Enforcement As A Backdoor Challenge: India's Arbitration Finality Dilemma

India's Enforcement Conundrum

An arbitral award (“award”) attains finality once it withstands scrutiny under Section 34 of the Arbitration and Conciliation Act, 1996 (“Act”), which prescribes the limited grounds on which an award may be set aside. After attaining such finality, the award is meant to be enforced under Section 36 of the Act. However, this provision, though intended to streamline enforcement, has instead created uncertainty over whether it allows fresh challenges to an award that has already become final. Section 36(1) states that an award “shall be enforced in accordance with the Code of Civil Procedure, 1908 (“Code”),” but it remains unclear whether this refers only to Order XXI of the Code, which governs execution, or also to Section 47 of the Code, which permits objections to executability. If Section 47 is held to apply, an arbitral award becomes susceptible to challenge even after attaining finality under Section 35 of the Act. This uncertainty is further compounded by the conflicting judicial interpretations rendered by various courts, as discussed herein.

Divergent Judicial Approaches on the Ambiguity

Addressing the issue, the Supreme Court, recently, in Electrosteel Steel Limited v. Ispat Carrier Private Limited (“Electrosteel”, 2025 INSC 525), inter alia, held that an award is accorded the status of a civil court decree and must be enforced in the same manner, thereby allowing the applicability of Section 47 in the enforcement proceedings initiated under Section 36. The said ruling returned by the Court is in line with its previous Judgement rendered in Punjab State Civil Supplies Corporation Ltd. v. M/s Atwal Rice and General Mills (2017 INSC 606).

In contrast to the Supreme Court's expansive approach, the High Courts have leaned in favour of excluding the applicability of Section 47 from the enforcement proceedings. For instance, the Delhi High Court (“Delhi HC”), in Anglo American Metallurgical Coal Pvt. Ltd. v. MMTC Ltd. (“Anglo American”, 2025 DHC 3495) relying upon its prior ruling

(2023/DHC/000475) as well as rulings of other High Court(s), adopted a more restrictive approach to rule that Section 36(1) was intended only to import the execution machinery under Order XXI, not to permit fresh objections under Section 47. This is because, once an award has survived scrutiny under Section 34, or the time to challenge has expired, it attains finality under Section 35, and reopening it at the enforcement stage would undermine the Act's objective of finality and limited judicial intervention. A similar position was taken by the Orissa High Court in Birat Chandra Dagra v. Orissa Manganese & Minerals Ltd., (C.M.P. NO. 1062 of 2019, Orrisa High Court)which the Supreme Court later left undisturbed by dismissing the appeal on merits (“Birat Chandra Dagra”, 2020).

The Pitfalls of Both Approaches

Problems with Electrosteel

To begin with, the Supreme Court in Electrosteel decided the issue without engaging with the conflicting judgment of a co-ordinate bench in Birat Chandra Dagra or the divergent views expressed by various High Courts. This omission has significantly diluted the precedential strength of the ruling and, in turn, deepened the uncertainty surrounding the issue, leaving High Courts free to align with either line of reasoning and thereby undermining consistency in the application of the law.

Secondly, Electrosteel overlooks the nuanced interplay between Section 34 and Section 47. Although both provisions serve distinct purposes, their scope may at times overlap. The Calcutta High Court in Srs Investments Bengal Tiger Ltd v. Rahul Todi and Others (“Srs Investments”) clarified that such overlap does not preclude the executing court from considering objections under Section 47, even if similar issues were adjudicated under Section 34. In line with this reasoning, several High Courts have entertained objections under Section 47 where an award was per se illegal (Chief Engineer and Others v. Prakash Constructions; 2019 SCC OnLine Mad 39370) and ex facie against public policy (2014 DHC 5378) - grounds that largely mirror those under Section 34, thereby rendering the finality under Section 35 redundant. Conversely, some judgments sought to preserve the sanctity of Section 35 by restricting Section 47, holding that grounds available under Section 34 could not be reopened at the enforcement stage. However, Electrosteel, by permitting even unraised Section 34 grounds to be invoked during enforcement, has diluted this settled position, blurred the distinction between challenge and enforcement proceedings, and reintroduced uncertainty into the arbitral enforcement framework.

