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December 2019 Reinsurance Newsletter

In our December 2019 Reinsurance Newsletter we discuss non-signatories being bound by arbitration clauses, a case involving who decides arbitrability questions, a functus officio case, a remand to an arbitration panel to clarify an arbitration award, and an update on TRIA.  A number of other case developments are digested as well.  Please enjoy.  Feedback is always welcomed.… Continue Reading

Another Federal Court Denies Application to Seal Arbitration Award

Nearly every US reinsurance arbitration includes a Confidentiality Agreement.  The vast majority of those confidentiality agreements are based on the ARIAS•U.S. Confidentiality Agreement and Protective Order model form.  Most confidentiality agreements provide that disclosure may be made “as is necessary in connection with court proceedings relating to any aspect of the arbitration, including but not limited … Continue Reading

Reinsurance and the Death Master File

In a traditional life insurance and reinsurance relationship, a life insurance company issues a policy to a policyholder and reinsures the policy (usually via a block of business consisting of the same or similar policies) with its reinsurer either by coinsurance or on a yearly renewable term basis (or otherwise).  When the insured person dies, … Continue Reading

Pre-Answer Security and Preclusion Based on Arbitral Decision — Who Decides?

In reinsurance disputes where one party is insolvent or has financial difficulties, the other side often demands security.  Where a non-domiciliary is involved, some states have pre-answer security requirements, which have been held to apply in reinsurance arbitrations.  In a procedurally complicated case, where an arbitration panel issued a security award and then stayed the … Continue Reading

Liquidator’s Motion to Dismiss Petition to Confirm Reinsurance Arbitration Award Denied

In some states receivers may bring claims inside or outside the receivership court, including reinsurance arbitrations. In other states receivership proceedings end the ability of either party to bring a reinsurance arbitration outside of the liquidation court.  In a recent case, a receiver of an insolvent cedent commenced a reinsurance arbitration outside of the receivership … Continue Reading

Partial Final Award Not Ripe For Confirmation

Under Section 9 of the Federal Arbitration Act, a court must confirm an arbitration award when a timely request is made unless there is a basis to vacate or modify the award.  But a court has no ability to confirm an arbitration award unless the award is considered a “final” award.  The law in virtually … Continue Reading

Second Circuit Affirms Exception to Functus Officio Rule in Arbitration

In 2017, we discussed a reinsurance case where the district court articulated an exception to the functus officio rule that allows for clarification of an arbitral award.  The Second Circuit has now affirmed that decision and joins the Third, Fifth, Sixth, Seventh and Ninth Circuits in allowing this exception.… Continue Reading

Arbitration Award Clarification Confirmation

Generally, when an arbitration panel issues a final award the panel is “functus officio“; its powers expired and its duties relieved because it has finished its work and there’s no more to be done.  Sometimes, however, an arbitration panel will retain jurisdiction for a period of time after the final award is issued in case … Continue Reading

Relationship? What Relationship?: Evident Partiality and Arbitrator Disclosure

Arbitrators have a special responsibility to disclose all relevant relationships to the parties so that any potential conflicts can be vetted. There are some obvious relationships that need to be disclosed like prior employment by one of the parties. There are other relationships that may be disclosed out of an abundance of caution, but typically … Continue Reading

Ex Parte Communications and Vacating an Arbitration Award

When a reinsurance arbitration is conducted under non-neutral rules or practices, when and how ex parte communications are allowed to take place between a party’s counsel and a party’s party-appointed arbitrator are important items to resolve at the organizational meeting. A typical, but not universal, formulation is to cut-off ex parte communications when the first pre-hearing … Continue Reading

Confirming a Reinsurance Arbitration Award After Payment Is Made

The Federal Arbitration Act provides that “[i]f the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to … Continue Reading

American Rule Prevails on Petition to Vacate Arbitration Award

Some contracts, including insurance and reinsurance contracts, include provisions providing that the successful party’s damage award will include all costs of the suit or arbitration, including attorney fees. This type of clause modifies the traditional default American Rule of costs and fees, in which each litigant pays its own attorney fees, win or lose. What … Continue Reading

Confidentiality in Arbitration

Much has been said over the years about the benefits of arbitration as a private, confidential mechanism for resolving business disputes. For decades the courts, especially the federal courts, have touted the confidential nature of private commercial arbitration. Courts regularly defer to arbitration and there is a clear federal policy favoring arbitration. So why when … Continue Reading

Too Little, Too Late: Post-Arbitration Award Frustrations

Armchair quarterbacking or second-guessing an outcome after an event has occurred is a skill displayed by many. The same is true following a reinsurance arbitration award. It is very easy to second-guess the arbitration award or wish that some evidence or testimony was presented differently. Anyone who has ever had an arbitration award that was … Continue Reading

The Honorable Engagement Clause and Flexibility In Arbitration Award Relief

Those of you steeped in reinsurance know about the honorable engagement clause. It’s a provision found in the arbitration clause of some (mostly older) reinsurance contracts that gives guidance to the arbitration panel on how they should construe the disputed reinsurance contract. I use the term “guidance” loosely here because a typical honorable engagement clause … Continue Reading

Who Decides the Preclusive Effect of a Prior Arbitration Award?

What happens when one party loses an arbitration and then commences a second arbitration against the same counterparty over similar issues? Can the party that won the arbitration and then had the award confirmed in federal court obtain an injunction precluding the first party from moving forward with the second arbitration? Apparently not.… Continue Reading
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