In current arbitration practice, a panel's issuance of a final award does not  necessarily mean the end of proceedings between the parties. One or both  parties may choose to go to court to  exercise rights under the Federal Arbitration Act, sometimes in an attempt  to vacate the award but, more often,  simply to have it confirmed so that it  has the force of a court judgment. The  rationale for invoking court assistance  at the end of a private, confidential  arbitration differs from case to case,  the most straightforward being to  facilitate collection of the award or  to have the ability to enforce compliance. Other considerations may also  come into play, but they should always  be informed by the fact that it is increasingly difficult to ensure that an  award will remain confidential once  the court's jurisdiction is invoked.

For at least the past decade (if not  longer), practitioners representing clients who elect to seek judicial  confirmation have been keenly aware  that filing a petition in court brings  with it the risk that the award may  become public knowledge, an outcome that is arguably at odds with  the reinsurance industry's tradition  of confidential and commercial dispute resolution. More often than not,  courts across the country will deny  requests to seal an award, unseal  awards sua sponte and even grant motions to unseal by third-party intervenors (usually another company with  exposure to the same claim or reinsurance contract). This last scenario may  be of particular concern to a cedent  who has "lost" an arbitration with one  reinsurer but still seeks to collect from  other reinsurers on the same claim.

With the unfavorable award made  public, those other reinsurers now  can attempt to introduce the decision  into the record in their own arbitration with the cedent and argue that  it should be given preclusive effect by  the arbitrators.

It is a debate unto itself whether this  new reality is a positive development— for example, by ensuring the same  "fairness" inherent in the judicial pro[1]cess by preventing a party from taking  multiple bites at the apple under the  same treaties for the same claim—or  just another example of how reinsurance arbitration has strayed from  its original aim of ensuring efficient,  businesslike, and (importantly) confidential dispute resolution. Whatever  one's view, parties and their counsel  should keep in mind all possible ramifications of simply filing a petition to  confirm an award (even if no action is  further taken in the proceeding), as recently seen in the Third Circuit.

The Penn National Award  and Unsealing

Earlier this year, a long-run[1]ning dispute between Pennsylvania National Mutual Casualty Insurance Company and one of its  reinsurers, Everest Reinsurance  Company, ended with the unsealing of an award from an arbitration to which Everest had not even  been a party. Everest was able to  obtain this result even though (1)  Penn National had withdrawn its  petition to confirm the award mere  days after filing and (2) the district  court had made no substantive decision based on the award or relied on it  in any way.

This article was published in the ARIAS-U.S. Quarterly on September 1, 2021. 


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