Around the time we published that post, my friend, colleague and fellow LinkedIn Commercial and Industry Arbitration and Mediation Group member, Theresa Hajost, told me that she had an article in the works that would treat in a very comprehensive fashion the issue of arbitrator authority to retain jurisdiction.  (For those of you who do not already know her, Theresa is a partner at the Washington, D.C. office of Halloran & Sage LLP, where she practices insurance and reinsurance litigation and arbitration.)  I thought that was a great idea and told her so. 

Theresa recently published the article, Does An Arbitrator’s Retention of Jurisdiction After The Issuance of a Final Award Subject That Award To Vacatur?,  in ADR Choices (Volume I Issue 10) (published by DRI).  We highly recommend it as it surveys and discusses cases from all over the country on the issue of an arbitrator’s authority to retain jurisdiction, organizes those cases into helpful categories and offers  insightful comments on the subject.  It is an excellent resource for anyone who is interested in arbitral power, or who is confronted with a scenario where there is a question concerning an arbitration panel’s authority to remain constituted post award.  You can read the article using the link Halloran & Sage has kindly provided here.

Great job, Theresa!

The presentation was designed to provide reinsurance professionals with some insights concerning the differences between U.S. and English reinsurance arbitration practice and procedure.  The principal theme was that U.S. arbitration law is designed principally to enforce the parties’ arbitration agreement as written, placing it on the same footing as all other contracts, while English arbitration law favors party automony, but also imposes a greater number of policy-based norms regulating arbitration, which limit to some extent the parties’ ability to structure their dispute resolution procedure exactly as they see fit.

We explored the application of this general rule and its exceptions  to four areas of arbitration practice: 

1. The parties expectations of neutrality;
2. Consolidation of arbitration proceedings;
3. Contractual choice-of-law; and
4. Court support and interference, with an emphasis on challenging arbitration awards.  

For example, we explained how the two bodies of law treat differently the expectations of neutrality applicable to party-appointed and third arbitrators.  While U.S. law permits vacatur of arbitration awards for “evident partiality” of the arbitrators, what constitutes impermissible ”evident partiality” is defined principally by the parties’ agreement.   That is why, absent contract langugage to the contrary, party-appointed arbitrators in U.S. reinsurance arbitrations may act as advocates of a sort, and why third arbitrators or umpires are not held to the same standards as federal judges, and may have institutional predispositions based on their experience in the market. 

But English law imposes on arbitrators — including party-appointed arbitrators — the same strict standards of neutrality applicable to English judges.  And, while there is some degree of leeway built in to compensate for the realities of the marketplace (which might burden an arbitrator with some degree of  institutional predisposition), parties cannot bargain away their right to impartial decision makers, party-appointed or otherwise. 

The talk was well attended by a number of market participants and we received a lot of positive feedback.  Costas and I will in all likelihood give one or more future talks on subject, perhaps in a U.S. forum.  

We would like to take this opportunity to thank Holmans solicitor Rupert Warren and marketing-director Melanie McBride for their hard work in helping Costas and me prepare for the presentation and for handling the arrangements.

If you are interested in learning more about the differences between English and U.S. arbitration law, practice and procedure, last year Costas and I wrote a two-part article entitled “Arbitration Practice and Procedure in U.S. and U.K. Reinsurance Disputes:  Is the Grass any Greener on the Other Side of the Pond?,” which was published in AIRROC Matters, the newsletter of the Association of Insurance and Reinsurance Run-Off Companies.  The article appears in Vol. 4, No. 1, at 24 (Spring ed.  2008) (Part I) (here) and Vol. 4, No. 2, at 28 (Fall ed. 2008) (Part II) (here).

But what happens if the arbitrators declare that they will retain jurisdiction until such time as both parties agree that they step down?   That is what happened in KX Reinsurance Co. v. General Reinsurance Corp., 08 Civ. 7807 (SAS), 2008 WL 4904882 (S.D.N.Y. Nov. 18, 2008) (Scheindlin, J.) (the “KX Re decision” or “KX Re”), and while courts rarely vacate awards on the ground that the arbitrators exceeded their authority, Judge Shira A. Scheindlin held that the panel exceeded its authority when, after resolving all the issues the parties submitted, the panel nevertheless retained jurisdiction.  

I represented KX Re in that case and wrote an article about the decision, which was recently published in AIRROC Matters, the newsletter of the Association of Insurance and Reinsurance Run-Off Companies.   If you are at all interested in the power of arbitrators to retain jurisdiction after issuing an award, we recommend that you read the article, which appears on page 26 of the Spring 2009 issue of AIRROC Matters, here. 

Hat tip to Peter A. Scarpato, Editor-in-Chief of AIRROC Matters, and to the AIRROC Publications Committee, for producing an excellent Spring 2009 issue, which is full of interesting articles on various topics pertinent to reinsurance and insurance run-off.

http://www.airroc.org/files/AIRROC_Spring_2009.pdf.

Peter Scarpato (website here), Editor-in-Chief of AIRROC Matters, wrote an interesting article on AIRROC’s new Dispute Resolution Procedure for Small Claims. The procedure is designed to provide a cost-effective alternative to a full-blown reinsurance arbitration for resolving relatively small-dollar reinsurance disputes. Peter’s article, which is highly recommended, appears on page 9 of the newsletter.   (Not too long ago, Peter submitted to the Forum an excellent guest post on mediation of reinsurance disputes, introduction to the post available here, and post available here.)

I sense on the part of many some dissatisfaction with certain aspects of reinsurance arbitration practice. One popular complaint is cost — not only the cost of legal services, but arbitrator fees. Tied into cost is time — most reinsurance attorneys and arbitrators charge by the hour, and reinsurance arbitrations can be as lenghty, or nearly as lengthy as court proceedings. In some cases, they are more lengthy.

When the amount at stake is tens or hundreds of millions of dollars, then the cost/value ratio may not be that high, but when the value of the claim goes down, the cost/value ratio tends to go up (even though the costs are lower from a dollars and cents perspective).  

What AIRROC (website here) has done is devised an alternative procedure featuring expedited proceedings, a $150 per hour cap on arbitrator fees, and a single arbitrator. The procedure (which, of course, is voluntary) may well provide a useful alternative to a full-blown arbitration for claims whose dollar value is small enough to fall within its scope. 

We’d  be interested in what others think about the procedure.  In addition, we’d be interested in hearing people’s thoughts on whether the procedure might provide a workable blueprint for other industry small-claims procedures.