THE AUTHORS:
Janine Haesler, Managing Associate at VISCHER
Arijit Sanyal, Advocate at Skywards Law
The finality of an arbitral award is a cornerstone of international arbitration. Typically, a party dissatisfied with an award can request a state court to set it aside or, in some cases, remit it to the tribunal for reconsideration. However, some jurisdictions, such as Singapore and England, recognize a third, more interventionist power: the judicial modification of arbitral awards.
The Republic of India had joined this group of jurisdictions. In a landmark 2025 decision, Gayatri Balasamy v. ISG Novasoft Technologies Limited (Decision), the Supreme Court of India confirmed that courts have the power to modify arbitral awards.
However, such modifications may face problems during a potential recognition and enforcement under the New York Convention 1958 (“NYC”) outside of India, especially in jurisdictions unfamiliar with a modification of the arbitral award by state courts. This contribution summarizes the Decision, analyzes the treatment of modified awards for the purpose of recognition and enforcement under the NYC, and proposes three alternatives to judicial modification.
The Findings in Gayatri Balasamy v. ISG Novasoft Technologies Limited
In the Decision, the Supreme Court of India found that Indian state courts can modify arbitral awards under Section 34 of the Indian Arbitration and Conciliation Act 1996. Such a modification is limited to:
- Correcting computational, clerical, or typographical mistakes,
- Curing manifest errors, including in interest calculations, and
- Adjust unreasonable post-award interest.
The acceptance of a court modification of arbitral awards begs the question of the fate of the arbitral award. Jurisdictions such as England and Singapore apply the doctrine of merger, according to which the initial arbitral award and the modifying court decision are considered as one single judgment at least in Singapore and the United Kingdom.
The Indian Supreme Court took a different stance and only recognized a judicially implied power to modify arbitral awards within the larger power to set aside awards under Section 34 of the Indian Arbitration and Conciliation Act 1996 (Decision, paragraph 67). It explicitly rejected the application of the doctrine of merger (Decision, paragraph 66). In the absence of the doctrine of merger, the arbitral award and the court decision modifying it are considered as separate acts.
The separate treatment of the arbitral award and the modifying court decision does not pose an obstacle when the award is enforced in India, as both acts are equally enforceable within the jurisdiction. But what happens if and when the modified award has to be recognized and enforced outside India? If the respective jurisdiction is one of the 172 jurisdictions that have ratified the NYC (which is very likely), the requirements of the NYC are decisive to answer this question.
The Indian Supreme Court’s Stance on the Enforcement of Modified Awards under the NYC
The Supreme Court of India has considered the recognition and enforcement requirements under the NYC. It found that court modified awards are unlikely to give rise to challenges under the NYC, because a foreign court assessing the enforceability of an award would look at the law of the seat, in this case, Indian law, to interpret the effect of the two acts. The foreign court would have to read Section 34 of the Indian Arbitration and Conciliation Act to include limited powers to modify awards as follows (Decision, paragraph 69):
The limited power under Section 34 allows the court to vary or modify the award. The effect thereof is that the award would be read as modified by the judgment/order.
In other words, the Supreme Court’s view is that a foreign court, when asked to enforce the award, must respect the modification as it is part of the law of the seat (lex loci arbitri). Consequently, the foreign court would enforce the arbitral award only as modified by the Indian courts.
The Recognition and Enforcement of Modified Awards under the NYC
In principle, the NYC provides that an arbitral award can be recognized and enforced if it is not subject to the limited refusal grounds in Article V of the NYC. However, there are two potential stumbling blocks for the recognition and enforcement of modified awards under the NYC:
First, the modifying court decision itself is unlikely to qualify as an arbitral award under Article I(2) of the NYC. The Convention’s definition, supported by its travaux préparatoires, is understood to cover only decisions rendered by arbitrators or permanent arbitral bodies, not state courts.
Because the modifying court decision is not an arbitral award, and since India has rejected the doctrine of merger, a party seeking enforcement abroad faces a significant hurdle. It is a (partial) new decision in the form of a state court decision. As it was not issued by arbitrators or a permanent arbitral body, a state court decision is unlikely to meet the NYC’s definition of award under Article I(2) of the NYC.
