Reinsurance Focus

On August 3, 2009, we reported on a district court vacating its prior order that arbitration must commence anew and reappointing an arbitrator to the panel after the arbitrator’s health improved. Insurance Company of North America and INA Reinsurance (collectively, “INA”) appealed and also successfully moved for a stay pending the appeal in the Second Circuit, as we reported on April 15, 2010.

Now, the Second Circuit has issued its decision affirming the district court’s grant of Public Service Mutual Insurance Company’s motion for relief from the judgment based on newly discovered evidence that an arbitrator who had resigned was, in fact, able to rejoin the arbitration panel prior to the district court’s decision on whether to convene a new panel or order a replacement arbitrator. According to the Second Circuit, the general rule that a new panel should be convened if a vacancy arises on an arbitral panel due to the death of an arbitrator prior to the rendering of an award does not apply to a vacancy created by a resignation. The Second Circuit further found that the district court’s decision either to reappoint the arbitrator who had resigned, or, in the alternative, to direct INA to appoint a replacement was proper. Among other things, that decision avoided the waste entailed in convening a new panel after the remaining arbitrators had already engaged in significant proceedings in the case. Insurance Co. of North America v. Public Service Mutual Insurance Co., No. 09-3640 (2d Cir. June 23, 2010).

This post written by Brian Perryman.