Summary: When a foreign arbitral award hits a snag, should the entire award sink or can the enforceable part still sail through? Indian law is clear on severability for domestic awards, but foreign awards remain in a grey zone. While global practice leans toward partial enforcement to protect legitimate claims, India risks being an outlier. It’s time for a pragmatic shift that aligns with international norms and safeguards commercial certainty.
When one part of a foreign arbitral award is unenforceable, can the other part be severed and enforced?
The position on severability is clear on domestic awards. Courts have an inherent power to sever the “invalid” part of an arbitral award from the “valid” part under Section 34 of the Arbitration & Conciliation Act, 1996 (“the Act”).[1] Such inherent power is an application of the doctrine “omen majus continent in se minus”, meaning that the greater power includes the lesser.
However, uncertainty prevails over whether this doctrine applies to the enforcing court’s power under Section 48 of the Act, thereby allowing partial enforcement of foreign arbitral awards in India.
Partial Enforcement of Foreign Arbitral Award in India
Section 48 of the Act deals with the power to refuse enforcement of a foreign award and is based on Article V of the New York Convention, 1958 (“NYC”). The proviso to Section 48(1)(c) (equivalent to Article V(1)(c) of the NYC) explicitly gives courts the power to partially enforce awards when decisions on matters submitted to arbitration can be separated from the decisions on matters not so submitted. However, Section 48(1)(c) is just one of the multiple grounds to refuse enforcement, and there is no mention of partial enforcement under any other ground, including the public policy ground.
A similar proviso explicitly allowing severability that is present in Section 34(2)(a)(iv) of the Act provides one of the multiple grounds to set aside a domestic award. In Gayatri Balasamy v. ISG Novasoft(“Gayatri Balasamy”), the Supreme Court held this provision to be clarificatory in nature, with the power of partially setting aside a domestic award being inherent under Section 34.[2]
However, in the absence of such a pronouncement being made for Section 48, Gayatri Balasamy’s decision on severability cannot directly apply to the section, since Part I of the Act (which includes Section 34) and Part II of the Act (which includes Section 48) have completely different spheres of application.[3] While the former applies to India-seated arbitrations, the latter is for foreign-seated ones. In fact, the Delhi High Court has observed that the enforcing Court’s limited power to partially enforce a foreign award is only in the circumstance given under Section 48(1)(c) i.e. the award contains decisions on matters beyond the scope of submissions to arbitration.[4]
Global Position on Partial Enforcement
Indian courts’ interpretation of Part II of the Act is strongly influenced by internationally recognised standards, and courts often cite foreign legal positions and commentaries.[5] An emerging trend across the globe favours partial enforcement of foreign arbitral awards under the NYC. The jurisdictions highlighted subsequently have adopted Article V of the NYC in their domestic laws like India and yet allowed partial enforcement on grounds beyond Article V(1)(c).
United Kingdom: The England and Wales Court of Appeal in IPCO v. NNPC, [2008] EWCA 1157,[6] held that it is commercially absurd to not enforce a foreign arbitral award (made in Nigeria in this case) in its entirety, even though only a part of it is challenged as invalid. Lord Tuckey J. observed that the power to enforce an award necessarily includes the power to enforce part of the award.[7] This is comparable to the doctrine that the greater power includes the lesser, asrelied upon in Gayatri Balasamy.
Austria: The Austrian Supreme Court in Buyer (anon. Austria) v. Seller (anon. Serbia & Montenegro),[8] allowed partial enforcement of the foreign award (made in Serbia in this case) with respect to the purchase price due but refused enforcement of the decision relating to interest. This is because the interest was so excessive that it violated Austrian public policy, but it could be separated from the enforceable portion of the award.
Argentina: The Supreme Court of Justice of Argentina in Deutsche Rückversicherung AG v. Caja Nacional de Ahorro y Seguro,[9] allowed partial recognition and enforcement of a foreign award (made in New York in this case) while part of the award was not enforced for violating Argentinean public policy. To the extent that the infirmity affecting public policy could be singled out, the enforcement of the valid portion was feasible.
Australia: The New South Wales Supreme Court in William Hare UAE LLC v. Aircraft Support Industries Pty Ltd, [2014] NSWSC 1403 held that partial enforcement of a foreign award (made in the UAE in this case) is permissible because it is anomalous to refuse enforcement of the entire award just because a severable part is invalid. The Court refused enforcement of the part affected by the breach of natural justice but severed and enforced the unaffected part. The defendant’s appeal from such decision was further rejected.[10]
This view is supported by the position in Hong Kong as well.[11]
Authoritative texts confirm this view. In fact, Gary Born notes that no apparently contradictory decision has been reported.[12] He says that the enforcing court’s power to sever and partially enforce a foreign award is reasonably clear and extends beyond the narrow ground of Article V(1)(c) of the NYC (Section 48(1)(c) of the Act).[13] A similar observation is made in the UNCITRAL Secretariat Guide on the NYC, based on the interest of facilitating the aim of the NYC, i.e., to facilitate enforcement.[14] Even the International Law Association recommends that partial enforcement of a foreign award be allowed even when the challenge is under the public policy ground.[15]
Way Forward for India
Indian enforcement practice cannot afford an “all-or-nothing” approach. Businesses invest millions banking on the finality of arbitral awards; refusing enforcement in entirety for a defect (which is severable) undermines that confidence. Courts should embrace a commercially sensible interpretation—permit partial enforcement wherever the valid portion is severable. This isn’t just about legal theory, it’s about reinforcing India’s credibility as an arbitration-friendly jurisdiction and reducing enforcement risk for cross-border transactions.
*Authors would like to acknowledge inputs provided by Agrim Gupta, Intern.
For further information, please contact:
Kapil Arora, Partner, Cyril Amarchand Mangaldas
kapil.arora@cyrilshroff.com
[1] Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited, 2025 INSC 605, ¶33.
[2] Id.
[3] BALCO v. Kaiser Aluminium Technical Services, (2012) 9 SCC 552, ¶196.
[4] Campos Brothers Farms v. Matru Bhumi Supply Chain Pvt. Ltd., 2019 SCC OnLine Del 8350, ¶90.
[5] HSBC PL Holdings Limited v. Avitel Post Studioz Ltd., 2024 INSC 242, ¶¶23-25.
[6] IPCO (Nigeria) Limited v. Nigerian National Petroleum Corporation, [2008] EWCA 1157.
[7] Id., ¶¶17,18.
[8] Buyer (Austria) v. Seller (Serbia and Montenegro), Supreme Court of Austria, 26 January 2005, 3 Ob 221/04b.
[9] Deutsche Rückversicherung AG v. Caja Nacional de Ahorro y Seguro, Corte Suprema de Justicia de la Nación [Supreme Court of Justice of the Nation], 24 September 2019, CCF 6461/20091CS1.
[10] Aircraft Support Industries Pty Ltd v William Hare UAE LLC, [2015] NSWCA 229, ¶61.
[11]J. J. Agro Industries (P) Ltd. v. Texuna International Ltd., High Court, Supreme Court of Hong Kong, Hong Kong, 12 August 1992, HCMP000751/1992.
[12] Gary Born, International Commercial Arbitration (Third Edition), §26.03[B][8] (Kluwer Law International, Updated March 2024).
[13] Id.
[14] UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 2016 Edition.
[15] Pierre Mayer & Audley Sheppard, Final ILA Report on Public Policy as A Bar to Enforcement of International Arbitral Awards, Recommendation 1(h).
