Reinsurance Focus

Recently, a Pennsylvania district court was asked to determine which of four arbitration panels should decide whether individual arbitration proceedings should be consolidated. As reported on in a prior posting (dated Oct. 26, 2006), the court previously held that Argonaut’s petition challenging Century’s attempt to force consolidated arbitration of multiple disputes was properly filed in Century’s home district. With the venue issue resolved, Argonaut filed a petition to compel Century to arbitrate multiple insurance claims in separate arbitration proceedings, and to dismiss the consolidated arbitration proceeding sought by Century. The parties agreed that the issue of whether arbitration proceedings should be individual or consolidated was a procedural question to be decided by the arbitration panel itself. The narrow question before the Court was which of the four arbitration panels was the appropriate body to determine the issue of consolidation.

Both parties advocated for a “first in time” rule, that is, that the first panel that was completely formed should decide the threshold question of consolidation. The parties disagreed, however, as to which of the panels was the first to be formed. The court recognized that the principles of efficiency strongly favored a single arbitration panel’s determination of whether consolidation of the claims was appropriate. However, persuaded by “the combination of statutory directives and case law together with the parties’ contractual agreement” the court concluded that all four arbitration panels should proceed to decide the issues before them. The court left open the options of either the parties or the four arbitration panels reaching an agreement on how the claims should be handled other than independently. Argonaut Ins. Co. v. Century Indemnity Co., Case No. 05-5355 (USDC E.D. Pa. Sept. 5, 2007).