Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

ELEVENTH CIRCUIT AFFIRMS CONFIRMATION OF AWARD IN INTERNATIONAL ARBITRATION

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The Eleventh Circuit Court of Appeals affirmed a Florida federal court’s confirmation of an award from an international arbitration, which was challenged by Triangula Pisos E Paineis, LTDA (“Triangulo”), the party against whom the award was made. Triangulo contended that the award should be vacated under a provision of the Federal Arbitration Act allowing vacatur based on an arbitrator’s refusal to hear evidence pertinent to the controversy. Without deciding whether the FAA even applied, as Triangulo had argued, the Court held that even if it did, Triangulo failed to make the requisite showing to demonstrate that the arbitrator had in fact refused to hear pertinent evidence. It affirmed the trial court’s denial of vacatur and confirmation of the award against Triangulo. Triangulo Pisos E Paineis, LTDA v. BR-111 Imports & Exports, Inc., No. 12-10776 (11th Cir. Aug. 24, 2012).

This post written by John Pitblado.

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VERMONT SUPREME COURT SENDS BANK BACK INTO CLASS ARBITRATION

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The Vermont Supreme Court reversed a trial court order that had the effect of precluding class arbitration where the parties’ agreement was silent on the issue. The trial court based its ruling on the then-recent U.S. Supreme Court decision in Stolt-Nielsen SA v. AnimalFeeds Int’l Corp. However, on appeal, the Vermont Supreme Court reversed, holding that the trial court’s involvement was premature, as it was not based on a timely vacatur or confirmation action, as required to invoke a court’s jurisdiction under the Vermont Arbitration Act. The defendant bank failed to timely challenge the arbitrator’s pre-Stolt-Nielsen decision allowing class arbitration, and failed to re-raise the issue of arbitrability with the arbitrator in light of Stolt-Nielsen. Bandler and Bandler & Co. v. Charter One Bank, No. 2011-249 (VT Oct. 5, 2012).

This post written by John Pitblado.

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COURT ENFORCES FORUM SELECTION CLAUSE IN REINSURANCE AGREEMENTS AND TRANSFERS ARBITRATION DISPUTE UNDER 28 U.S.C. § 1404

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In an arbitration dispute brought in the Western District of Wisconsin over the inability of the parties to choose an arbitrator for reinsurance disputes, the court found that venue was improper and transferred the case to the Southern District of New York under 28 U.S.C. § 1404. Petitioners sought an order compelling the respondent to comply with the method for choosing arbitrators provided for in the arbitration agreement and respondent counterclaimed asking the court to choose an arbitrator since the parties could not agree on one. Respondent also argued that venue was not proper as to petitioners claims because the arbitration agreements included an agreement to hold arbitrations in New York, but argued at the same time that it should be allowed to assert its counterclaim in Wisconsin because it related to appointing an umpire under 9 U.S.C. § 5, which does not include a venue limitation, rather than enforcing an arbitration agreement under 9 U.S.C. §4, which includes a venue limitation. The court determined that the transfer of all claims was appropriate because the Seventh Circuit held in Haber v. Biomet that § 4 requires district courts to enforce forum selection clauses in arbitration agreements and that the counterclaim could not be tried separately from petitioners’ claims because the claims were too intertwined. Employers Ins. Co. of Wausau v. Arrowood Indemnity Co., Case No. 12-283 (USDC W.D. Wis. Oct. 26, 2012).

This post written by Abigail Kortz.

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COURT REFUSES TO COMPEL ARBITRATION PENDING DISCOVERY AS TO SCOPE OF TWO POTENTIALLY APPLICABLE CONTRACTS

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In a putative class action, a court denied the defendant’s motion to compel individual arbitration, pending discovery as to the appropriate law governing the dispute and the scope of two potentially applicable agreements between the parties. The dispute surrounded the appropriate charges for propane delivery. Plaintiff, a propane customer, contended that an oral contract existed between him and the company which set the price at a “market rate” and did not include an agreement to arbitrate. The company, on the other hand, contended that the parties’ relationship was governed by a written agreement sent to the customer following the initial propane services, and that the agreement contained a class-waiver arbitration clause. The court found that it lacked sufficient facts to determine both which state laws and which of the two purported contracts applied. The court denied the motion to compel arbitration and ordered “limited discovery as to the appropriate choice-of-law as well as the scope of the oral and Master Agreements.” Howard v. Ferrellgas Partners, L.P., Case No. 10-02555 (USDC D. Kan. Aug. 27, 2012).

This post written by Michael Wolgin.

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NO MUTUAL ASSENT TO ARBITRATE WHEN ONE PARTY EMAILS ARBITRATION PROVISION AFTER CONTRACT FORMATION

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In a class action suit against a company that sells online programs offering discounts on goods and services, the Second Circuit affirmed the district court’s denial of defendant’s motion to compel arbitration. Defendants argued that they provided plaintiffs with notice about the arbitration provision through a hyperlink on a webpage plaintiffs would have seen before enrolling in defendants’ service and in an email sent to plaintiffs after enrollment. The court held that an unsolicited email from an online consumer business sent after enrollment does not put recipients on inquiry notice of its terms and that failure to cancel the membership does not, by itself, constitute assent. The court declined to decide the issue of whether the hyperlink on the enrollment screen provided notice of the arbitration provision because defendants failed to raise the issue in the district court. However, the court hinted that the hyperlink “might have created a substantial question as to whether the [arbitration] provision was part of a contract between the parties.” Schnabel v. Trilegiant Corp., No. 11-1311 (2d Cir. Sept. 7, 2012).

This post written by Abigail Kortz.

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