Execution Of Arbitral Awards In India: Issues, Challenges And Way Forward

Under the Arbitration and Conciliation Act, 1996, arbitral awards are enforced "in accordance with the provisions of the Code of Civil Procedure, 1908 (CPC), in the same manner as if it were a decree of the Court". This reliance on CPC introduces procedural complexities

The efficacy of any dispute resolution framework is intrinsically linked to the robustness of its enforcement procedures. While arbitration in India is positioned as a swift and efficient alternative to traditional court litigation, the enforcement of arbitral awards continues to pose significant hurdles, undermining its potential as a reliable dispute resolution mechanism.

Historical Context and Present-Day Realities

An observation made by the Privy Council over a century and a half ago still rings true today: “The difficulties of a litigant in India begin when he has obtained a decree.” This statement reflects the enduring struggle faced by decree-holders, for whom securing a ffavourable judgement marks only the beginning of a more arduous enforcement journey.

Recognising these systemic issues, the Supreme Court of India, in Rahul S. Shah vs. Jinendra Kumar Gandhi (2021), directed that execution proceedings be resolved within six months of filing, extendable only with documented reasons. A subsequent ruling in 2022 reinforced this stance. However, the true impact of these judicial directives remains limited due to the chronic overburdening of the Indian judiciary.

Systemic Shortcomings in Award Enforcement

Under the Arbitration and Conciliation Act, 1996, arbitral awards are enforced “in accordance with the provisions of the Code of Civil Procedure, 1908 (CPC), in the same manner as if it were a decree of the Court.” This reliance on the CPC introduces procedural complexities, as Order XXI of the CPC comprises an extensive framework of 106 rules governing execution procedures, including stays of execution, methods of enforcement, attachment processes, and the adjudication of claims and objections.

The delays in enforcement are not solely attributable to obstructive behaviour by judgement-debtors. Courts often prioritise the adjudication of new cases over the execution of existing decrees, compounding delays. This irony is particularly striking in arbitration, which is lauded for its promise of expedited dispute resolution.

Procedural Barriers in Arbitration Enforcement

Once an arbitral award is granted, the award-holder must endure a statutory waiting period of three months—extendable by an additional 30 days—during which the award can be contested under Section 34 of the Arbitration Act. Even after overcoming potential challenges and achieving finality (provided no stay is granted under Section 36(3) of the Act), the award-holder must engage with the very judicial system they sought to bypass through arbitration.

While the Arbitration Act mandates a maximum of 18 months for the conclusion of arbitration proceedings (post-pleadings), there is no corresponding deadline for the enforcement of awards. This legislative gap severely undermines the credibility of arbitration, reducing awards to mere “paper tigers” until they are executed.

As of 2025, thousands of execution petitions are pending in India’s lower courts, underscoring the magnitude of the enforcement challenge.

Proposed Modifications to the Arbitration and Conciliation Act

To mitigate these issues and expedite the enforcement of arbitral awards, the following modifications to the Arbitration and Conciliation Act are suggested:

1. Enforcement Provisions: Amend the Act to include explicit procedures for the direct enforcement of arbitral awards, thereby eliminating reliance on the CPC’s complex execution rules. For instance, Singapore’s International Arbitration Act allows for the direct registration and enforcement of awards with minimal judicial intervention. By streamlining the enforcement process, India could reduce delays and enhance the reliability of arbitration as a dispute resolution mechanism.

2. Defined Timeframes for Execution: Introduce statutory deadlines for the enforcement of arbitral awards, akin to the 18-month cap on arbitration proceedings. A six-month deadline for execution, with extensions allowed only under exceptional circumstances, would enhance efficiency. This approach mirrors practices in jurisdictions like Hong Kong, where the judiciary is mandated to process enforcement applications within a specified timeframe, significantly expediting the process.

3. Specialised Execution Tribunals: Establish dedicated tribunals for the enforcement of arbitral awards, staffed by judges with expertise in arbitration and commercial law to ensure prompt and informed adjudication. The London Court of International Arbitration (LCIA) serves as a model, providing specialised judicial bodies that handle arbitration-related matters efficiently and with a high degree of expertise.

4. Penalties for Frivolous Challenges: Introduce stringent penalties for parties filing baseless or obstructive challenges to arbitral awards, thereby deterring non-compliance and encouraging timely execution. In the United States, under the Federal Arbitration Act, courts can impose sanctions on parties that engage in bad-faith litigation tactics, which has proven effective in reducing frivolous challenges.

5. Digitisation of Enforcement Processes: Utilise technology to streamline enforcement procedures, including e-filing, online tracking of execution cases, and digital communication between courts and parties. Digitisation can significantly reduce administrative burdens and enhance the efficiency of legal processes, including arbitration enforcement.

6. Limited Enforcement Powers for Arbitrators: Consider granting arbitrators limited authority to enforce uncontested awards, reducing the necessity for judicial intervention. This could involve allowing arbitrators to issue binding enforcement orders in cases where no objections have been raised, thereby expediting the resolution process.

7. Review Jurisdiction of Arbitrators: Introduce provisions that allow parties to request limited reviews of arbitral awards within a specified timeframe. This would enable arbitrators to amend awards in cases of manifest illegality, enhancing the overall fairness and accuracy of arbitration outcomes ensuring the integrity of the arbitration process.

8. Promotion of Institutional Arbitrations: Encourage the use of institutional arbitration bodies, which oversee proceedings under established rules and ensure adherence to timelines and procedural standards. Institutional oversight enhances the quality of arbitrations, mitigates uncertainties related to fees and expenses, and improves the overall efficiency and credibility of the arbitration process. Currently, a significant portion of arbitrations in India are conducted on an ad-hoc basis, leading to inconsistencies and procedural inefficiencies. This creates uncertainty with regard to fees, expenses, timelines, and also the quality of procedural conduct, as well as the vulnerability of awards not fully meeting the satisfaction of courts when challenged. Institutions like the Singapore International Arbitration Centre (SIAC) and the LCIA have demonstrated how institutional frameworks can significantly enhance the reliability and efficiency of arbitration.

Conclusion

While India’s arbitration framework holds considerable promise as an efficient alternative to traditional litigation, persistent delays in the enforcement of arbitral awards undermine its effectiveness. By amending the Arbitration and Conciliation Act to incorporate robust enforcement mechanisms and learning from best practices in jurisdictions like the U.S., UK, Singapore, and Hong Kong, India can significantly enhance the credibility and reliability of its arbitration landscape. The time for comprehensive legislative and procedural reforms is now, to ensure arbitral awards translate into meaningful, enforceable resolutions.

Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.