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ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms

Delta Ltd and Epsilon Ltd attended a mediation and signed a written settlement agreement on the terms agreed. Later Epsilon refuses to comply with it. Which statement best describes the position?

The signed settlement is a contract between the parties, so Delta can enforce it through the courts if Epsilon breaches it. The mediator has no enforcement power, but the agreement the parties themselves reached is legally binding as a contract.

  1. AThe mediator can now enforce the settlement by imposing a penalty on Epsilon
  2. BThe settlement is nothing more than a mediator's recommendation and has no legal effect
  3. CThe settlement is a contract between the parties, so Delta can seek to enforce it through the courtsCorrect

Explanation

A mediator has no power to decide or enforce. However, once the parties sign an agreed settlement, it is generally a binding contract between them, so breach can be pursued in court. Option B confuses a binding agreement with a non-binding recommendation.

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