Canceling a settlement agreement that has been given the force of a judgment – ​​is it possible and how?

Canceling a settlement agreement, especially if it was submitted to court and received the force of a judgment, is not an easy task.

In this article, we will try to understand what can still be done to try and cancel a settlement agreement that does not help or does not advance the interests of the party seeking its cancellation.

First, we will try to understand what a compromise agreement is and why it is difficult to cancel it.

What is a compromise agreement?

agreement compromise It is a situation in which the parties reach agreements between themselves in order to avoid legal proceedings or with the aim of shortening and ending legal proceedings.

The provisions of the settlement agreement are determined by the parties themselves (usually through their lawyers).

This issue is especially important if one of the parties is not satisfied with the terms of the agreement.

In these cases, in most cases, that party has no choice but to make its own claims. In these cases, canceling a settlement agreement will be particularly difficult and complex.

In most cases, as part of the settlement agreement, each party waives some of its claims, and this is in effect the settlement.

If the parties do not give up some of their claims or demands, it is clear that, in most cases, no compromise will be reached.

A settlement agreement can be signed before Filing the lawsuit Or after it.

Each stage has advantages and disadvantages, but in general, compromise often saves significant expenses for both parties (at the very least, it saves the costs of managing the lawsuit in court from start to finish).

A settlement agreement is a contract for all intents and purposes, and is binding on the parties who signed it.

Advantages and disadvantages of submitting a settlement agreement to the court

נשתמש בדוגמה הבאה:אבי הלווה לשלומי 100,000 ש"ח. שלומי התחייב להחזיר לאבי את הכספים תוך שנה. שלומי לא החזיר את הכספים בתוך שנה. אבי פונה לשלומי ומודיע לו שהוא מתכוון להגיש נגדו תביעה. שלומי מודיע לאבי שהוא לא החזיר את הכספים בגלל מחדלים של אבי. הצדדים מגיעים להסכמות וחותמים על הסכם פשרה במסגרתו שלומי מתחייב להחזיר לאבי את כל הכספים תוך חודש נוסף. אם הסכם הפשרה לא מוגש לבית המשפט ושלומי לא ישלם לאבי את הכספים במועד, אבי יאלץ להגיש תביעה ולהמתין עד למתן פסק דין בענייננו, ורק לאחר מכן יוכל לפנות להוצאה לפועל.

On the other hand, if my father filed a lawsuit in advance and at the beginning or during it, a settlement agreement reached by the parties was submitted to the court, which gave effect to verdict According to the settlement agreement, if the settlement agreement is violated, my father will be able to apply directly to the Enforcement Bureau, and will not have to go to court.

Cancellation of a settlement agreement that has the force of a judgment

As I already mentioned, a settlement agreement is a binding contract. The tendency in the courts is that contracts must be honored.

However, there are many grounds under contract law that allow Cancel a contractThat is, the cancellation of a compromise agreement can be carried out in the same way as other contracts are cancelled (for example, by virtue of deception, oppression, etc.).

To cancel a settlement agreement, it is always advisable to use the ruling of the Supreme Court.

The decisions of the Supreme Court are binding on every other court, and therefore the courts must refer to this ruling when a request is submitted to them to cancel a settlement agreement that has received the force of a judgment.

Regarding the cancellation of a settlement agreement, the Supreme Court ruled, among other things, as follows:

A judgment by consent combines two characteristics, that of an agreement and that of a judgment. Therefore, the judgment is subject to annulment due to any defect that may annul an agreement.

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יכול צד לבקש ביטול פסק-דין, אשר נתן תוקף להסכם פשרה, כשם שאפשר לבקש ביטול הסכם בהסתמך על חוק החוזים (חלק כללי), תשל"ג-1973, מתוך טענת טעות.

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If the applicant had chosen to enforce the agreement, additional problems would have arisen in this matter, such as: whether the agreement was enforceable under the circumstances, and whether the applicant could succeed in a motion for contempt of court.

There is no need to answer these questions, since the applicant in the application before us expressed his opinion that he sought the cancellation of the agreement. If so, his remedy is to sue for rescission due to breach, release from his own obligations and perhaps damages for the breach.

פסק דין חדש של בית המשפט העליון מתאריך 5.7.2022 (ע"א 5858/19 פסגות קופות גמל ופנסיה בע"מ נ' חיים אופיר) מוסיף וקובע בעניין ביטול הסכם פשרה שקיבל תוקף של פסק דין, כך:

A settlement agreement is first and foremost a contract, so contract law governs the engagement between the parties. Therefore, the settlement agreement may be voided due to the same defects that constitute grounds for voiding a contract – error, deception, illegality, violation or a material change in circumstances. At the same time, the ratification of the settlement agreement by the court in a judgment allows the parties, in certain cases, to take regular appeal proceedings for the purpose of voiding it. For example, when there was a defect in the legal proceedings, including the legal procedures…

Meanwhile, the contractual and judicial aspects also dictate the procedure that must be followed to challenge the judgment that ratified the settlement agreement - if its annulment is sought due to contractual grounds, the party wishing to annul it must take action to annul the judgment and submit it to the court that ratified the agreement and gave it the validity of the judgment; this is in contrast to a situation where the reason for annulling the judgment stems from judicial defects that occurred in it, in which case the party wishing to annul it must file an appeal against the judgment.

The starting point for discussing the status of a settlement agreement that has been given the force of a judgment is that great weight must be given to the finality of such agreements, in order to fulfill the reasonable expectations of the parties regarding those settlement agreements. With this in mind, it was ruled that in order to justify the annulment of a settlement agreement that has been given the force of a judgment, the applicant for annulment must point to convincing and weighty reasons…

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In addition, the fact that a judgment has been given effect to a compromise agreement between parties to a dispute does not grant the agreement immunity from possible cancellation, and in appropriate cases it will be possible to accept a claim that the compromise arrangement contained a defect that justifies its cancellation...

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That is, in order to annul a settlement agreement that has been given the force of a judgment, it is required that the contractual defect be a fundamental defect that goes to the root of the contractual agreement between the parties.

It should be emphasized, beyond the scope of this ruling, that it is possible to demand the cancellation of a settlement agreement that has been granted the force of a ruling even within the framework of Class action lawsuit And not only within the framework Civil lawsuit "רגילה".

To which court is a request submitted to cancel a settlement agreement?

Contrary to popular belief, cancellation of a settlement agreement should be carried out by filing a new lawsuit and not by filing a request for the same case in which the settlement agreement was approved.

The lawsuit to annul a settlement agreement must be filed with the same court that approved the settlement agreement.

That is, if the settlement agreement was approved by the Magistrate's Court, the lawsuit to cancel the settlement agreement must be filed with the Magistrate's Court and not with the District Court or Small Claims Court.

Eddie Blitstein Law Firm specializes in law. Civil – Commercial and also on issues Cancellation of a judgment Or canceling a settlement agreement that has the force of a judgment.

Frequently Asked Questions Regarding the Cancellation of a Settlement Agreement That Has Been Given the Force of a Judgment