How Courts Select Umpires Where The Reinsurance Contract Gives Courts The Power

Author:Mr Larry Schiffer
Profession:Squire Patton Boggs LLP
 
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Some reinsurance contracts have a provision in the arbitration clause that allow the parties to ask a court to appoint the umpire if the parties cannot agree on the selection of one. A court's analysis of the candidates and whether they are qualified or should be disqualified from consideration as an umpire is always interesting for those who know the candidates and their backgrounds. It is a bit like vetting umpire questionnaires and ranking candidates, except that the court actually picks one.

In Enstar EU Ltd. v. National Union Fire Insurance Co. of Pittsburgh, PA., No. 654089/2018 (N.Y. Sup. Ct., N.Y. Co. (Feb. 19, 2019), the parties reached an impasse in an arbitration over asbestos-related claims ceded to three casualty excess reinsurance contracts. The contract provided that if the parties could not agree on an umpire they could apply to the court to appoint the umpire. The decision goes into detail about the candidates proposed, which is in and of itself interesting when you know these people, but there were some other interesting things as well.

The judge, in a footnote, commented that “[i]n the future, the court urges the parties to consider diversity as a factor in selecting arbitrators and umpires.” Why was the comment made? The judge is a woman and all the candidates the judge reviewed were white men. A diverse woman was initially proposed, but her candidacy, along with another white male, was not presented in the motion. This is certainly an issue the industry struggles with and one that ARIAS is trying to address.

One of the candidates was knocked out because of expert witness work for the reinsurer some years before. Because accumulation of asbestos exposures was an issue in the case, the prior expert testimony aboutone event language compelled the court to conclude that this candidate wasnot entirely neutral as to this arbitration. Another candidate was knocked out because he was a party-appointed arbitrator in the same case as the expert witness because his vote (voted against the expert's interpretation)may be a predictor creating an...

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