The American Institute of Architects has agreed to pay $700,000 to a Washington architect who contended he was improperly suspended from membership in a dispute over a contract to design Union Station's National Visitor Center.

The money will be paid in three installments over a two-year period to Aram H. Mardirosian as part of an out-of-court settlement of a lawsuit he brought challenging the professional group's enforcement of its ethics code.

At issue in the case was Mardirosian's one-year suspension in 1977 after the AIA found that he had taken over work at the Visitor Center already awarded to another architect, Seymour Auerbach. The AIA had applied ethics regulations to the case that forbid its members from seeking a contract for work for which another architect has already been "selected or employed."

In instances where architects were to be changed, the regulation stipulated that the original architect first had to be terminated and then informed that another was seeking the job. The complaint had been lodged by Auerbach.

In 1979, U.S. District Judge John J. Sirica ruled that the regulation -- which the AIA has since replaced with nonbinding guidelines -- violated the Sherman Antitrust Act because it limited competition among architects.

Mardirosian had sought $3 million in damages from the AIA in his suit, but Sirica did not rule on how much he should collect. The determination of the amount was left to another judge and deliberations in the matter continued until the $700,000 settlement was negotiated out of court.

The AIA had planned to delay an announcement of the settlement until Sept. 14 to give it time to notify its 27,000 members. Last night, however, it confirmed the settlement after being questioned about the matter by The Washington Post.

In a statement released last night, the AIA said its board of directors concluded that it was in the organization's best interest to settle the case to avoid the expense of a long trial on the amount of payment and then still possibly be faced with having to appeal an adverse judgment.

R. Randall Vosbeck of Alexandria, the AIA president, said in a letter to members that the settlement was "mutually satisfactory" and can be met "without serious curtailment of services and programs."

In the Visitor Center case, the National Park Service, which is responsible for the project, decided to terminate Auerbach and paid him $700,000 for work already done. It then hired Mardirosian, who had just left the Park Service where he had been coordinator of the project.

Mardirosian was suspended after the AIA's three-member national judicial board found in 1977 that the Visitor Center switch "was flagrant, deliberately planned and done with the cooperation of former associates" of Mardirosian then still employed by the Park Service. It recommended that Mardirosian be expelled, a penalty later reduced to a one-year suspension.

The Visitor Center was only partly completed in time for the original 1976 national bicentennial observance, and since has been shut down. It is widely regarded as a white elephant.

In filing his lawsuit, Mardirosian denied the AIA findings.

Judge Sirica, in his ruling, said it was clear Mardirosian was suspended for competing with Auerbach. He held that the mandatory ethics regulations clearly were anticompetitive and violated the Sherman Act.

"I feel vindicated," Mardirosian told a reporter yesterday. He said the out-of-court settlement calls for expunging the AIA's official records of all references to the case and to his suspension. He said he has been returned to full membership.

Auerbach said "there was no question the AIA and I acted in good faith" in pursuing the charges. He said he was troubled by the fact that, partly as a result of this case, the AIA no longer could police the ethics of the architectural profession.