In a case managed by the Godorogea Daniel Lucian Law Office, we faced a situation where our clients—who were not formal parties to the initial appeal proceedings—suffered damage to their rights as a result of a settlement agreement and the resulting consent judgment (hotărâre de expedient) rendered by the appellate court, the Cluj Tribunal.

To safeguard our clients’ rights, we elected to file an appeal on points of law against the judgment confirming the settlement. Although directed against a consent judgment, the appeal was not grounded in Article 440 of the Code of Civil Procedure (CPC), but on the general statutory provisions governing appeals on points of law (Art. 488 CPC). This strategy was adopted because the challenged decision was not purely a consent judgment; its legal nature was mixed, as the tribunal had also formally ruled upon and dismissed our defenses regarding the unlawful cause of the settlement.

Specifically, before the Cluj Tribunal, when confronted with the settlement agreement despite not being formal parties at the appellate stage, we raised a plea alleging the nullity of the settlement agreement. We argued that its object was unlawful, infringed upon existing legal acts and prior res judicata, and extended beyond the rights and obligations of the signatory parties. Self-evidently, had this plea been upheld by the court of second appeal, the remaining parties’ request to record the settlement would have been dismissed, compelling the appellate court to proceed with hearing the merits.

Thus, through our appeal on points of law, we sought to challenge the supporting reasoning of the Civil Decision whereby the Cluj Tribunal rejected our appellate defenses as unfounded, since failing to challenge these findings would risk subjecting them to res judicata.[1]

Consequently, in the challenged decision, the court did not merely record the parties’ settlement; it formally examined the defenses raised on behalf of our clients (non-signatories to the settlement) and dismissed them as unfounded within the reasoning section of the judgment.

The Cluj Court of Appeal ruled in favor of our clients, noting the following in its landmark decision:

“Before the court of first instance, the three appellant families prevailed; as such, they lacked legal interest in filing an appeal. Through the settlement agreement concluded on appeal among all other parties, the plaintiffs waived their claims in the initial lawsuit against the signatory defendants; however, in exchange for this concession, the defendants recognized rights in favor of third parties—a recognition capable of infringing upon the rights and interests of the non-signatory defendants (the appellant families). Consequently, the defendants’ interest in filing an appeal on points of law arose only following the delivery of the consent judgment through which the appellate court rejected the plea alleging nullity of the settlement contract raised in defense by these parties. As a result, the defendants had standing to file an appeal on points of law against the appellate decision to challenge the resolution of the plea of nullity of the settlement contract found in the decision’s reasoning. Evidentially, if this grievance proves well-founded, the request of all other parties to record the settlement is rejected, requiring the appellate court to resume trial on the merits. (…) (…)

Accordingly, Article 440 of the Code of Civil Procedure is inapplicable to this ruling; the defendants are entitled to file an appeal on points of law asserting the unlawfulness of the decision pursuant to Article 488 of the Code of Civil Procedure. The limitation under Article 440 of the Code of Civil Procedure clearly applies solely to the signatory parties of the settlement, whereas the appellants are third parties to it, whose procedural rights cannot be restricted through disposition acts executed by the other parties.”

We chose to pursue an appeal on points of law rather than challenging the settlement contract in separate subsequent litigation because we risked facing a defense of res judicata, given that the Cluj Tribunal had already ruled—albeit erroneously—on the validity of the settlement contract.

Our legal reasoning was fully validated by the Cluj Court of Appeal: “Consequently, the Court finds that through the settlement agreement concluded before the appellate court, the signatory parties sought to circumvent statutory obligations imposed on the plaintiffs and disregard rights and correlative obligations established in favor of and against the parties to this cause under final judicial decisions, the contract thus possessing an unlawful cause.”

Regarding this case, we emphasize that before issuing a consent judgment taking note of a court settlement, the court is obligated to scrutinize its content to ascertain that no unlawful purpose is pursued, particularly since the dispositive section of the judgment will incorporate the text of the contract itself.

As established by the High Court of Cassation and Justice [2]:

“The court is required to examine the content of the settlement and the conditions under which it was concluded, to ascertain that it does not pursue an unlawful purpose, is not contrary to the law, public policy, or third-party rights, and is not the result of vitiated consent.”

Furthermore, this duty to verify legal instruments is equally imposed on public notaries pursuant to Art. 9 para. (2) of Law No. 36/1995 on Public Notaries and Notarial Activity:

“(2) If the requested act is contrary to the law and public policy, the public notary shall refuse to draft it.”

Given that scrutinizing the legal substance of contracts is incumbent upon public notaries and any authority called upon to rule on a legal instrument, it is self-evident that this duty rests equally upon a judge requested to render a consent judgment based on a settlement contract.

Moreover, legal doctrine and established case law confirm [3]: “Where parties seek to terminate litigation via a settlement agreement, the court is bound to verify whether they possess the capacity to settle, whether the instrument reflects their free will, and whether concluding the settlement aims to achieve unlawful ends. If such circumstances are found upon examination, the court must reject the disposition act and continue hearing the merits of the cause (High Court of Justice, Civil Section, Dec. No. 552/1990).”

Under Art. 22 para. (7) of the Code of Civil Procedure regarding the judge’s role in establishing the truth:

“(7) Whenever the law reserves discretionary power to the judge or requires consideration of all circumstances of the cause, the judge shall take into account, inter alia, general principles of law, requirements of equity, and good faith.”

Given the legal consequences produced by a settlement contract forming the dispositive section of a judgment, combined with the principle of legality, the court was duty-bound to examine the substance of the settlement and the conditions of its execution to ensure no unlawful purpose was pursued.

Although the Tribunal originally dismissed our arguments, the Cluj Court of Appeal validated our legal strategy, holding that the settlement infringed upon our clients’ rights and possessed an unlawful cause.

This landmark case from the practice of Godorogea Daniel Lucian Law Office demonstrates that non-signatory third parties may challenge a consent judgment if their rights have been violated and the court addressed and dismissed their defenses within the reasoning of the judgment.

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[1] The High Court of Cassation and Justice held similarly in Decision No. 1011 of March 12, 2013, ruling that res judicata attaches not only to the dispositive part of a judgment, but also to the essential reasoning on which it rests.

[2] High Court of Cassation and Justice, Settlement. Declaratory Action, Pandectele Române No. 4/2004.

[3] M. AFRAȘINEI in M. AFRAȘINEI, The New Civil Code Commented, Feb 20, 2013, Hamangiu Publishing, Art. 1.