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Anjuru Chandra Sekhar (Advocate )     06 January 2017

Amendments to section 89 of cpc

In view of the Amendments proposed by Law Commission in its 238th Report to Section 89 of CPC, I suggest the following :

The Court shall have the right to refer the parties to Arbitration despite the absence of prior arbitration agreement between parties.  The suitable method for this is to have the law relating to Sec.89 as under:

“89. Settlement of disputes outside the Court.- (1)Where it appears to the court that there exist elements of a settlement which may be acceptable to the parties, the court shall, notwithstanding anything mentioned in Arbitration & Conciliation Act, 1996, after recording the admissions and denials direct the parties to choose the following:

1. Arbitration

2. Mediation

and obtain the option of parties without allowing parties to know the option chosen by opposite party.  

(2) Having known the options of the parties, where both parties choose Arbitration, the court shall refer the dispute for MEDARB in which the Arbitrator first acts as Mediator and draws the possible terms of settlement on equitable grounds and shall decide the remaining issue/issues at variance by way of Adjudicating.

(3)(a) Where both the parties choose Mediation, the court shall refer the dispute to ARBMED in which the Arbitrator first acts as Arbitrator and determines the rights and liabilities of the parties as per law, passes non-binding Arbitration award and then based on the award so passed, negotiates in the capacity of mediator for settlement.  

(b) Where parties fail to reach a settlement, entire record is transferred to the referral judge who passes a decree making necessary variations to the award passed by Arbitrator also taking into account the views of parties during settlement process with Arbitrator.

(4) Where both the parties are at variance with regard to options under sub-section (1), the court shall refer the matter to MEDARB wherein the Arbitrator adopts same procedure as in sub-section (2), and the record is forwarded to the referral judge who passes a decree based on issues settled already during MEDARB and by making necessary variations to the award passed by the Arbitrator on remaining issue/issues as per law.

(5) Where decree is passed under sub-section (4), the award can only be challenged in respect of that part of decree in which the Arbitrator/referral judge had adjudicated on remaining issue/issues as per law and settled issues shall be deemed to be award by consent.




 2 Replies

Anjuru Chandra Sekhar (Advocate )     06 January 2017

Order 10


1. Court shall supply a copy of record of proceedings till reference to the Arbitrator appointed under sub-sections indicated in Section 89.

2. Where parties fail to choose their Arbitrator on consensus the Court shall appoint Arbitrator/Mediator of its choice from the panel of ten Arbitrators out of which parties shall indicate preferences for atleast three arbitrators . 

3. Where court refers for ARBMED under sub-section (3), the Arbitrator shall be Lok Adalat in accordance with the provisions of sub-section (1) of Section 20 of the Legal Services Authorities Act, 1987 and where settlement is reached all other provisions of that Act shall apply in respect of the dispute and where settlement is not reached the record of proceedings shall be transferred to referral judge notwithstanding anything contrary to it in the Legal Services Authority Act, 1987.

4. Where award is made under sub-section  (2) it shall be binding as if it's  is decree passed by referral judge and recourse against it can only be taken under provisions of Arbitration & Conciliation Act, 1996.

5. Before passing a decree under sub-sections  (3) or (4) of the Section 89, parties may submit their opinions on the non-binding Award passed by Lok Adalat under sub-section  (3) or Arbitrator appointed under sub-section  (4) of Section 89, as the case may be.

P. Venu (Advocate)     07 January 2017

Arbitration and Mediation are two different concepts.

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