Patent illegality is unavailable to challenge India-seated international commercial arbitral awards under Section 34.

Steel Authority of India Ltd. (“SAIL”) and Norvic Shipping North America Inc. (“Norvic”) entered into a Contract of Affreightment dated 5 April 2019 for transportation of limestone from the UAE to India over multiple voyages.

Disputes arose concerning the calculation of laytime, demurrage and freight for eight vessels. The arbitral tribunal rejected the claim concerning one vessel but awarded Norvic amounts relating to seven vessels, together with interest and costs. The award dated 19 October 2022 was rectified on 21 February 2023.

SAIL challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996.

The arbitration was an international commercial arbitration because Norvic was incorporated in Canada, while Delhi was the contractual seat of arbitration.

Whether the tribunal correctly treated the NOR issued for MV Pegasus as valid and calculated laytime and demurrage from the contractual date despite the subsequent generator problem?

Whether the NOR issued for MV Esperia was invalid because cargo could not be discharged on 27 July 2019 and was accepted only after the vessel re-berthed on 31 July 2019?

Whether COVID-19 and the related governmental and port circulars activated Clauses 55 and 56 of the Contract of Affreightment so as to exclude laytime or demurrage for the five vessels?

Whether the tribunal failed to exclude cyclone-related delay in the case of MV Sparrow?

Whether the award was non-speaking, violated natural justice or public policy, or otherwise attracted a ground under Section 34(2) of the Arbitration and Conciliation Act, 1996?

Whether the award of interest at LIBOR plus 3 percentage points or 12% per annum, whichever was lower, was impermissibly open-ended or uncertain?

The Court applied Sections 2(1)(f) and 2(2) of the Arbitration and Conciliation Act, 1996, holding that an arbitration involving a foreign-incorporated body corporate is an international commercial arbitration and that Part I applies because Delhi was the seat.

Under the post-2015 statutory framework, the ground of “patent illegality” under Section 34(2A) is unavailable in an international commercial arbitration; judicial review is confined to the grounds in Section 34(2), including public policy and the limited procedural grounds.

The Court applied Clauses 35 and 36 of the contract, which required an NOR at the discharge port and permitted laytime to run irrespective of whether the vessel was berthed, and Clause 41, which excluded periods of equipment inefficiency without invalidating the NOR.

Clauses 55 and 56 governed exclusions for epidemics, causes beyond the charterers’ control and force majeure.

An arbitral tribunal is the final judge of the quantity and quality of evidence, and a plausible contractual or factual interpretation cannot be reassessed under Section 34.

Although an award must contain intelligible and adequate reasons under Section 31(3), it need not resemble a detailed judicial judgment.

The Court held that the MV Pegasus NOR dated 10 May 2019 was valid because SAIL failed to establish that the vessel was not ready to discharge on that date.

The later generator problem was covered by Clause 41, which required exclusion of the period of inefficiency but did not require a fresh NOR or invalidate the earlier one.

For MV Esperia, the tribunal reasonably found that no disabling misunderstanding existed when the NOR was issued on 10 July 2019; the later difficulty arose on 27 July and was resolved the same day. Therefore, laytime did not have to be recalculated from 31 July.

Regarding COVID-19, the Ministry of Shipping’s order treated waterborne transport and loading and unloading operations as essential services, while the subsequent circulars required major ports to remain operational.

SAIL did not prove that COVID-19 actually prevented or materially hindered discharge for the relevant vessels.

The Vizag Chamber letter did not assist SAIL because only MV Cas Avanca was at Vizag during the specified force-majeure period, and no specific evidence showed that its discharge was affected.

The Haldia circular concerned port-imposed charges and could not alter the parties’ private contractual allocation of demurrage.

Section 53 of the Major Port Trusts Act was merely an enabling provision concerning remission of port charges and did not govern contractual demurrage between SAIL and Norvic.

The cyclone argument concerning MV Sparrow was not properly pleaded; in any event, the relevant cyclone period had already been excluded in the calculation accepted by the tribunal.

The Court further found that the award contained sufficient factual findings and contractual reasoning.

Non-reference to every document or submission did not make the award non-speaking, particularly in an international commercial arbitration where the Court could not reassess evidence or substitute its view for a plausible arbitral conclusion.

The interest formula was clear because it required application of the lower of LIBOR plus 3 percentage points and 12% per annum.

The impugned award, as rectified, was upheld, and all pending applications were disposed of.