Clock’s Ticking on Arbitral Awards

The enforcement of arbitral awards has emerged as one of the most pressing challenges in India’s dispute resolution framework, directly influencing investor confidence. As India seeks to attract domestic and foreign capital, particularly in infrastructure, energy, and large-scale greenfield projects, the ability to translate arbitral verdicts into tangible recoverable value has become as critical as the arbitration process itself. Businesses today operate on compressed timelines, where cash flows, project milestones, and market opportunities cannot afford indefinite delays. Any holdup—whether during arbitration, while challenges under Section 34 of the Arbitration and Conciliation Act, 1996 are pending, or at the enforcement stage—often amounts to denied justice. For investors, such uncertainty can outweigh even carefully drafted arbitration clauses.

Legal experts argue that India’s legislative framework is no longer the principal obstacle. The 2015 amendments to the Arbitration Act narrowed the grounds for challenging awards and eliminated the automatic stay that previously followed the filing of a Section 34 petition. Under Section 36, arbitral awards now carry the status of court decrees and are enforceable unless a specific stay is granted. On paper, this reform represented a decisive shift toward faster execution. Yet, in practice, enforcement often encounters delays. Parties raise extraneous objections, seek repeated adjournments, or frustrate execution by creating encumbrances over assets. Even locating attachable assets can become a prolonged exercise. That said, enforcement of foreign arbitral awards has shown notable improvement, with Indian courts displaying greater discipline and consistency, aligning more closely with international standards.

Despite these advances, enforcement remains arbitration’s “weak underbelly” in India. Before 2015, the automatic stay regime meant that merely filing a challenge could stall enforcement for years. Its removal was a necessary correction, but timelines remain difficult to enforce. Section 34(5) prescribes a one-year period for disposing of challenges, but courts have consistently treated this timeline as directory rather than mandatory, citing heavy caseloads and systemic constraints. Even commercial courts struggle to adhere to it. Moreover, the quality of arbitral awards plays a crucial role at the enforcement stage. Ambiguous or poorly reasoned awards complicate execution, as courts are bound to enforce the decree as written and cannot rewrite or reinterpret it.

The Supreme Court’s ruling in Vijay Karia v. Prysmian Cavi E Sistemi SRL (2020) clarified that violations of the Foreign Exchange Management Act do not automatically trigger the public policy exception to resist enforcement of foreign awards. Yet delays persist, as losing parties often exhaust every conceivable objection to defer payment. Ironically, interest continues to accrue during this period, inflating eventual liabilities. Several experts note that responsible legal advice sometimes means urging clients to comply with awards and refocus on business rather than prolong disputes.

From an institutional perspective, the White Industries Australia Limited v. Republic of India case remains a cautionary tale. A nine-year delay in enforcement led to India being held liable under an investment treaty for failing to provide “effective means” of asserting rights. Such cases have left a lasting imprint on India’s global reputation. While arbitration timelines themselves have improved—institutions like the Mumbai Centre for International Arbitration now deliver awards within 16 to 18 months in non-emergency cases—the real bottleneck lies after the award, where claimants can wait years, sometimes close to a decade, for recovery. Still, there is cautious optimism, with judicial attitudes showing signs of change.

At the ground level, courts have begun imposing heavy costs, sometimes up to ₹50 lakh, to deter frivolous challenges after prolonged delays. Yet the statutory right of appeal under Sections 34 and 37, combined with massive backlogs in several states, makes delay almost inevitable. Responsibility, experts stress, is shared among lawyers, litigants, and courts, all of whom must recognize the economic cost of delayed money. Reform proposals include imposing meaningful costs on dilatory parties, encouraging asset-tracing mechanisms, and creating specialized enforcement benches with trained judges, particularly in tier-2 and tier-3 cities. Others suggest borrowing from the MSME Act’s pre-deposit model to inject urgency into challenges.

The consensus is clear: India’s arbitration ecosystem has matured, but unless enforcement timelines improve, the promise of swift dispute resolution will remain incomplete. Addressing this final mile could significantly strengthen India’s credibility as an arbitration-friendly and investment-ready jurisdiction.