The Delhi High Court recently addressed the issue of "issue conflict" as a ground for disqualifying an arbitrator, ruling that such a conflict alone is insufficient to establish bias or prejudice. In the case of Steel Authority of India Limited v. British Marine PLC, the Court emphasized that an arbitrator's prior involvement in a similar legal issue does not automatically render them unfit to adjudicate a subsequent dispute involving the same or related parties.
Justice Jyoti Singh, presiding over the matter, clarified that merely because an arbitrator has previously decided on an issue where one party may be common to the current arbitration does not, in itself, raise justifiable doubts about the arbitrator's impartiality. The Court stated that it must be demonstrated that the arbitrator's ability to approach the new issue with an open mind is compromised, thereby affecting their capacity to deliver justice impartially.
The case arose from a long-term contract of affreightment signed in 2008 between Steel Authority of India Limited (SAIL) and British Marine PLC, under which British Marine was to transport coking coal to India for SAIL. SAIL allegedly failed to provide cargo nominations as required, leading British Marine to terminate the contract and seek damages. An arbitral tribunal found SAIL in breach of contract and awarded British Marine approximately US$30 million in damages.
SAIL contested the arbitral award, alleging that two of the arbitrators—Captain SM Berry, the Presiding Arbitrator, and Niranjan Chakraborty, British Marine’s nominee—were disqualified due to "issue conflict." SAIL argued that these arbitrators had previously interpreted similar contractual terms in another arbitration between SAIL and SeaSpray Shipping Company in favor of the latter.
The High Court dismissed SAIL's petition, stating that the mere fact that the arbitrators had dealt with similar issues in a prior arbitration did not, without more, disqualify them. The Court found no evidence that the arbitrators had approached the earlier case with bias or that their prior decisions had been influenced by partiality. Therefore, the Court concluded that there were no grounds to question the arbitrators' impartiality in the current arbitration.
This judgment underscores the principle that "issue conflict" is not an automatic disqualifier for arbitrators. Parties seeking to challenge an arbitrator's appointment on such grounds must provide concrete evidence demonstrating that the arbitrator's prior involvement in similar issues has compromised their ability to adjudicate the current dispute impartially.
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