Reinsurance Focus

Trustmark Ins. Co. brought an action against Clarendon Nat’l Ins. Co. and Clarendon America Ins. Co. (“Clarendon”) seeking a preliminary injunction barring any arbitration between Trustmark and Clarendon with Clarendon’s appointed arbitrator on the panel. In a decision issued ten days after a similar decision in favor of Trustmark in another case in the same district (see our February 15, 2010 post), a different judge rejected nearly identical arguments made by Trustmark. Trustmark argued that Clarendon’s arbitrator would necessarily breach a confidentiality agreement entered into by the parties and arbitrators relating to a prior arbitration between the parties (see our December 9, 2009 arbitration roundup). Clarendon named the same arbitrator it used in the first arbitration for the second, unrelated arbitration. Trustmark argued this would require the arbitrator necessarily to import information from the first arbitration into the second, in violation of the confidentiality agreement. The court rejected Trustmark’s argument, finding that a potential future breach of the confidentiality agreement by Clarendon’s arbitrator was not sufficient ground for a preliminary injunction barring the proceeding, and that any challenge to an arbitrator’s conduct or impartiality must be made post-award. It seems questionable whether this result can be harmonized with the prior ruling in favor of Trustmark on the basis that in the earlier decision there was an actual breach by the party-appointed arbitrator of the confidentiality agreement, not a hypothetical future breach. The issue now seems a good candidate for review by the Seventh Circuit Court of Appeals. Trustmark Ins. Co. v. Clarendon Nat’l Ins. Co., No. 09-c-6169 (N.D. Ill. Feb. 1, 2010).

This post written by John Pitblado.