One of the fundamental pillars of arbitration is the impartiality and independence of arbitrators. However, in practice, these concepts are frequently tested, particularly when an arbitrator has previously expressed views on a similar issue in another case involving the same or related parties.
This situation gives rise to what is known as an “issue conflict.” The recent Delhi High Court judgment in Steel Authority of India Ltd. (SAIL) v. British Marine PLC (2025) revisited this question, exploring whether an issue conflict—by itself—constitutes an automatic ground for disqualifying an arbitrator under the Arbitration and Conciliation Act, 1996 (“the 1996 Act”).
The decision provides much-needed clarity on the thin line between “knowledge and expertise” on one hand, and “pre-judgment and bias” on the other.
Background of the Case
The dispute stemmed from a Contract of Affreightment (COA) executed in 2007 between SAIL, India’s largest steel producer, and British Marine PLC, an international ocean freight transport company, for shipping coking coal from Australia to India. The contract contained an arbitration clause (Clause 60), providing for resolution under the Maritime Arbitration Rules of the Indian Council of Arbitration (ICA).
Following global economic disruptions in 2008 and subsequent contractual disagreements, British Marine invoked arbitration against SAIL. A three-member arbitral tribunal was constituted, comprising Capt. S.M. Berry (Presiding Arbitrator), Mr. Niranjan Chakraborty (Respondent’s nominee), and Mr. Ashok Sharma (SAIL’s nominee).
After an unfavourable award, SAIL approached the Delhi High Court under Section 34 of the 1996 Act, challenging the award on multiple grounds. Central among them was the alleged “issue conflict” of two arbitrators—Capt. Berry and Mr. Chakraborty—who had previously decided another arbitration (SAIL v. SeaSpray Shipping Co. Ltd.) involving an identical contractual clause (Clause 62 of the same COA).
SAIL’s Argument: Issue Conflict Equals Bias
SAIL argued that the two arbitrators, having already expressed a specific interpretation of Clause 62 in the earlier SeaSpray arbitration, were predisposed to adopt the same reasoning in the instant case. This, according to SAIL, created a “reasonable apprehension of bias” and rendered them de jure ineligible under Section 14(1)(a) of the Act.
The company relied heavily on the concept of issue conflict as recognised in international arbitration jurisprudence, including:
- CC/Devas (Mauritius) Ltd. v. Republic of India, PCA Case No. 2013-09 (2013),
- Caratube International Oil Co. LLP v. Republic of Kazakhstan, ICSID Case No. ARB/13/13 (2014), and
- Vento Motorcycles Inc. v. Mexico, 2025 ONCA 82 (Ontario Court of Appeal).
SAIL emphasised that issue conflict arises when an arbitrator has taken a firm stance on a specific legal issue in a prior proceeding involving one of the same parties, such that there is a legitimate fear the arbitrator will not approach the issue with an “open mind.”
The petitioner further invoked Entry 24 of the Fifth Schedule of the 1996 Act, which states:
“The arbitrator currently serves, or has served within the past three years, as arbitrator in another arbitration on a related issue involving one of the parties or an affiliate of one of the parties.”
This, SAIL contended, directly covered the situation at hand. Since the same arbitrators had interpreted Clause 62 in the SeaSpray matter, their continuation in the present arbitration created “justifiable doubts” under Section 12(1) and violated their duty to disclose circumstances affecting impartiality under Section 12(2).
Respondent’s Stand: Prior Interpretation Is Not Bias
British Marine countered that an arbitrator’s prior view on a legal issue could not, by itself, constitute bias. Experienced arbitrators often rely on established interpretations of law, and to disqualify them merely for consistency in reasoning would undermine arbitration’s very purpose—to draw upon specialised expertise.
The respondent stressed that “issue conflict” was not recognised as an independent or automatic ground for disqualification under Indian law. Moreover, the previous arbitration (SAIL v. SeaSpray) was factually distinct, though based on a similar clause, and did not render the arbitrators incapable of independent judgment in the present matter.
Issues Before the Court
- Whether an “issue conflict” amounts to a valid ground for disqualification or bias under the Arbitration and Conciliation Act, 1996.
- Whether failure to make additional disclosures by the arbitrators under Section 12(2) and the Sixth Schedule vitiated the award.
- Whether Entry 24 of the Fifth Schedule automatically rendered the arbitrators ineligible.
Court’s Analysis
Justice Jyoti Singh undertook an exhaustive examination of both domestic and international precedents on the subject of arbitrator impartiality and issue conflict.
1. Nature of “Issue Conflict”
The Court began by defining issue conflict as a situation where an arbitrator has previously expressed a specific opinion or conclusion on a legal or factual issue substantially identical to the one in the present dispute. However, the Court distinguished this from actual bias or personal conflict, noting that issue conflict “arises from intellectual predisposition, not personal interest.”
