Enforcing Awards Against Non-Signatories and Non-Parties in India
I. The Enforcement Framework Under Section 36 and Order XXI CPC
Under Section 36 of the Arbitration and Conciliation Act, 1996 (“Act”), an arbitral award is enforced in the same manner as if it were a decree of a civil court. Consequently, the execution of an award is governed by the provisions of the Code of Civil Procedure, 1908 (“CPC”), particularly Order XXI and other provisions relating to execution of civil decrees1Punjab State Civil Supplies Corporation Limited and Anr. v Atwal Rice and General Mills (2017) 8 SCC 116 : AIR 2017 SC 3756 : 2017 (7) SCALE 691.
Section 51 CPC empowers the executing court to enforce a decree “in such manner as the nature of the relief granted may require”, subject to statutory limitations. Read with Order XXI, this equips the court with significant procedural tools to ensure effective enforcement.
Execution proceedings ordinarily commence against the named award-debtor. The court may issue notice to the judgment-debtor, direct disclosure of assets, examine the debtor regarding property, proceed toward attachment of movable or immovable assets, initiate garnishee proceedings, or appoint a receiver where appropriate.
The difficulty arises when execution reveals that the award-debtor lacks attachable assets. In enforcement proceedings, award-holders frequently encounter situations where the award-debtor lacks attachable assets, while value lies with entities that are legally or commercially intertwined with the award-debtor, such as nominees, assignees, group companies, shareholders, guarantors, or controlling state entities, who are not signatories to the arbitration agreement or parties to the arbitral proceedings. This raises a recurring post-award question: under what circumstances can an arbitral award bind a third party?
Indian arbitration law addresses this issue primarily through Section 35 of the Act, which provides that an arbitral award is final and binding on the parties and “persons claiming under them.” Indian courts have interpreted this phrase to permit limited post-award extension to third parties, while simultaneously placing firm limits on such extension.
II. Section 35: The Statutory Basis for Binding Third Parties
Section 35 of the Act occupies a distinct position within the scheme of the Act. Unlike Sections 7, 8, or 11, which address consent to arbitrate and the existence of an arbitration agreement, Section 35 operates after the arbitral process has concluded and the tribunal has become functus officio. It provides that an arbitral award shall be final and binding on the parties and “persons claiming under them.”
The scope of this expression was examined by the Supreme Court in Cheran Properties Ltd. v. Kasturi and Sons Ltd.2Cheran Properties Ltd. v. Kasturi and Sons Ltd, 2018 SCC OnLine SC 431, where the enforcement of the award was sought against the appellant (non-signatory nominee) on the basis that it claimed under a signatory and was therefore bound by the award.
The Court recognised that “modern business transactions are often effectuated through multiple layers and agreements. There may be transactions within a group of companies. The circumstances in which they have entered into them may reflect an intention to bind both signatory and non-signatory entities within the same group…” In such contexts, the Court observed that “The effort is to find the true essence of the business arrangement and to unravel from a layered structure of commercial arrangements, an intent to bind someone who is not formally a signatory but has assumed the obligation to be bound by the actions of a signatory”.
The Court emphasised that “The expression ‘persons claiming under them’ in Section 35 widens the net of those whom the arbitral award binds…” and described it as “…a legislative recognition of the doctrine that besides the parties, an arbitral award binds every person whose capacity or position is derived from and is the same as a party to the proceedings…”
III. Recognised Bases for Extending Binding Effect Under Indian Law
Indian courts have recognised a limited set of scenarios wherein awards may bind non-parties.
Derivative identity: Nominees, Assignees, and Successors
The most straightforward application of Section 35 of the Act, as recognised in Cheran Properties, arises where a non-party’s legal position is directly derived from a party to the arbitration. This includes cases of nomination, assignment, succession, or devolution of interest, where the non-party effectively steps into the legal shoes of the award-debtor.
In Gemini Bay Transcription Pvt. Ltd. v. Integrated Sales Services Ltd.3Gemini Bay Transcription Pvt. Ltd. v. Integrated Sales Service Ltd., (2021) SCC OnLine SC 572 (India), the Supreme Court interpreted Section 46, of the Act, which declares that a foreign award is binding “on the persons as between whom it was made.”Distinguishing from Section 35 of the Act, the Court noted that Section 46 of the Act refers broadly to “persons”, and is therefore not limited to formal signatories. A non-signatory may be bound where the award itself establishes the relevant legal relationship.
