Micoperi SrL v The Shipowners' Mutual Protection & Indemnity Association (Luxembourg)

On an appeal under section 69 of the Arbitration Act 1996, the court will not convert an alleged error of fact into an error of law merely because the tribunal’s conclusion appears surprising. The tribunal’s reasons must be read as a whole. An appeal lies only for an error in ascertaining or applying the law. Equitable estoppel does not require complete reliance or detriment, but the party asserting it must establish reliance on the representation. Under section 68, a serious irregularity requires more than a tribunal making findings on an issue that became relevant through the parties’ evidence and submissions.

Micoperi appealed under section 69 of the Arbitration Act 1996 against a partial final award concerning whether its protection and indemnity club had waived, or was estopped from denying, insurance cover after representing that cover was accepted. Micoperi also applied under section 68, alleging that the arbitrators had determined the reasonableness of a settlement outside the preliminary issues referred to them.

The arbitrators found that the club had made an unequivocal representation but that Micoperi had not relied on it. They also addressed the settlement as one of the matters relied upon by Micoperi. The central issues were whether the arbitrators had made an appealable error of law and whether their treatment of the settlement constituted a serious irregularity causing substantial injustice.

1. The section 69 appeal was dismissed. The arbitrators correctly identified the two questions for equitable estoppel: whether there was an unequivocal representation that legal rights would not be enforced, and whether the representee relied on it so that enforcement would be inequitable.
2. The arbitrators’ conclusion was that Micoperi had not relied on the representation at all. Their reference to the benefit of the club’s letter of undertaking did not show that they had imposed a requirement of detriment. Nor did the conclusion involve an error concerning partial reliance. The tribunal found that the proposed arrest of pipes had been overtaken by Toreador’s offer of security, and that it was open to the arbitrators to reach that factual conclusion.
3. The court recognised that equitable estoppel does not require complete reliance or detriment. Those propositions were consistent with Hughes v Metropolitan Railway [1887] 2 App Cas 439, The Kanchenjunga [1991] Lloyd’s Rep 391 and The Post Chaser [1981] 2 Lloyd’s Rep 695. They did not, however, establish any error in the arbitrators’ actual reasoning.
4. The section 68 application was dismissed. The settlement’s reasonableness had become relevant because Micoperi advanced it as an additional matter of reliance, without objection, and the parties adduced evidence and made submissions on it. The arbitrators therefore acted within the reference in making findings on that issue. The circumstances did not amount to a serious irregularity causing substantial injustice.

This was an appeal to the High Court under sections 68 and 69 of the Arbitration Act 1996 from a partial final arbitration award dated 21 December 2010.