Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

INSURER AND REINSURER STIPULATE TO DISMISSAL OF LAWSUIT, AGREEING TO ARBITRATE REINSURANCE CLAIM DISPUTE

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TIG Insurance Company (“TIG”) sued Arrowood Indemnity Company (“Arrowood”) in federal court for breach of a reinsurance agreement. TIG had settled claims with insured Browning Ferris Industries, Inc., and claimed coverage from Arrowood under a facultative reinsurance contract. The parties dismissed their court case without prejudice, agreeing to arbitrate the dispute. The dispute is described in the lawsuit’s Complaint. TIG Ins. Co. v. Arrowood Indem. Co., Case No. 1:10-cv-00465-SM (U.S.D.C. D.N.H. Dec. 29, 2010)

This post written by Ben Seessel.

U.K. COURT CONFIRMS ARBITRATION AWARD AGAINST REINSURER AND IN FAVOR OF P&C INSURER THAT PAID SUMS UNDER SETTLEMENTS

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A reinsurer challenged an arbitration award finding coverage in favor of a P&C insurer in six cases where the insurer had paid sums under compromise agreements. A U.K. court confirmed the award in favor of the P&C insurer, finding that the arbitrators’ reasoning was clear, and that their judgment was unchallengeable in law. The underlying claims by insureds involved silicon breast implant manufacturers’ liability, liability of makers of products derived from blood contaminated with HIV or AIDS, asbestos, and environmental pollution. In re Arbitration Between IRB Brasil Resseguros SA & CX Reinsurance Co., [2010] EWHC 974 (Q.B. 2010).

This post written by Ben Seessel.

NON-PARTY TO ARBITRATION AGREEMENT COMPELLED TO ARBITRATE

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A federal judge in Illinois compelled arbitration of a defamation suit brought by an ousted board member against other board members of an LLC formed as a joint venture. The LLC was formed by an operating agreement that included a procedure for the designation of governing board members. Plaintiff, the principal of one of the entities forming the joint venture, was designated to the board, but other board members successfully sought to have him removed for reasons they set forth in writing to other members. Plaintiff sued them for defamation. The defendants moved to compel arbitration, citing the operating agreement’s arbitration provision. While the Plaintiff was not a party to the operating agreement, the court still compelled him to arbitration, as it found him to be an agent of one of the signatory companies, citing agency as one of the “five doctrines through which a non-signatory can be bound by arbitration agreements entered into by others.” The court also found the defamation claims to be within the scope of the arbitration agreement, because it pertained to a disagreement “concerning the management or conduct of the affairs” of the joint venture created by the operating agreement. Denari v. Rist, Case No. 10-2704 (USDC N.D. Ill. Jan. 31, 2011).

This post written by John Pitblado.

THIRD CIRCUIT ACCORDS “EXTREME DEFERENCE” TO ARBITRATOR’S AWARD

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The Third Circuit Court of Appeals affirmed a district court’s ruling confirming an arbitration award in a labor dispute under a collective bargaining agreement. The Court reiterated the principles of “extreme deference” accorded to arbitrator decisions under the Federal Arbitration Act, and cited the arbitrator’s review of testimony, exhibits, briefs, oral argument and thoughtful seven-page memorandum of decision. The Court concluded by citing the district court’s statement that the case “is really nothing more than Tube City’s quibbling over the arbitrator’s interpretation of the CBA [collective bargaining agreement].” Tube City IMS, LLC v. United Steel, Paper and Forestry, Rubber, Mfg., Energy, Allied Industrial Service Workers Int’l Union, Local 5852-19, No. 10-1403 (3d Cir. Jan. 6, 2011).

This post written by John Pitblado.

MANIFEST DISREGARD OF LAW DOCTRINE NOT VIABLE IN THE EIGHTH CIRCUIT

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A U.S. district court in the Eighth Circuit has followed circuit precedent and rejected the “manifest disregard of the law” attack on an arbitration award. The court confirmed an award and denied a motion to vacate, holding that “it is well-established in the Eighth Circuit that the ‘manifest disregard of the law’ doctrine is no longer good law, and this Court is bound to follow the established law of the Eighth Circuit.” Jay Packaging Group, Inc. v. Mark Andy, Inc., Case No. 4:10MC00763 (USDC E.D. Mo. Jan. 21, 2011).

This post written by Michael Wolgin.