Arbitration clauses in reinsurance contracts typically recognize either expressly or impliedly that an arbitration proceeding has a beginning and an end. The process usually begins with a demand for arbitration and the selection of an arbitration panel, and ends with the arbitrators holding a hearing on the merits and issuing a final award. At that point the parties generally expect that the arbitrators will step down, and that any future dispute will be the subject of a new arbitration proceeding, perhaps with a different panel.
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.
Tags: 10(a)(4), AIRROC Matters, Association of Insurance and Reinsurance Run-Off Companies, Federal Arbitration Act, General Re Corp., issues submitted, Judge Scheindlin, KX Reinsurance Co., KX Reinsurance Company v. General Reinsurance Corp., Peter A. Scarpato, Philip J. Loree Jr., retain jurisdiction, submission, Vacate