dispute. - Arbitration is treated as an exceptional means of dispute resolution and should be interpreted narrowly, avoiding extensions that would defeat or waive its purpose.
Practical significance
- In practice, concluding a settlement or release generally precludes applying the original arbitration clause to disputes covered by that settlement unless the parties explicitly agree otherwise. - If the parties wish to refer a dispute about the settlement to arbitration, they must include an arbitration clause in the settlement or conclude a subsequent arbitration agreement. This content is an educational summary only and does not constitute judicial text or legal advice.
Frequently asked questions
Subject?
The points address the effect of a settlement/release agreement on an arbitration clause contained in the original contract. They state that a settlement is a compromise under Article 647 of the Civil Code, which terminates the dispute by mutual agreement and that its effect is limited to the rights it addresses.
Summary?
- Parties' agreement to end a prior dispute by concluding a settlement and release constitutes a new agreement and amounts to an implicit withdrawal from the original arbitration agreement with respect to the settled dispute. - A dispute arising from the terms of the settlement is not automatically subject to the arbitration clause in the original contract; an arbitral tribunal lacks jurisdiction over such a dispute after the release is executed, due to absence of an arbitration agreement linked to the settlement. - For a settlement-related dispute to be arbitrable, the settlement must contain an express arbitration clause or the parties must enter a separate arbitration agreement regarding that dispute. - Arbitration is treated as an exceptional means of dispute resolution and should be interpreted narrowly, avoiding extensions that would defeat or waive its purpose.
Practical significance?
- In practice, concluding a settlement or release generally precludes applying the original arbitration clause to disputes covered by that settlement unless the parties explicitly agree otherwise. - If the parties wish to refer a dispute about the settlement to arbitration, they must include an arbitration clause in the settlement or conclude a subsequent arbitration agreement. This content is an educational summary only and does not constitute judicial text or legal advice.
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