In a dispute arising out of a series of contentious reinsurance arbitrations over a seven-year period between National Indemnity Company (“NICO”) and IRB Brasil Ressegurous S.A., the court confirmed three awards issued by an arbitration panel in NICO’s favor. IRB had sought coverage for a significant property and business interruption loss under a retrocessional reinsurance contract entered into with NICO. A dispute arose concerning NICO’s indemnification obligations for the loss, which was submitted to arbitration before a three-person panel. Other issues between the parties, including whether NICO was entitled to keep certain premium paid under another retrocessional agreement between the parties, and its request for attorneys’ fees and costs, were also submitted to the panel. Ultimately, the panel issued three awards in NICO’s favor.
Each party sought confirmation and vacatur of the awards through various lawsuits filed in federal court, which were consolidated. One of the primary bases upon which IRB sought vacatur was that the umpire failed to disclose his appointment as party-arbitrator for an entity that was an alleged affiliate of NICO in a separate dispute during the period of time between his nomination as umpire (after his umpire questionnaire was completed) and his eventual appointment some two-years later. For this reason, IRB asserted that the umpire demonstrated evident partiality towards NICO, requiring vacatur of the awards under the Federal Arbitration Act. The court disagreed with IRB, finding that the umpire had no obligation to disclose the appointment during the period after he completed the umpire questionnaire, while he was up for consideration, and that the umpire’s voluntary disclosure post-selection (and decision not to withdraw) was sufficient. Further, the court noted that there was no case law supporting the notion that an arbitrator’s disclosure after being selected as umpire, instead of during the period in which his nomination was pending, constituted sufficient grounds to vacate an arbitration award. Notably, the decision cited to the ARIAS-US Code of Conduct in analyzing the umpire’s conduct, finding that he acted in accordance with the Code in addressing the situation. National Indemnity Co. v. IRB Brasil Ressegurous S.A., No. 15-cv-3975 (USDC S.D.N.Y. Mar. 10, 2016).
This post written by Rob DiUbaldo.
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