ONLY ARBITRATOR, NOT FEDERAL COURT, CAN DETERMINE PRECLUSIVE EFFECT OF CONFIRMED ARBITRATION AWARD
In a case of first impression in the First Circuit, Employers Insurance Company of Wausau and National Casualty Company (“Wausau”), two of three reinsurers under identical agreements with OneBeacon American Insurance Co. (“OneBeacon”), petitioned a federal court for a declaration that a prior arbitration award between One Beacon and the third reinsurer had preclusive effect over OneBeacon’s subsequent demand for arbitration against Wausau. The district court dismissed the action, agreeing with OneBeacon that a determination of the preclusive effect of the arbitration award itself was arbitrable. On appeal, Wausau argued that because the federal court confirmed the prior arbitration award, thus affording that award the same “force and effect” as any other federal court judgment pursuant 9 U.S.C. §13, then only the federal court could determine its preclusive effect. The First Circuit rejected this argument, noting that an arbitration award is distinct from the federal judgment confirming the award. Because a federal court’s review of an arbitration award does not include a review of the merits or legal basis of the award, which would be required in order to determine its preclusive effect, the First Circuit concluded that such a determination fell outside the purview of the federal court. Employers Insurance Company of Wausau and National Casualty Company v. OneBeacon American Insurance Co., et. al., Case No. 13-1913 (1st Cir. Feb. 26, 2014).
This post written by Leonor Lagomasino.
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