Shipping disputes are decided clause by clause, and Section 34 of the Arbitration and Conciliation Act, 1996 gives a court very little room to re-decide them. On 22 September 2026, Justice Avneesh Jhingan of the Delhi High Court in Steel Authority of India v. Norvic Shipping North America Inc., O.M.P. (COMM) 260/2023, dismissed SAIL's challenge to an award of demurrage and freight made under the aegis of the Delhi International Arbitration Centre in a dispute over limestone shipments from the UAE to Indian ports.
The dispute
Under a Contract of Affreightment, Norvic — a shipping company based in North America — carried limestone for SAIL from the UAE to Indian ports. Disputes arose over laytime calculations and demurrage across eight vessels, with SAIL disputing the validity of Notices of Readiness and invoking COVID-19 as force majeure for five of the voyages. Norvic invoked arbitration in June 2020 under the DIAC rules; a three-member tribunal awarded demurrage and freight in October 2022 (rectified in February 2023). SAIL challenged the award under Section 34.
The grounds and their fate
| Ground urged by SAIL | How the Court dealt with it |
|---|---|
| Invalid NOR for MV Pegasus — generator malfunction | The malfunction occurred after a valid NOR; under Clause 41, subsequent breakdown affects laytime counting but does not retroactively invalidate the notice. |
| Premature NOR for MV Esperia | The contract required NOR on arrival within port limits regardless of berth availability; the tribunal\'s reading followed the clauses. |
| COVID-19 force majeure (Clauses 55–56) for five vessels | Cargo and shipping operations were declared essential services; the pandemic did not prevent discharge, so the clauses were not triggered. |
| Inadequate reasoning / natural justice | The award\'s reasoning was intelligible and grounded in the record; Dyna Technologies standards were met. |
The standard of review
The judgment restates the architecture that now governs award challenges in India. Because the arbitration was international and commercial, the "patent illegality" ground under Section 34(2A) was simply unavailable — a consequence of the 2015 amendment explained in Ssangyong Engineering v. NHAI, (2019) 15 SCC 131. What remained were the narrow grounds of Section 34(2): incapacity, invalid agreement, lack of notice, excess of jurisdiction, improper composition, and conflict with the public policy of India as tightly defined. A plausible interpretation of contractual clauses by the tribunal, however debatable, is beyond the reach of all of them. The Court also referred to Pasl Wind Solutions v. GE Power Conversion and the recent guidance in Balaji Steel Trade v. Fludor Benin S.A., underscoring the pro-enforcement orientation of the current law.
The distinction the award drew on Notices of Readiness — "an invalid NOR will never become valid," but a valid NOR is not undone by later breakdown — is a point of recurring importance in charterparty practice, and now carries the endorsement of a Section 34 court.
What parties should take from this
Choose grounds realistically. Against an international award, arguments dressed as "patent illegality" — misreading of contract, insufficient evidence — will be turned away at the threshold.
Force majeure is factual. Clauses are applied to what actually prevented performance. Where governments declared an activity essential and it continued, the pandemic label carries no weight of its own.
Laytime clauses mean what they say. Whether NOR can be tendered "whether in berth or not" and how interruptions count are questions the contract answers; tribunals applying those answers are safe from review.
Reasoning challenges face a high bar. Awards need intelligible, adequate reasons — not judgments of a court. Dyna Technologies remains the measure.
The takeaway
For public sector undertakings and private charterers alike, the case is a reminder that the Section 34 court is not an appellate forum over maritime arithmetic. The place to win a demurrage dispute is before the tribunal, on the clauses and the contemporaneous port records. Once the award is rendered, Indian courts — and the Delhi High Court prominently among them — will confine themselves to the narrow supervisory role the statute assigns.
This article is for general information only and is not legal advice or a solicitation.
Frequently Asked Questions
What is demurrage and why did it arise here?
Demurrage is the agreed compensation payable to a shipowner when the charterer's cargo operations exceed the laytime allowed by the contract. SAIL had engaged Norvic under a Contract of Affreightment to carry about 1.6 million MT of limestone across multiple voyages; disputes over when laytime commenced — that is, when a valid Notice of Readiness was tendered — generated demurrage claims across eight vessels.
Why could SAIL not rely on "patent illegality"?
Because the arbitration was an international commercial arbitration — the respondent being a foreign company — and after the 2015 amendment, the patent-illegality ground in Section 34(2A) applies only to purely domestic awards. Challenges to international awards are confined to the narrower grounds in Section 34(2), as explained in Ssangyong Engineering v. NHAI and Vijay Karia v. Prysmian Cavi.
Did COVID-19 amount to force majeure excusing demurrage?
Not on these facts. The tribunal found — and the Court declined to disturb — that shipping and cargo-handling operations had been declared essential services during the lockdown, so the pandemic did not prevent the discharge operations within the meaning of the contract's force majeure clauses.
Can an invalid Notice of Readiness become valid later?
The award drew a distinction the Court endorsed: a NOR tendered when the vessel is genuinely not ready is invalid and remains so. But where a valid NOR has been tendered on arrival, a subsequent equipment breakdown does not retrospectively invalidate it; the contract's interruption clauses then govern the counting of laytime.