The Connecticut Supreme Court, following one of its own 1999 decisions, has held that an arbitration panel is not required to give preclusive collateral estoppel effect to a prior arbitration award, even where the prior award involved the interpretation of the same provision of a contract between the same parties. LaSalla v. Doctor's Associates, Inc., SC 17483 (Conn. June 13, 2006). The Court held that the desire to maintain the flexibility of the arbitral process was more important than the desire to promote the stability and finality of judgments in this context, noting in dicta that a specific provision in the contract to the contrary might have led to a different result.
Arbitration / Court Decisions
US allowed to interevene in broker liability case to contest disclosure of audit report
A US Magistrate Judge has granted the United States permission to intervene in an MDL broker liability case to contest the disclosure of a report which it contends contains statements of potential Government witnesses in a pending criminal case, where the statements would not be subject to disclosure in the criminal action. In re Insurance Brokerage Antitrust Litigation, MDL No. 1663 (D.N.J. July 12, 2006). The Government sought a stay of the disclosure until the conclusion of the criminal matter, which had been brought by indictment. The Court required in camera submissions prior to making a decision on the request for a stay of discovery of the report.
NASD arbitration award by default confirmed
A US District Court has confirmed an arbitration award entered in an NASD arbitration in unusual circumstances: Petitioner failed to present any evidence in an attempt to force a postponement of the final hearing. The Panel denied the request for a postponement, at which time counsel for Petitioner left the hearing. The Panel reconvened the next day to permit Petitioner to offer evidence, which it failed to do. The Panel later dismissed the claims for lack of evidence. The Court found that Petitioner's failure to proceed was not misconduct by the Panel. Kober v. Kelly, Case No. 06-3341 (USDC S.D.N.Y. July 18, 2006).
UK – Reinsurance broker not entitled to double brokerage
The UK Court of Appeal has held that a reinsurance broker was not entitled to receive brokerage on both a deposit premium and on the total adjusted premium (without deduction of the deposit premium). This was a question of the interpretation of four excess of loss reinsurance contracts and seven burning cost contracts. Absalom v. TCRU Ltd., [2005] EWCA Civ 1586 (December 19, 2005).
Arbitration award confirmed over objection of regulator
In Koken v. Cologne Reinsurance (Barbados) Ltd., Case No. 98-0678 (USDC M.D. Pa. Aug. 23, 2006), a District Court reaffirmed its earlier decision that an arbitration provision was binding upon the Insurance Commissioner of Pennsylvania, acting as the liquidator of American Integrity Insurance Company, rejecting an argument based upon the McCarran-Ferguson Act. The Court declined to vacate the majority of the award under the manifest disregard of law standard, holding that “an erroneous interpretation by the arbitration panel does not warrant a finding of manifest disregard,” but vacated one paragraph of the award as being in manifest disregard of law, becuase it continued an insurance coverage past the time provided for by an unambiguous Pennsylvania statute.