To Waive Or Not To Waive Future Claims In Settlement Agreements?

The decision of the Commercial Court in Khanty-Mansiysk Recoveries Limited v. Forsters LLP [2016] EWHC 522 (Comm) may not, at first sight, be of obvious importance to HR practitioners. However, this decision highlights important considerations for the drafting of settlement agreements in the employment sphere.

The claim

Forsters LLP (Forsters) entered into a (non-employment) settlement agreement in relation to its unpaid professional fees and a right to call on a personal guarantee which was created by a director of the company to secure the payment of those fees. The purpose of the settlement agreement, on its terms, was as follows:

"...in full and final settlement of all or any Claims which the parties have, or could have had against each other (whether in existence now or coming into existence at some time in the future, and whether or not in contemplation of the Parties...)"

The term "Claim" was defined as "any claim, potential claim...whether known or unknown, suspected or unsuspected...however and whenever arising...arising out of or in connection with the Action or the invoice...".

The company went into liquidation in 2015 and a recovery company pursued Forsters for in excess of £70 million for alleged negligence in providing its legal advice. The Commercial Court was asked to consider, as a preliminary issue, whether Forsters could rely on the existence of the settlement agreement as a defence to this claim.

The Commercial Court held that on the construction of the...