Alliance Insurance Company (Pvt) Ltd v Imperial Plastics (Pvt) Ltd and The Honourable Judge L. G Smith (Retired) N.O.

Imperial Plastics (first respondent) was insured by Alliance Insurance (applicant) under an "Assets All Risks Policy". On 11 August 2013, Imperial Plastics' business property was destroyed by fire. After the applicant paid what it believed was covered under the policy, disputes arose regarding: (1) a crane used at the premises, (2) the amount paid for lost stock, and (3) payment for damaged electricals. The matter was referred to arbitration before Judge L.G. Smith (retired) (second respondent). Both parties led extensive evidence - the first respondent called five witnesses and the applicant called six witnesses. On 9 June 2015, the arbitrator granted an award in favor of Imperial Plastics ordering Alliance Insurance to: (a) replace the crane or pay its equivalent value before 30 June 2015; (b) pay US$188,815.90 for destroyed stock; and (c) pay all costs on an attorney-and-client scale. Alliance Insurance then applied to the High Court to set aside the arbitral award.

• Whether the arbitral award dealt with matters beyond the scope of submission to arbitration in terms of Article 34(2)(a)(iii) of the Arbitration Act
• Whether the arbitral award was in conflict with the public policy of Zimbabwe in terms of Article 34(2)(b)(ii) of the Arbitration Act
• Whether the arbitrator correctly found that the crane was covered under the insurance policy
• Whether the arbitrator correctly assessed the value of stock destroyed based on the BDO report rather than the KPMG report
• What standard of review applies when a court considers setting aside an arbitral award

The application to set aside the arbitral award was dismissed with costs.

An arbitral award may only be set aside under Article 34 of the Arbitration Act on limited grounds, and not merely because the court disagrees with the arbitrator's reasoning or conclusions on facts or law. The award will only be set aside if the reasoning or conclusion constitutes a palpable inequity that is so outrageous in its defiance of logic or accepted moral standards that a sensible and fair-minded person would consider that the conception of justice would be intolerably hurt by the award. Minor computational errors in an arbitral award do not vitiate the award where the arbitrator applied the correct methodology and reasoning. Under an "Assets All Risks Policy", tangible assets inspected by the insurer's underwriters and not specifically excluded are covered by the policy, and the insurer bears the risk if it fails to properly inspect, value, and exclude specific items from coverage.

The court observed that the rate at which information was released to the insurer was not critical since both parties were aware that records had been destroyed by fire and the applicant was aware of difficulties in obtaining requisite information timeously. The court also noted approvingly that all parties took the arbitration proceedings seriously, leading extensive evidence and making detailed submissions, which formed the basis for a well-reasoned award based on detailed analysis of the evidence.

This case is significant in Zimbabwean arbitration law as it applies and reinforces the limited grounds for setting aside arbitral awards under Article 34 of the Arbitration Act. It confirms the highly deferential standard of review established in ZESA v Maphosa, emphasizing that courts will not interfere with arbitral awards merely because the reasoning or conclusions may be wrong in fact or law. The award will only be set aside if it constitutes a palpable inequity that is outrageous in its defiance of logic or accepted moral standards. The case also provides guidance on insurance law principles, particularly regarding what constitutes coverage under an "Assets All Risks Policy" and the insurer's duty to properly inspect and value insured property before determining exclusions. It demonstrates the courts' pro-arbitration stance and reluctance to substitute their judgment for that of arbitrators on factual and evidentiary matters.