Different results of a settlement agreement and an arbitration award based on a settlement agreement

According to Article 49 of the Arbitration Law, the disputing parties may reach a settlement on their own initiative in arbitration. In such a case, they have two options: to request the arbitral tribunal to make an award according to the settlement agreement or withdraw the request for arbitration. In nature, this means that the case will be closed by making an award or withdrawing the request for arbitration, which will result in different consequences.

In the case of the first option, an award will be made and become enforceable. If the losing party fails to comply with the award, the prevailing party may request a court of competent jurisdiction for enforcement.

In the case of the second option, no award will be made and no enforcement action will occur. If either party fails to comply with the settlement agreement, the other party may file a request for arbitration as if the previous arbitration did not occur.

And in practice, arbitration costs paid are not refundable if an arbitration award is made, but refundable in full or in part if the request for arbitration is withdrawn before or after the composition of an arbitral tribunal, as the case may be.

In conclusion, the first option is a final settlement of dispute but is more burdensome for both parties, and the second option is more efficient, cost-saving, and friendly but risky.

References:

The Arbitration Law of the People's Republic of China

Article 49 After a request for arbitration has been filed, the parties may reach a settlement on their own initiative. Where a settlement agreement is reached, the parties may request the arbitral tribunal to make an award according to the settlement agreement, or the request for arbitration may be withdrawn.

Article 50 Where either party reneges on the settlement agreement after the request for arbitration has been withdrawn, he may file a request for arbitration according to the arbitration agreement.

Interpretations of the Supreme People's Court on Issues Pertaining to the Application of the Arbitration Law of the People's Republic of China

Article 28

Where a party claims to reject the petition for enforcement of a conciliation statement made in arbitration or an arbitration award made according to the settlement agreement between the parties, the people's court shall not uphold the claim.