Problems with Anglo American

The Delhi HC's decision in Anglo American and the other similar rulings are commendable in its effort to safeguard the statutory mandate of Section 35. Yet its interpretation of Section 36(1) is problematic. This is because, the legislature has deliberately used two different expressions: Section 36(1) employs the phrase “in accordance with the provisions of the Code of Civil Procedure”, while Section 36(3), dealing with stay of enforcement of the award during a Section 34 challenge, uses “having regard to the provisions of the Code of Civil Procedure.” As clarified by the Supreme Court in Pam Developers Private Ltd. v. State of West Bengal (“Pam Developers”), the former makes Code provisions mandatorily applicable, whereas the latter indicates only a directory import, operative to the extent it does not conflict with the Act. This distinction maintains a balance between strict compliance at the enforcement stage and flexibility in granting stay. By conflating the two, Anglo American runs contrary to the legislative scheme and departs from binding precedent.

Secondly, the Delhi HC's observation that objections under Section 47 invariably amount to a second challenge on the merits and should therefore be barred is difficult to sustain. This is because Section 47, unlike Section 34, is concerned with executability rather than annulment of an award, a distinction recognised in Srs Investments. This distinction becomes critical in cases where issues arise that are outside the scope of Section 34 but directly impact enforceability. A practical example lies in Judgement of the Supreme Court in M. Anasuya Devi v. M. Manik Reddy (“M. Anasuya Devi”), wherein the Court affirmed that such defects must be addressed during enforcement under Section 36 read with Section 47, not under Section 34. Excluding Section 47 altogether would compel courts to enforce unstamped or unregistered awards, contrary to mandatory statutory requirements, an outcome Parliament could not have intended, particularly given its deliberate drafting choice in Section 36(1), which mandates enforcement “in accordance with” the Code.

The Way Forward: A Legislative Fix

The uncertainty surrounding Section 36(1) reflects how legislative inaction and inconsistent judicial interpretation have weakened India's arbitration framework. Despite its importance to enforcement, the Supreme Court has yet to issue a clear ruling reconciling conflicting precedents, and successive amendments have ignored the problem. This gap allows award debtors to exploit procedural ambiguities to delay enforcement, denying successful parties the benefit of their awards. Such delays erode arbitration's core promise of speed and finality and diminish confidence in India's contract enforcement regime. If India is to emerge as a global arbitration hub and achieve its goal of becoming a 'Viksit Bharat' by 2047, clarity on Section 36(1) through legislative or judicial intervention is essential to ensure arbitral awards are truly effective.

In this backdrop, even if the Supreme Court were to finally settle the issue, each potential approach carries significant risks. A broad reading of Section 47 during enforcement would enable executing courts to reopen matters that properly fall within the ambit of Section 34, eroding the finality guaranteed by Section 35 and diluting the principle of minimal judicial intervention embodied in Section 5 of the Act. Conversely, a complete exclusion of Section 47 would contradict the Court's reasoning in Pam Developers and render executing courts powerless in situations similar to those identified in M. Anasuya Devi.

A so-called “middle path,” which attempts to harmonise the Act and the Code by restricting the scope of objections under Section 47, also presents its own difficulties. Such an approach would curtail the powers of executing courts without explicit legislative backing, raising concerns of judicial overreach. Moreover, it risks generating further uncertainty at the enforcement stage, as courts grapple with distinguishing objections that properly arise under Section 34 from those maintainable under Section 47, ultimately making the enforcement framework cumbersome and counterproductive.

It is evident that the judiciary alone cannot provide a lasting resolution to the issue. The sustainable solution must come from the legislature through a targeted amendment to Section 36(1), clarifying that all objections, including those relating to stamping, registration, or validity, must be raised exclusively under Section 34, and that once such objections are adjudicated, the award attains finality and may only be enforced under Order XXI. Such legislative intervention would eliminate the present ambiguity, uphold the finality envisaged under Section 35, and restore coherence between the Act and the Code. More importantly, it would reinforce the Act's foundational principles of efficiency, certainty, and minimal judicial interference, ensuring that arbitral awards in India do not remain trapped in procedural limbo.

Authors are advocates practicing at Delhi High Court. Views Are Personal.