The Hon’ble Supreme Court’s decision in Nagaraj V. Mylandla v. PI Opportunities Fund-I & Ors., 2026 SCC OnLine SC 1218 (“Nagaraj”) settles the scope of intervention in case of a “public policy challenge” raised by a party to a foreign award in enforcement proceedings under Section 48 of the Arbitration and Conciliation Act, 1996 (“Act”). The Hon’ble Supreme Court in the Nagaraj judgment takes the next decisive step after PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion India Pvt. Ltd., (2021) 7 SCC 1 (“PASL”) and Vijay Karia v. Prysmian Cavi E Sistemi SRL, (2020) 11 SCC 1 (“Vijay Karia”) and has acknowledged the doctrine of transnational issue estoppel in the context of international commercial arbitration. The dispute arose from a Singapore-seated SIAC arbitration concerning investor exit rights under a shareholders’ agreement in an Indian company. After the arbitral award was unsuccessfully challenged before the Singapore High Court, the court of the seat, the award-debtors challenged the enforcement in India under Section 48 of the Act on the ground that arbitral award was violative of public policy of India.
If PASL validated the ability of Indian parties to choose a foreign seat, and Vijay Karia reinforced a pro-enforcement reading of Section 48 of the Act, Nagaraj dealt with the core issue—’whether the issues already determined by the seat court could be relitigated before the Indian enforcement court under the guise of a public policy objection’.
I. The Conceptual Background: From PASL & Vijay Karia to Nagaraj
In PASL, the Hon’ble Supreme Court held that two Indian parties may choose a foreign seat of arbitration, and an award rendered at such foreign seat will be enforceable under Part II of the Act, provided conditions under Section 44 of the Act are satisfied. As such, parties opting for a foreign seat may have “two bites at the cherry” insofar as a challenge to the award was concerned, one at the seat court under the law of the seat and the other at the stage of enforcement under Section 48 of the Act.
In Vijay Karia, the Hon’ble Supreme Court held that Section 48 of the Act must be construed narrowly, and enforcement of foreign awards is the norm. Further, a review on merits is impermissible, and Indian courts must maintain a pro-enforcement stance.
The Hon’ble Supreme Court in Nagaraj holds that if a foreign-seated award has already been challenged before the seat court and that challenge has failed, the issues that have been adjudicated by the seat court cannot be raised afresh before the enforcement court under Section 48 of the Act.
II. Recognition of the Doctrine of Transnational Issue Estoppel
The Hon’ble Supreme Court in Nagaraj recognizes the doctrine of transnational issue estoppel. The doctrine, as explained by the Hon’ble Supreme Court, is the cross-border extension of ordinary issue estoppel, i.e., when a competent foreign court has already finally decided an issue between the same parties, that issue cannot ordinarily be reopened in another jurisdiction. In the arbitration context, this becomes particularly important when the seat court has already ruled on a challenge to the award and the award-debtor seeks to re-agitate the same issue before the enforcement court.
In Nagaraj, the award-debtors had already challenged the Singapore-seated award before the Singapore High Court. They later raised, at the enforcement stage before courts in India, substantially the same objection by arguing that the award effectively amounted to an unlawful buy-back of shares and was therefore contrary to the public policy of India.
The Hon’ble Supreme Court while rejecting the challenge held that an enforcement court cannot be turned into a second forum for merits reconsideration after the seat court has already decided the issue. If the same is permitted, the finality and efficiency of international arbitration would collapse into multi-jurisdictional litigation. Nagaraj therefore uses transnational issue estoppel as a doctrine to preserve finality without undermining the enforcement court’s independent role. The Hon’ble Supreme Court acknowledges that the doctrine is subject to certain conditions, namely, identity of issues, the award of the seat court must be final and conclusive, and rendered by a court of competent jurisdiction. At the same time, the Hon’ble Supreme Court recognises that domestic public policy is unique to each State and the doctrine would not necessarily apply to every public policy objection, particularly where the objection is rooted in the public policy of the enforcing State.
III. Seat Court versus Enforcement Court: Powers and Limitations
1. The Seat Court: Primary Supervisory Jurisdiction
The Hon’ble Supreme Court recognizes that the seat court has primary jurisdiction over the arbitral proceedings and is the proper forum to entertain a challenge to the validity of the award under the arbitration law of the seat. It is the court that may set aside or refuse to set aside the award according to its domestic arbitration law. The Hon’ble Supreme Court in PASL observed that once Indian parties choose a foreign seat, they accept that supervisory control shifts to the courts of that seat.
But the seat court does not conclusively determine every possible issue in other jurisdictions. The Hon’ble Supreme Court acknowledges that certain issues, particularly those tied to the public policy of the enforcement forum, may not be conclusively determined by the seat court.
This is precisely why the Hon’ble Supreme Court’s decision in Nagaraj assumes significance. The Hon’ble Supreme Court clarified that not every determination by the seat court is binding on the Indian enforcement court. Instead, the relevant inquiry is whether the issue sought to be reopened before the enforcement court is in fact the very same issue that was conclusively determined by the seat court.
2. The Enforcement Court: Secondary Jurisdiction under Section 48
The enforcement court, by contrast, occupies a position of secondary jurisdiction. Its function is not to supervise the arbitration, nor to sit in appeal over the award. Its role is narrower to only adjudicate whether the foreign award should be recognized and enforced in that jurisdiction. In Indian law, this is governed by Section 48 of the Act, grounds whereunder are restrictive, as emphasized in Vijay Karia.
This means that the enforcement court has real but limited powers. It may refuse enforcement on the grounds enumerated by statute, including public policy. But it cannot conduct a merits review and reinterpret the contract as though it were the primary jurisdiction.
IV. The Evolution from PASL & Vijay Karia
The shift from PASL to Nagaraj is not a contradiction but an evolution.
In PASL, the Hon’ble Supreme Court’s principal concern was party autonomy. The Hon’ble Supreme Court held that Indian parties are free to choose a foreign seat, and Indian law will respect that choice. That judgment was foundational because it validated entry into the foreign-seat regime.
The Hon’ble Supreme Court in Vijay Karia established that foreign award enforcement in India must be pro-enforcement, Section 48 of the Act is narrow, and enforcement courts ought to refrain from reviewing the merits.
Nagaraj takes the next step. It holds that once parties have exercised that autonomy, they must also accept the procedural consequences that flow from that choice. A central consequence is the authority of the seat court. If the seat court has already adjudicated an issue, the same cannot simply be relitigated in India by invoking Section 48 of the Act. The law has therefore evolved.
Conclusion
After PASL, parties knew they could choose a foreign seat. After Vijay Karia, parties knew Section 48 of the Act was narrow. After Nagaraj, the jurisprudence has developed to recognise that the Indian enforcement court is not a fallback appellate forum after an unsuccessful seat-court challenge.
Nagaraj is a landmark judgment because it is the Hon’ble Supreme Court’s first ruling on transnational issue estoppel and explains the distinct roles of the seat court and the enforcement court. The ruling preserves the enforcement court’s power to protect Indian public policy while preventing that power from becoming a cloak for re-litigation.