In contrast, in Ningbo Aux Imp and Exp Co. Ltd. v. Amstrad Consumer India Pvt. Ltd. & Anr.4Ningbo Aux Imp and Exp Co. Ltd. v. Amstrad Consumer India Pvt. Ltd. & Anr. (Commercial Arbitration Petition (L) No. 29646 of 2024), the enforcement was sought against a guarantor who had neither been made a party to the arbitration nor bound by an incorporated arbitration clause. The arbitral tribunal had expressly declined to implead the guarantor. In these circumstances, the Bombay High Court held that the guarantor could not be treated as “claiming under” the award-debtor. Accordingly, execution could not be used to indirectly impose liability or compel disclosure against a non-party.
Alter Ego and Piercing the Corporate Veil in Execution
A more complex question arises where enforcement is sought against directors, shareholders, or related entities on the basis that the award-debtor is a mere alter ego or that the corporate structure has been misused.
It is settled that the corporate veil may be lifted even at the stage of execution. However, courts have consistently emphasised that this power is exceptional and must be grounded in recognised principles such as fraud, impropriety, or misuse of corporate form.
In V.K. Uppal v. Akshay International (P) Ltd.5V.K. Uppal v. Akshay International (P) Ltd., 2010 SCC OnLine Del 538, the Delhi High Court refused to attach the personal assets of directors in execution of an arbitral award, holding that the veil cannot be lifted merely because the company is unable to satisfy the award. The Court underscored that vague allegations of asset transfer are insufficient; the decree-holder must establish fraud or impropriety.
Similarly, in Balmer Lawrie & Co. Ltd. v. Saraswathi Chemicals6Balmer Lawrie & Co. Ltd. v Saraswathi Chemicals Proprietors Saraswathi Leather Chemicals (P) Ltd, (2017) DLT 217, the Delhi High Court considered an application in execution seeking to implead non-signatory third parties on the allegation that they had siphoned off the assets of the judgment-debtor company. The Court held that it is not powerless to extend execution to third parties where assets have been secreted or diverted through a fraudulent device, or where a corporate façade is used to defeat enforcement. However, on the facts of the case, no such circumstances were established, and the Court declined to lift the corporate veil.
A different factual matrix was presented in Bhatia Industries and Infrastructure Ltd. v. Asian Natural Resources (India) Ltd.7Bhatia Industries and Infrastructure Ltd. v. Asian Natural Resources (India) Ltd, 2016 SCC OnLine Bom 10695, where the Bombay High Court permitted attachment of coal imported by an associate company during execution of an international arbitral award. The Court concluded that the judgment-debtor and its affiliate functioned as a single economic entity and that the goods, though imported in the affiliate’s name, in substance belonged to the debtor. Although no specific impropriety was independently established, the reasoning drew upon principles analogous to the “group of companies” doctrine. It importantly distinguished between extending an arbitration agreement to a non-signatory at the jurisdictional stage and tracing assets that, in reality, belong to the judgment-debtor at the enforcement stage.
The limits of veil piercing in execution were clarified in Mitsui O.S.K. Lines Ltd. v. Orient Ship Agency (P) Ltd8Mitsui OSK Lines Ltd. (Japan) v Orient Ship Agency Pvt. Ltd. and Ors., 2020 SCC OnLine Bom 217.The Bombay High Court held that the corporate veil may be lifted only in circumstances recognised by statute or falling within the established principles governing veil piercing as articulated by the Supreme Court in Balwant Rai Saluja v. Air India Ltd9Balwant Rai Saluja v. Air India Ltd, (2014) 9 SCC 407. In Mitsui, the award-holder sought to proceed against the personal assets of directors who were neither parties to the arbitration agreement nor to the award. The Court refused such extension, emphasising that the burden rests squarely on the judgment creditor to establish circumstances justifying veil piercing. It is not for directors or shareholders to demonstrate the absence of impropriety.
A more expansive approach to veil piercing in execution emerged in Delhi Airport Metro Express (P) Ltd. v. DMRC Ltd.10Delhi Airport Metro Express (P) Ltd. v. DMRC Ltd., 2022 SCC OnLine Del 727, where the Delhi High Court lifted the corporate veil of Delhi Metro Rail Corporation Ltd. and held its principal shareholders, namely the Union Government and the Government of the National Capital Territory of Delhi, liable to satisfy the arbitral award.
The Court held that the doctrine of lifting the corporate veil is not confined to cases of fraud or sham transactions. Drawing upon earlier Supreme Court observations that the doctrine must evolve with circumstances, it reasoned that veil piercing may be justified where considerations of public policy, public interest, or enforcement of binding legal obligations so require. Emphasising the sanctity of judicial and arbitral decisions, the Court concluded that corporate personality cannot be permitted to obstruct execution of a binding award.