The Court observed that arbitrators are expected to possess and apply specialised knowledge, and that mere familiarity with legal issues cannot, without more, lead to a presumption of bias. If that were accepted, many subject-matter experts would become disqualified simply because of prior exposure to similar disputes.
2. Entry 24 of the Fifth Schedule — A “Guide”, Not an Automatic Rule
The Court emphasised that Entries in the Fifth Schedule are illustrative, not conclusive. Entry 24 indicates situations that may give rise to doubts about independence or impartiality, but does not automatically render an arbitrator ineligible. For ineligibility to arise, the circumstances must meet the stricter standard under Section 12(5) (read with the Seventh Schedule), which was not applicable here.
Justice Singh clarified that Entry 24 must be interpreted in the context of the words “on a related issue involving one of the parties.” Merely deciding a similar issue in another arbitration does not satisfy this unless it can be shown that the arbitrator has pre-judged the matter or is incapable of re-evaluating the question afresh.
Thus, issue conflict does not automatically fall within the scope of de jure disqualification under Section 14(1)(a).
3. Disclosure Obligations under Section 12(2)
The Court accepted that the duty to disclose is “sacrosanct and continuous,” but it also held that non-disclosure by itself does not vitiate proceedings unless it can be shown that the undisclosed fact gives rise to a real likelihood of bias.
In this case, both Capt. Berry and Mr. Chakraborty had made disclosures in accordance with the ICA Maritime Arbitration Rules, 2012, and their prior involvement in another arbitration with similar issues did not, in the Court’s view, automatically amount to a conflict warranting recusal.
4. Comparative International Jurisprudence
The Court examined international decisions like Caratube and Devas, acknowledging that issue conflict is recognised in investment arbitration. However, it drew a crucial distinction—those decisions involved the same arbitrator deciding between the same State and related claimants, on overlapping facts and evidence, creating a tangible apprehension of bias.
By contrast, the dispute between SAIL and British Marine was commercial in nature, and the earlier SeaSpray case involved different parties and distinct factual matrices. Hence, the reasoning in Caratube or Devas could not be mechanically imported into the Indian context.
5. Presumption of Judicial Capacity
Justice Singh reaffirmed the presumption that arbitrators, much like judges, are capable of compartmentalising prior experiences and approaching each case with an independent mind. Unless there is “cogent evidence of pre-judgment or closed-mindedness,” courts should not interfere with their appointment.
The Court cited the Supreme Court’s rulings in State of West Bengal v. Shivananda Pathak (1998) and Justice R.A. Mehta (2013) to reiterate that reasonable apprehension of bias must be based on substantial and objective grounds, not mere suspicion.
Final Holding of the Court
Delhi High Court ultimately held that the issue of conflict is not an automatic ground for the disqualification of an arbitrator. It must be demonstrated that the arbitrator’s previous views on the issue are so entrenched that they create a reasonable apprehension that he or she will not approach the case with an open mind.
Since SAIL failed to establish such pre-judgment or partiality, the Court upheld the validity of the arbitral tribunal and refused to set aside the award on this ground.
Key Takeaways from the Judgment
1. Issue Conflict ≠ Automatic Bias
The Court drew a clear line between “issue conflict” and “personal or pecuniary bias.” Prior decisions or opinions do not, by themselves, disqualify an arbitrator. The test is whether a fair-minded observer would reasonably apprehend that the arbitrator will not bring an open mind to the current case.
2. Disclosure Duty is Continuous but Contextual
While the duty to disclose remains ongoing, failure to disclose prior arbitrations involving similar clauses is not fatal unless it materially affects perceived impartiality.
3. Fifth Schedule is Illustrative
Entries in the Fifth Schedule are merely a “guide” for assessing justifiable doubts, not an exhaustive or self-executing list of disqualifications.
4. Judicial Non-Interference in Plausible Interpretations
The Court reaffirmed the principle that once an arbitrator provides a plausible interpretation of contractual terms, courts cannot substitute their view under Section 34 unless the finding is perverse or contrary to public policy.
5. Reaffirmation of Arbitrator Expertise
Arbitrators are selected precisely for their expertise and prior experience in similar disputes. Disqualifying them merely because of prior opinions would discourage domain specialists from serving in arbitration.
Conclusion
Delhi High Court’s decision in Steel Authority of India Ltd. v. British Marine PLC (2025) represents a significant step in refining India’s jurisprudence on arbitrator impartiality. The Court decisively held that “issue conflict is not an automatic ground for disqualification”, reaffirming that impartiality must be assessed through the lens of real likelihood of bias, not theoretical overlap of issues.
In doing so, the judgment strengthens confidence in India’s arbitration framework—acknowledging that experience and independence can coexist, and that the pursuit of fairness must not come at the cost of efficiency.
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