Judicial principles and studies
Effect of a Settlement Agreement on an Arbitration Clause
Judicial practice treats a settlement as a compromise that ends the dispute and limits its effect to the rights addressed; consequently, it may amount to an implicit waiver of the arbitration clause for the settled dispute.
Updated: 10 September 2026
Prepared and reviewed by: Ashraf Al-Khawaja
Subject
Judicial practice treats an agreement between the parties to settle a specific dispute as a compromise; as noted in the points, a settlement under Article (647) of the Civil Code terminates the dispute and limits its effect to the rights addressed by the settlement.
Summary
When the parties agree to end a prior dispute by executing a settlement or release, that settlement is treated as an implicit waiver of the original contract's arbitration clause with respect to the settled matter. The settlement is a new agreement and disputes arising from it are not automatically referred to the arbitration clause in the original contract. An arbitral tribunal lacks jurisdiction over the settled dispute after the release, unless the settlement itself contains an arbitration clause or the parties subsequently agree to arbitration. Arbitration is an exceptional remedy and should be interpreted narrowly. This is a general educational summary and does not constitute judicial text or legal advice.
Practical significance
This is a general educational summary based on the points published in the official source. It does not replace the original material or a review by Ashraf Al-Khawaja before relying on it for any action.
Sources and references
Verify the official text and latest amendments before relying on this material professionally.