On the facts, DMRC was found to function as the alter ego of its sovereign shareholders, who exercised decisive control through board composition and financial contributions. The Court therefore held that they could not rely on separate legal personality to avoid compliance.
Unlike earlier decisions grounded in fraud, asset diversion, or misuse of corporate form, DMRC relied substantially on public policy and institutional integrity, representing a broader articulation of veil piercing at the execution stage.
IV. Comparative Approaches to Post-Award Extension
A comparative examination reveals that most jurisdictions adopt a narrower conception of post-award extension.
In OLG Hamm, 8 U 86/1511Cypriot Investment Company v. German Publicly Listed Company & Former CEO, OLG Hamm, 25 November 2019, 8 U 86/15, the German Higher Regional Court, applying English law principles, recognised that a shareholder or corporate officer may in theory be bound by an arbitral award against the company, but only in exceptional circumstances. Mere corporate status is insufficient. The courts require a direct financial interest or other compelling circumstances demonstrating genuine privity. The inquiry is whether, given the facts of the dispute, there exists a degree of identification between the company and the individual sufficient to justify extending the binding effect of the award to the individual.
In Alstom Brasil Energia e Transporte Ltda. v. Mitsui Sumitomo Seguros S.A.12Alstom Brasil Energia e Transporte Ltda. v. Mitsui Sumitomo Seguros S.A., 15-cv-08221-AKH, ECF 32 (S.D.N.Y. June 20, 2016), the Southern District of New York Court enforced an arbitral award against a non-signatory insurer acting as subrogee. The court reasoned that an insurer-subrogee stands in the shoes of its insured; having assumed the insured’s rights, it was correspondingly bound by the arbitration clause.
Similarly, in Carte Blanche (Singapore) Pte. Ltd. v. Diners Club Int’l Inc.13Carte Blance Pte. Ltd. v Diners Club Int’l Inc., 2 F.3d 24, 29 (2d Cir. 1993), the Second Circuit recognised that an arbitral award rendered against a subsidiary may, in appropriate circumstances, be enforced against a parent company at the enforcement stage. California courts have also acknowledged that a judgment may be amended to add a non-party alter ego as a judgment debtor where the requisite elements are established, as seen in Toho Towa, Ltd. v. Morgan Creek Productions14Toho Towa, Ltd. v. Mor gan Creek Prods., 159 Cal. Rptr. 3d 469, 478 (Cal. Ct. App. 2013).
By contrast, in GE Transportation (Shenyang) Co., Ltd. v. A-Power Energy Generation Systems, Ltd.15GE Transportation (Shenyang) Co., Ltd. v. A-Power Energy Generation Systems, Ltd., 15-cv-06194-PAE, ECF 47 (S.D.N.Y. June 22, 2016), the Southern District of New York Court confirmed the award against the signatory parent company but declined to extend confirmation to non-signatory affiliates alleged to be alter egos. The court held that determining alter ego liability would unduly complicate what is intended to be a streamlined confirmation proceeding under the Federal Arbitration Act. Confirmation actions are limited in scope and are not designed to resolve complex corporate-structure disputes.
The court did, however, recognise two narrow exceptions: first, where an independent basis for subject matter jurisdiction exists against the alleged alter egos; and second, where veil piercing would not materially complicate the confirmation proceeding. As neither condition was satisfied, the court declined to extend enforcement within the confirmation action, leaving open the possibility of a separate proceeding to pursue alter ego liability.
V. Conclusion: Reconciling Finality, Consent, and Enforcement Reality
In post-award enforcement, the key question is not whether a third party was formally a signatory to the arbitration agreement, but whether it is legally bound by the award under the statutory framework of the Arbitration and Conciliation Act, 1996.
Indian law approaches this issue through Section 35 of the Act. The provision permits extension of binding effect to “persons claiming under” a party, but only where a recognised legal relationship is established. Courts have enforced awards against nominees, assignees, successors and, in appropriate cases, alter egos. At the same time, they have consistently refused attempts to use execution proceedings to indirectly implead non-parties or to pierce the corporate veil in the absence of demonstrable misuse.
For practitioners, two principles emerge. First, enforcement strategy must be grounded in a clear juridical basis such as derivative identity, asset tracing, or established alter ego control. Mere corporate proximity is insufficient. Second, execution proceedings under Order XXI CPC cannot be used to enlarge the scope of the award beyond those legally bound by it.
Compared with other jurisdictions, the Indian framework is neither confined to strict privity nor open-ended in its use of equitable doctrines. Its reach is defined by statutory language and judicially recognised principles. Properly deployed, Section 35 serves as a targeted enforcement tool capable of preventing strategic evasion while preserving the consensual foundation of arbitration.
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