Petitioner Sun Life Assurance Company of Canada (“Sun Life”) moved to confirm an arbitration award against Respondents Liberty Mutual Insurance Company, Golden Eagle Insurance Corporation and San Diego Insurance Company. The award was rendered by a panel of three actuaries and required Sun Life to pay a specific commutation amount to Respondents pursuant to certain reinsurance contracts.

The Respondents sought a stay of the action to confirm the award, and moved to compel arbitration on the grounds that an issue remained for the arbitration panel to decide before the commutation process could be finalized, which would result in termination of the reinsurance contracts. Specifically, Respondents argued that Sun Life owed interest on the commutation figure, and initiated arbitration to resolve this issue.

In granting the Respondents’ motion to stay and compel, the Court rejected Sun Life’s argument that the reinsurance contracts at issue were terminated (and thus arbitration was improper) when it paid Respondents the commutation amount determined by the panel. The Court found that whether the reinsurance contracts were terminated, and whether the arbitration clauses in those contracts still applied, was an issue solely for the panel to determine.

To review a copy of the Southern District of California’s Order in Sun Life Assurance Co. of Canada v. Liberty Mutual Ins. Co., et al., No. 09-cv-2133 (2009), click here.