ARBITRATION COMPELLED IN TRENWICK REINSURANCE DISPUTE
A federal district court granted a motion by reinsurer Unionamerica Insurance Company to dismiss a lawsuit seeking enjoin the allegedly “illegal arbitration” of a reinsurance dispute between Unionamerica and Trenwick American Reinsurance Corp.; the court instead granted Unionamerica’s motion to compel the arbitration. Unionamerica had demanded that Trenwick participate in arbitration concerning Unionamerica’s claim that Trenwick failed to make payments due under a reinsurance assumption agreement. In response, Trenwick filed a lawsuit seeking to enjoin such an arbitration.
The court rejected Trenwick’s suit and compelled arbitration. Although the court found it had jurisdiction to decide threshold questions of arbitrability, it also determined that Unionamerica – a nonsignatory to the reinsurance agreement – could invoke the arbitration provision because of “cut-through” language allowing Unionamerica to rely on all terms of the agreement. The court further determined that the parties’ claims and defenses fell within the arbitration provisions’ scope, which encompassed “any” dispute arising out of or in connection with the agreement. Finally, the court held that Trenwick’s statute of limitations defense was not justiciable in court, but would need to be decided by the arbitrator. Trenwick American Reinsurance Corp. v. Unionamerica Insurance Co., Case No. 3:13cv94 (USDC D. Conn. July 12, 2013).
This post written by Brian Perryman.
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