Steel Authority of India had a long-term contract of affreightment with British Marine PLC for carrying raw material by sea. A dispute arose over Clause 62 of that contract, and it went to arbitration. SAIL later objected to the two arbitrators appointed to hear it, pointing out that both had earlier sat on a different arbitration between the same parties, under the same long-term contract, and had already interpreted Clause 62 there. SAIL's argument was straightforward: having formed a view on the clause once, how could the tribunal approach the second dispute with an open mind?
A single judge rejected that objection first, back in 2025, and SAIL appealed to a Division Bench. The appeal failed too, and the reasoning the Division Bench gave is worth setting out because it draws a line that commercial arbitration practitioners in India had been waiting for someone to draw clearly. The Court distinguished what it called issue conflict from disqualifying bias. An arbitrator who has previously construed a contract clause, even the very same clause between the very same parties, has not thereby disqualified himself from hearing a later dispute involving that clause. What would disqualify him is specific material showing he has approached the fresh dispute with a closed mind, not simply the fact of prior exposure to the same legal question.
The Court leaned on the practical reality of maritime arbitration. Shipping and affreightment disputes need arbitrators who understand freight structures, laytime, demurrage and the commercial logic of long-term carriage contracts. That expertise is scarce. If every arbitrator who had once ruled on a clause in a contract became ineligible to hear a later dispute on the same clause between the same parties, the pool of qualified maritime arbitrators in India would shrink to almost nothing, and parties with repeat, long-duration contracts would be forced to educate a fresh set of arbitrators from scratch in every single dispute. The Bench was unwilling to read Section 12 of the Arbitration and Conciliation Act, 1996 so widely that it produced that result.
There was also a timing problem with SAIL's objection that the Court did not let pass quietly. SAIL knew about the arbitrators' appointment and their prior involvement well before it raised the bias point, and it raised the challenge only months later, past the fifteen-day window the applicable arbitral rules set for such objections. The Bench treated that delay as a waiver. A party that sits on a known ground of challenge and only raises it once the arbitration has moved forward cannot resurrect it later to attack an award it does not like. Belated objections of this kind, the Court suggested, look less like genuine concerns about impartiality and more like a tactic to unsettle an unfavourable outcome.
On the merits the tribunal had decided against SAIL, awarding damages with interest, and SAIL's appeal also challenged the interest rate itself. That challenge went nowhere too. The arbitral award had applied 6 percent interest for the pre-award period and 9 percent for the period after the award, and the Division Bench found both rates consistent with what Section 31(7) of the Act permits an arbitrator to fix absent a contrary agreement between the parties.
What practitioners should take from this is a workable test rather than a vague sentiment about expertise. Prior rulings on the same contractual clause, even against the same objecting party, do not by themselves cross the line into justifiable doubts about independence or impartiality under the Fifth and Seventh Schedules of the Act. A real challenge needs something more: evidence that the arbitrator has prejudged the specific fresh dispute, not merely that he has encountered the same legal question before. And whatever the merits of an objection, it has to be raised promptly. SAIL's loss here was really two losses stacked on each other, a weak substantive challenge and a late one, and either alone would probably have been enough to sink the appeal.