Following the Holy Dragon Emperor's firm refusal to comply, General Wang was left with no choice but to contact the Celestial Emperor for further instructions. The situation had grown too delicate, and any misstep could ignite a conflict that would affect not just the Celestial Emperor but the entire Nine Heavens.
The Heaven's Mandate certainly possessed the manpower to annihilate the Holy Dragon Clan if they so wished, but doing so would be no different than striking down a foreign diplomat protected by immunity, and they'd have to answer to the other Royal Dragon Clans.