This publication has been published by Economic Times- Legal World at Transforming Foreign Award Enforcement in India: A New Era for Investors, ETLegalWorld.  

Senior Partner Hardeep Sachdeva, Partner Sudish Sharma, and Senior Associate Druheen Mohanty examine how recent judicial developments are transforming the enforcement of foreign arbitral awards in India. Once treated as little more than symbolic commitments, enforceable in principle but dependent on Reserve Bank of India approval for actual fund remittance, these awards are now moving towards a framework of concrete and readily enforceable judgments. This article explores how these changes are dismantling longstanding regulatory barriers and what they signal for foreign investor’s confidence in India’s legal system.

In an era marked by global economic uncertainty, India has emerged as a jurisdiction committed to strengthening its appeal as a destination for foreign investment. Through a combination of legislative reforms and progressive judicial interpretations, the country has steadily worked to dismantle barriers that historically deterred international investors. For years, the enforcement of such awards in India was fraught with procedural complexities, particularly concerning the remittance of awarded sums to foreign investors. The requirement of Reserve Bank of India approval for cross-border fund transfers often rendered enforcement a protracted and uncertain process, undermining the very purpose of arbitration as an efficient dispute resolution mechanism. However, recent judicial pronouncements have begun to recalibrate this landscape, signalling a decisive shift toward a more investor-friendly regime. This article examines a landmark judicial development that promises to transform how foreign awards are enforced in India, reducing regulatory friction and reinforcing the credibility of India’s legal framework in the eyes of the global investment community.

Recovery of damages and the RBI conundrum

For years, enforcing foreign arbitral awards in India felt like a game of regulatory Russian roulette, with the RBI as the unpredictable house since the actual remittance of funds from India to foreign investors was
contingent on the grant of approval by the Reserve Bank of India (“RBI”).

The central question: did you need the RBI’s nod before paying out damages to a foreign party? The Delhi High Court in Cruz City (2017) provided a pro-enforcement view ruling that foreign arbitral awards for damages are enforceable but leaving the question about remittance of funds from India untouched. The Supreme Court’s decision in Vijay Karia (2020) created a two-step shuffle, i.e., courts could enforce the award, but the RBI kept its velvet rope at the remittance stage, which effectively meant that foreign investors won the legal battle, only to face a second administrative challenge of obtaining approval from RBI to actually get their money in the form of damages out from India. This approach was echoed in Banyan Tree (2020), where the Bombay High Court further entrenched the distinction between an award’s enforceability and the subsequent remittance of funds. The court held that the potential need for future RBI approval was not grounds to refuse enforcement. This decision reinforced a framework where judicial enforcement of an award did not guarantee the ability to repatriate funds, leaving foreign parties with a court-sanctioned award but facing continued regulatory uncertainty before payment could be made.

Green light from SC? – 2025 Decisions

This year, while the judgments in Mercedes-Benz (2025), and Nine Rivers (2025) have significantly clarified the landscape for the enforcement of arbitral awards in India, however it was the Supreme Court in case of GPE (2025), which established a crucial precedent, confirming that compensatory damages payable to non-residents are current account transactions not requiring prior RBI approval.

In GPE (2025), the Supreme Court brought welcome clarity to the long‑debated RBI – Foreign Exchange Management Act, 1999 (“FEMA”) hurdle in award enforcement. Recording the RBI’s stand, the Court affirmed that amounts payable to a non‑resident under an arbitral award are ‘current account transactions’ and, therefore, ‘do not require prior RBI approval’ for payment or remittance. This clarification by the
Supreme Court removes the uncertainty in relation to payment of damages by resident to non-residents which was created by earlier decisions based on a two-step approach, i.e., as a first step, such foreign arbitral awards being enforceable but such first step, being dependent on the second step which required approval from RBI prior to such payment of damages. This approach aligns with vision envisaged by the New York Convention’s for enforcement of foreign arbitral awards as discussed in Cruz City and Vijay Karia. Practically, the GPE case has held “prior RBI approval” cannot be used as a defence to resist enforcement of payments of damages from India pursuant to foreign arbitral awards. Any FEMA compliance questions are to be addressed at the banking/remittance stage under ordinary current‑account regulation, rather than as a condition precedent to enforceability of foreign arbitral awards.

While the GPE ruling has cleared a major hurdle by removing the RBI pre-approval bottleneck, the investment community is now closely watching the Supreme Court’s pending decision in Nine Rivers. A favourable outcome in this case could further de-risk foreign investment by providing definitive clarity on the finality and enforceability of foreign arbitral awards. For foreign investors, this would mean stronger confidence in India’s dispute resolution framework, translating into reduced risks and a more predictable exit strategy.

Taken together, the GPE and Nine Rivers decisions represent a paradigm shift. By removing the RBI approval hurdle and severely limiting the ‘public policy’ challenge, the Supreme Court has dismantled two of the most significant obstacles to enforcing foreign awards in India. This judicial dual punch aligns India’s arbitration framework more closely with global standards found in leading hubs like Singapore and London, signalling a robust and predictable enforcement regime for foreign investors.
This certainty would also lead to streamlining investment transaction documentation without the need for having complex provisions to navigate regulatory ambiguity. A decisive pro-enforcement ruling in Nine Rivers would not just supplement the GPE decision, it would cement India’s commitment to honouring international arbitration, marking another significant step in improving its investment climate.

What the future holds?

While the global economic forecast might have more clouds than a British summer, India is polishing its silver linings. The recent judicial tune-up, especially the Supreme Court’s ‘no-more-gatekeeping’ stance on RBI approvals for arbitral awards, is more than just a legal tweak. It’s a full-blown upgrade to India’s investment operating system.

For foreign investors tired of playing regulatory ‘Snakes and Ladders’, this clarity is a welcome straight shot to the finish line. As India continues to iron out the wrinkles in its business fabric, the message is loud and clear: while the world tightens its belt, India is rolling out the red carpet. The future? It looks less like a question mark and more like an exclamation point.