Discuss the scope of the 'public policy' exception under Section 48 of the Arbitration and Conciliation Act, 1996. How has judicial interpretation narrowed it?

Section 48 of the Arbitration and Conciliation Act, 1996 lists the only grounds on which an Indian court may refuse to enforce a foreign arbitral award [1]. It follows Article V of the New York Convention [7]. Public policy is the widest of these grounds. The courts and Parliament have steadily narrowed it so that it works as a safety valve, not a second appeal.

Scope of the exception

• Seven grounds in total: five under S.48(1) that the resisting party must prove, and two under S.48(2) that the court may raise on its own: non-arbitrability and public policy [1][4].
• After the 2015 amendment, an award conflicts with public policy only if (i) it was induced by fraud or corruption, (ii) it contravenes the fundamental policy of Indian law, or (iii) it conflicts with the most basic notions of morality or justice [1].
• Explanation 2 to S.48(2) bars any review on the merits [1].
• If the objections fail, the award is deemed a decree of the Indian court (S.49) [1].

Judicial and legislative narrowing

• Renusagar (1994): public policy means more than a mere violation of law. It covers fundamental policy, the interests of India, and justice or morality [2].
• Amendment Act 3 of 2016: dropped the vague "interests of India" limb and made the test the same under S.34 and S.48 [1][4].
• Govt. of India v. Vedanta (2020): the SC enforced a Malaysia-seated award and found no breach of public policy [2].
• 2024 INSC 242: the enforcing court cannot re-examine the merits of the dispute [3].
• 2026 INSC 298: a mere breach of a statute, by itself, does not meet the public-policy bar [4].
• Ravva case (Nov 2026): the Centre argued the tribunal "rewrote" the contract, which is a merits plea. The SC dismissed its appeal, noted that the seat court had already upheld the award, and warned that "nobody will trust you" [5].

Balance

• Fraud and corruption still attract the exception, so India keeps protection against tainted awards [1].
• However, a parliamentary committee found that excessive and inconsistent court intervention still delays arbitration [6].

The exception has moved from a broad sovereign shield to a narrow test of integrity and fundamental values. That narrowing fits the reciprocity that the New York Convention depends on [7]. To build India as an arbitration hub, the State should apply this restraint to its own litigation and route disputes through the India International Arbitration Centre, as the Standing Committee recommended [6]. That also serves the rule-of-law goal of SDG 16.