Publications

(Article from Insurance Law Alert, February 2017)

For more information, please visit the Insurance Law Alert Resource Center.

Affirming a New York federal district court decision, the Second Circuit ruled that an umpire-arbitrator did not demonstrate “evident partiality” requiring vacatur of the awards.  National Indem. Co. v. IRB Brasil Reseguros S.A., 2017 WL 421944 (2d Cir. Jan. 31, 2017).

In this reinsurance arbitration, IRB petitioned to vacate certain arbitration awards issued against it on the basis of arbitrator partiality.  IRB argued that the umpire was not impartial because (1) he refused to withdraw after IRB objected to his service as a party-arbitrator in another matter on behalf of Equitas, an entity that IRB claims is effectively identical to National Indemnity; and (2) he accepted an appointment as Equitas’ party-arbitrator in a second arbitration while the present arbitrations were pending.  The district court disagreed and granted National Indemnity’s petition to confirm the awards.  The Second Circuit affirmed.

Under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, a court must confirm an award unless it finds a ground for refusal specified in the Federal Arbitration Act.  The FAA permits vacatur of an award “where there was evident partiality or corruption in the arbitrators.”  The court reasoned that the umpire’s work as a party arbitrator on behalf of Equitas does not amount to “evident partiality.”  Even assuming that Equitas and National Indemnity are corporate affiliates, the court held that this relationship standing alone is insufficient to establish partiality.   The court also noted that the umpire was not alleged to have any personal or business relationship with National Union or Equitas.  Finally, the court emphasized that the umpire had ultimately voted against Equitas in the other arbitration and has also accepted arbitrator appointments “against” National Indemnity-reinsured parties, like Equitas.