Maritime Arbitrator's Prior Ruling On Similar Clause Does Not Establish Bias: Delhi High Court
The Delhi High Court on 17 September held that an arbitrator does not become disqualified merely because they previously decided a similar issue in another maritime arbitration involving one of the parties, particularly where specialised maritime disputes draw from a limited pool of domain experts.
A Division Bench of Justices Prathiba M. Singh and Vikas Mahajan upheld the arbitral award in favour of UK-based British Marine PLC and dismissed Steel Authority of India Limited's (SAIL) appeal against a Single Judge's order upholding the award. The Bench held:
“A maritime contract by its very nature requires domain knowledge for quick adjudication. Merely because an Arbitrator has served in another maritime arbitration which involves interpretation of the same or a similar clause by itself cannot raise justifiable doubts as to the independence or impartiality of an Arbitrator.”
The dispute arose from a Contract of Affreightment dated 5 December 2007, under which British Marine was to transport three million metric tonnes of coking coal from Australia to India between June 2008 and December 2012.
In November 2008, SAIL said it could not declare further shipment bookings, known as STEMS, due to the global economic situation. On 10 March 2010, it invoked Clause 62 of the contract seeking termination without liability.
Following negotiations, the parties executed an addendum dated 20 April 2011. No further STEMS were ultimately issued, and SAIL issued a termination letter on 12 September 2012.
The dispute was referred to a three-member arbitral tribunal. SAIL challenged two arbitrators, Captain S.M. Berry and Niranjan Chakraborty, on the ground that they had earlier interpreted the same default clause in another arbitration involving SAIL and SeaSpray Shipping Company. The SeaSpray award was communicated to SAIL on 1 September 2014. SAIL sought disclosure from Captain Berry and Chakraborty only on 19 November 2015.
SAIL argued that the arbitrators' earlier ruling created justifiable doubts about their independence or impartiality under Section 12 read with the Fifth Schedule of the Arbitration and Conciliation Act, 1996. It contended that they were required to disclose circumstances likely to give rise to such doubts.
British Marine argued that deciding a similar issue in an earlier arbitration did not establish bias and that SAIL had failed to challenge the arbitrators within the prescribed 15-day period.
The Bench found that SAIL knew from the outset that Captain Berry and Chakraborty were serving on the SeaSpray tribunal. It held that the challenge was belated and stressed that timelines for questioning an arbitrator's appointment must be strictly followed to prevent delays in arbitration. It also cautioned against imposing stringent conflict requirements on specialist arbitrators handling similar maritime disputes. It observed:
“If it were to be held that experts who serve as Arbitrators on such arbitrations, ought to be bound by such stringent conflicts, it may lead to scarcity of such expert Arbitrators and also their perpetual disqualification”
The arbitral tribunal passed its award on 13 September 2018. SAIL challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 before a Single Judge of the Delhi High Court. The Single Judge dismissed SAIL's challenge on 13 October 2025, upholding the arbitral award.
SAIL then appealed against the Single Judge's order before the Division Bench under Section 37 of the Arbitration Act, read with Section 10 of the Delhi High Court Act and Section 13 of the Commercial Courts Act.
On SAIL's reliance on Clause 62 to terminate the contract without liability, the judges found that its interpretation was contrary to the clause. They held that the provision could operate where suppliers in Australia failed to supply the goods, but not where SAIL itself failed to issue STEMS despite coal being available.
The Bench also upheld the tribunal's calculation of damages based on the difference between the contractual rate and the spot rate applied to the relevant tonnage. It found the approach rational and logical and held that the award did not violate public policy. It concluded that the 13 September 2018 award had been rightly upheld by the Single Judge.
Accordingly, the Division Bench of the High Court dismissed SAIL's appeal, while disposing of the pending applications.
Appearances for appellant (Steel Authority of India Limited): Senior Advocate Rajshekhar Rao, along with Advocates Ajay Sabharwal, Sidhartha Sharma, Priyanka Tibrewal, Rishav Dutt, Aman Katrina, Anirudh Pandit and Neelakshi Singhal.
Appearances for respondent (British Marine PLC): Senior Advocate Ramesh Singh, along with Advocates Sumit K. Batra, Anupam Dighe, Manish Khurana and Chandini Tanna.