Error based on evidence

It is regularly held by the courts that an error of fact does not give rise to judicial review under the Arbitration Act 1996. Two attempts were made in Micoperi SrL v The Shipowners’ Mutual Protection & Indemnity Association (Luxembourg) [2011] EWHC 2686 (Comm) to persuade the court to overturn an award on that very basis: that the arbitrators had misapplied the law to the facts (error of law under s69 of the Arbitration Act 1996); and that the arbitrators had taken into account matters which had not been argued before them (serious irregularity under s68 of the 1996 Act). Burton J dismissed both arguments. Perhaps the most surprising aspect of the case is that permission to appeal under s69 was given in the first place.

Micoperi: the facts

For the relevant year 2005 to 2006 Micoperi was a member of the Association (the Club), and its vessel Micoperi 30 was insured by the Club. The Club’s rules provided for the arbitration of any disputes in London. On 3 October 2005 there was incident in the Black Sea which led to claims against Micoperi by a third party, Toreador Turkey Ltd. Those claims were up to €11.6m, and Micoperi both denied liability and asserted its own claims to a value of €4.5m. On 3 July 2006 Toreador arrested the vessel in Palermo, and although the vessel was released a week later it appeared that the vessel could be validly arrested in the future. On 14 July 2006 the Club unequivocally accepted that Micoperi was covered by the Club and that security for the release of the vessel would be provided, and on the same day security was provided by each of the parties for the respective claims against them. Proceedings were then commenced by Toreador against Micoperi in the High Court in London.