Reinsurance Focus

There have been a number of decisions recently addressing different issues with respect to the confirmation or vacation of arbitration awards:

• Modifying a final award: There have been two decisions under the functus officio doctrine, which addresses whether an arbitrator exceeds his/her powers by making substantive changes to the merits of an award. In Transtech Industries, Inc,. v. A & Z Septic Clean, No. 05-5246, the Third Circuit held that modifications to an award were permissible since they “clarified” ambiguity resulting from the initial award stating “relatively little” with respect to an issue. In Eastern Seaboard Concrete Constr. Co. v. Gray Constr. Inc., Case No. 08-37 (USDC D. Me. Apr. 18, 2008), a magistrate judge held that an arbitrator exceeded his authority when he modified the substantive portion of an earlier award to address an “additional” issue. The line between clarifying an award that does not address an issue and changing an award to initially address an issue may be a fine line.
• Scope of arbitration issues: The Third Circuit held in Greenwich Services, Inc. v. District 1199C, No. 06-4951 (3d Cir. Apr. 11, 2008) that an arbitrator has the authority to interpret and determine the scope of the issues in the arbitration, based upon the submissions of the parties and the applicable contract. Finding that the arbitrator's determination drew its essence from the contract, the court affirmed the confirmation of the award.
• Timing of seeking vacation of award: In Employers Ins. Co. of Wausau v. Paladin Reinsurance Corp., Case No. 08-42 (USDC S.D.N.Y. Feb. 21, 2008), the court confirmed an arbitration award finding that the claims asserted with respect to 19 facultative reinsurance certificates were time barred, when the party seeking to vacate did not make the request within the time allowed by the Federal Arbitration Act. The Petition to Confirm the award sets forth pertinent background facts.
• Merits of awards: In Delgado v. A. Korenegay Senior House HDFC, Case No. 07-7761 (USDC S.D.N.Y. Mar. 21, 2008), the court affirmed an award over a number of complaints relating to procedure and evidence, finding that the arbitrator had found that the party seeking to vacate the award was not a credible witness, which is not a basis for vacating an award.

This post written by Rollie Goss.