An example from Germany proves this. The German Federal Court of Justice considered enforcement under the NYC as focusing on awards rather than decisions [BGH IX ZR 152/06, paragraphs 8-15]. The non-recognition of the merger in India means foreign courts will likely struggle to enforce the award in its modified form as a single, cohesive decision.
Second, Article V(1)(e) of the NYC allows a foreign court to refuse recognition and enforcement of an arbitral award if a party demonstrated that it “has not yet become binding on the parties, or has been set aside or suspended” at the seat of the arbitration. This provision does, however, not allow to refuse recognition and enforcement in case of a substantive modification of the arbitral award.
There is little guidance, as most of the other jurisdictions allow limited modifications to do so through express legislation. Even in jurisdictions that apply a merger doctrine, its effect is typically limited to domestic enforcement. For the purposes of the NYC, the original, unmodified award is often considered the only act enforceable. Therefore, the Indian approach does not find a clear parallel that would guarantee enforcement of the modified award.
Potential alternatives
The authors of this post see three alternatives to safeguard the recognition and enforcement of a “modified” arbitral award under the NYC:
First, where an award contains computational, clerical, or typographical errors, or even certain manifest errors, the parties should first (or in parallel) seek recourse through the arbitral process itself. Many institutional rules, such as the ICC,SIAC, and MCIA Rules, provide mechanisms for the correction or interpretation of an award by the arbitral tribunal. Invoking these provisions allows the arbitral tribunal to rectify the award, thereby preserving its status as a purely arbitral decision that is enforceable under the NYC. This route avoids the complications associated with judicial modification.
Second, a party could pursue a dual-track enforcement strategy. This would involve seeking recognition and enforcement of the original, unmodified parts of the arbitral award under the NYC. Simultaneously, the party would seek recognition and enforcement of the separate state court decision, which contains the modification, under the applicable bilateral or multilateral treaties on the recognition of foreign judgments, or under the domestic law of the enforcement jurisdiction. This approach, while legally sound, is more complex and potentially costly, undermining the efficiency that arbitration promises.
Third, the parties could formalize the modification through a settlement agreement. After the court indicates its intended modification, the parties could embody that change in a consent award or a settlement agreement. An award by consent would then be enforceable under the NYC, sidestepping the issue of a separate court decision. However, this alternative hinges on the parties’ consent.
Conclusion
The Indian Supreme Court’s decision in Gayatri Balasamy confirms the power of Indian courts to modify arbitral awards. While this may seem a pragmatic solution for domestic disputes, particularly those with unique facts like the one at hand, it creates uncertainty for commercial disputes with an international angle.
The core issue is the enforceability of such modified awards under the NYC. As the Indian Supreme Court rejected the doctrine of merger, a foreign court will be presented with two separate acts: an arbitral award and a modifying court decision. The latter is unlikely to qualify for enforcement under the NYC, creating precisely the kind of enforcement risk that arbitration is designed to avoid.
While alternatives like seeking correction from the tribunal or pursuing a complex dual-enforcement strategy exist, they are imperfect workarounds. If India-seated arbitrations are to remain attractive to foreign parties, the power to modify awards may be exercised with extreme caution. Otherwise, the finality and enforceability that make arbitration a preferred method of dispute resolution could be undermined.
ABOUT THE AUTHORS
Janine Haesler is a Managing Associate in VISCHER‘s arbitration and litigation team in Zurich. Her practice focuses on representing clients in complex disputes before all Swiss courts, including the Swiss Supreme Court, as well as in arbitral tribunals and Swiss public authorities.
Janine is an active contributor to the legal community as she regularly publishes and speaks on topics related to dispute resolution and serves on the Steering Committee of the Young Mumbai Centre for International Arbitration (Young MCIA).
She holds a Master of Law from the University of Bern (2014) and an LL.M. in International Arbitration and Dispute Resolution from the National University of Singapore (2020). She was admitted to the Swiss bar in 2017.
Arijit Sanyal is an Advocate at Skywards Law. He is a qualified attorney in India and was called to the Bar in New Delhi in 2023. His practice focuses on international and domestic arbitration, including proceedings under ICC, SIAC, and UNCITRAL rules, as well as enforcement and advisory work across jurisdictions in South Asia and Eastern Europe.
He has experience acting as both counsel and tribunal secretary, supporting complex, high-value disputes. Arijit focuses on industries including shipping, commodities, engineering and transport.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
