Reinsurance Focus

This petition for vacatur followed the last of three arbitrations between American Centennial Insurance Company, a company with its principal place of business in Delaware, and Global International Reinsurance Company, a Barbados company, pursuant to a reinsurance agreement between the parties. While in runoff, ACIC changed its ownership structure through a series of reorganizations and acquisitions. In response, Global sought a reduction of its reinsurance obligations as provided for by their agreement. In the third arbitration, an award was issued in favor of Global. The losing party filed a petition to vacate the award, but the United States District Court for the Southern District of New York confirmed the arbitration panel’s order. Despite the losing party’s argument that the arbitrators had exceeded their authority and displayed manifest disregard for the law and the parties’ agreement (which had an honorable engagement clause and also required the panel to provide reasons for its order), the court held that the panel had acted within its “wide discretion.” Furthermore, the court found that, in discussing the terms of the agreement, the parties’ dispute, the findings of the earlier arbitration panels, and the rationale for awarding less than was sought, the panel went further than necessary in explaining its award since the agreement did not request detailed factual findings and conclusions of law. Thus, the petition to vacate the award was denied and the award was confirmed. American Centennial Insurance Co. v. Global International Reinsurance Co., Case No. 12 Civ. 1400 (USDC S.D.N.Y. July 9, 2012).

This post written by Brian Perryman.

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