Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

Opinions on confirmation of arbitration awards

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Four recent non-reinsurance opinions have applied accepted principles in the confirmation of arbitration awards:

  • A party may not successfully contend that an arbitration award entered pursuant to what is referred to as the “baseball arbitration” process is “manifestly irrational and prejudicial” when the parties agreed to use that process.  The Court also found that a claim that the award was the result of corruption, fraud or undue means failed because the proof of fraud was vague, rather than clear and convincing, and there was no nexus demonstrated between the alleged fraud and the basis for the award.  U.S. Steel Mining Co. v. Wilson Downhole Services, Case No. 02-1758 (USDC W.D. Pa. Oct. 5, 2006)
  • An arbitration award was confirmed where a panel granted a Respondent summary judgment, holding that the doctrines of res judicata, collateral estoppel and waiver all precluded the panel from deciding the merits of the Petitioner's claims.  Sherrock Bos., Inc. v. DaimlerChrysler Motors Co., Case No. 06-351 (USDC M.D. Pa. Oct. 12, 2006)
  • An arbitration award was confirmed, rejecting a contention that the award failed to draw its essence from the contract at issue, since the arbitrator's award arguably construed the contract.  Appalachian Regional Healthcare v. Ky. Nurses Assoc., Case No. 06-150 (USDC E.D. Ky. Oct. 13, 2006)
  • An arbitration award was vacated on the basis that it failed to draw its essence from the underlying contract, where an award contravened express contractual limits on the authority of the arbitrator.  The Court rejected the suggestion that it was merely disagreeing with the award.  Truck Drivers Local Union No. 164 v. Allied Waste Systems, Inc., Case No. 05-73509 (USDC E.D. Mich. Oct. 16, 2006).

Liability limit in excess policy applies to following form reinsurance certificate

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The Second Circuit has found that an aggregate liability limit in excess insurance policies applied to facultative reinsurance certificates which contained a “follow the form” clause. The parties had a dispute as to how the aggregate limit should be interpreted for purposes of the reinsurance. The Court affirmed a District Court Order ruling that the clear definition of the aggregate limit in the underlying policy controlled, as a matter of contract interpretation. Travelers Casualty & Surety Co. v. ACE American Reinsurance Co., Case No. 05-6189 (2nd Cir. Oct. 18, 2006).

Re Risk blog provides news and commentary on the London markets

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Readers of this blog may be interested in exploring Re Risk, a blog relating to reinsurance maintained by Jolyon Patten, a solicitor specializing in reinsurance and insurance law with the UK Halliwells law firm. Re Risk aims to be a rolling and relatively informal round-up of news and commentary about the London insurance and reinsurance market. It provides a great variety of information and opinions relating to the London markets in an entertaining and informative format.

Links added to sidebar

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A new section has been added to the sidebar of Reinsurance Focus, providing quick access to selected Internet links described in various posts. There are three parts to the links section: Blogs; Organizations; and Topics. The Blogs section contains links to other blogs related to reinsurance, arbitration or insurance matters. The Organizations section contains links to such organizations as ARIAS, RAA and the NAIC's Reinsurance Task Force. The Topics section contains links to the NAIC's Finite Reinsurance resources and alternative risk transfer resources. Additional links will be added to these sections. I hope that this section will be useful in helping you find other helpful content on the Internet.

Court holds that Petition challenging arbitration does not have to be filed in District in which contract states that arbitration shall be held

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Argonaut Insurance and Century Indemnity had 19 disputes encompassing multiple reinsurance agreements, which contained different arbitration site provisions. Argonaut filed a Petition in Century's home District challenging, inter alia, Century's attempt to force consolidated arbitration of the disputes. The Court has held that venue for the Petition was appropriate under the general venue statute, 28 U.S.C. section 1392, in the District in which Century maintains its home office, despite a provision in the applicable reinsurance agreement providing that arbitration of disputes under that particular reinsurance agreement should occur in New York City. Argonaut Insur. Co. v. Century Indemnity Co., Case No. 05-5355 (E.D. Pa. Aug. 28, 2006). Century contended that under section 4 of the Federal Arbitration Act, 9 U.S.C. section 4, venue for the action should have been in New York City.