Two recent cases illustrate the courts’ view that procedural matters concerning the arbitration process are confined to the arbitrators’ bailiwick.
In Allstate Insurance Co. v. Liberty Mutual Insurance Co., the U.S. District Court for the District of Massachusetts denied reinsurer Allstate’s motion to compel two separate arbitrations. Instead, the court granted ceding insurer Liberty Mutual’s cross-motion to compel Allstate to select an umpire to complete an arbitration panel that, in turn, would decide how many arbitration proceedings should be held. Allstate, having filed two arbitration demands based on distinct issues, sought to compel two separate arbitrations. The court denied Allstate’s request, reasoning that the court’s job was to determine the validity and scope of the arbitration provision, while the arbitrators should decide procedural questions related to the arbitration, including whether to consolidate the separately requested proceedings.
The U.S. District Court for the Southern District of New York likewise held, in Munich Reinsurance America, Inc. v. National Casualty Co., that the interpretation of a treaty’s “act-as-one” provision is a procedural issue for the arbitrators to decide. National Casualty was one of several reinsurers providing reinsurance to Munich Re under a single treaty. National Casualty and another reinsurer, Wausau, denied claims submitted by Munich Re. The treaty provided that disputes would be arbitrated and that if more than one reinsurer was involved in the same dispute, all reinsurers would act as one party. Wausau refused to submit to arbitration, however, and National Casualty took the position that the treaty’s “act-as-one” clause prohibited the arbitration from going forward without Wausau as a party. Munich Re successfully moved to compel. The court held that whether the “act-as-one” provision prohibited an independent arbitration against National Casualty was a threshold procedural issue for the arbitrators to decide.