There have been a number of recent cases on whether petitions in federal court to confirm or vacate reinsurance arbitration awards  should be sealed. The trend in many courts appears to be against granting the sealing request, but some courts do not consider a petition to confirm to be the type of case that merits public disclosure.

In a recent case in New York federal court, the judge confirmed the award, but as requested by the parties asked them to brief the issue of why he should grant their joint request to seal the record. The judge mentioned that in the Southern District of New York, public disclosure is presumed and sealing requests are rarely granted. Those briefs are due on February 23 or so and we should see a decision shortly thereafter.

In Clearwater Ins. Co. v. Granite State Ins. Co., No. 15-cv-165 (RJS), 2015 U.S. Dist. LEXIS 13792 (S.D.N.Y. Feb. 5, 2015), the court granted the unopposed petition to confirm an arbitration award. Both sides asked the judge to seal the record stating that because confirmation is a ministerial act, the case did not implicate the public’s right to access to documents underlying the award.

The parties noted a recent Illinois federal court case that said the presumption in favor of public filing is not triggered by a petition to confirm an arbitration award. Nationwide Mut. Ins. co. v. Continental Cas. Co., No. 14-cv-844 (EEB) (N.D. Ill. Jun. 3, 2014). The New York federal court relied on the precedent in its own district and stated that the parties must overcome the strong presumption of public access to judicial documents, including the adjudications of substantive rights. Because no facts or arguments justifying sealing were presented, the court ordered the briefing (limited to 15 pages).

So what’s the big deal? Isn’t it an open secret that even with confidentiality orders and agreements in nearly every reinsurance arbitration the results “find” there way out to the industry?

The big deal is the tension between the presumption of public access to court records and the general notion that reinsurance arbitration is a private and confidential proceeding outside of the public view. That latter position is bolstered by the confidentiality typically agreed upon by parties to reinsurance arbitrations. It is rare today to see an arbitration that does not use the ARIAS·U.S. form of Confidentiality Agreement.

When parties go to court to confirm or vacate or modify an arbitration award, they are asking a public court to participate in what was a private and confidential proceeding between the parties. Doesn’t the public therefore have the right to access the petition and other papers filed with the application for confirmation or vacatur?

The argument against public access is that a petition to confirm is merely ministerial, because under the Federal Arbitration Act a court must grant the petition and confirm the award unless it concludes that there is a basis to vacate, modify or correct the award. As we all know, the bases to vacate or modify an arbitration award are very limited. Where there is no opposition to the petition to confirm, there is no real public issue and the parties are merely seeking a federal judgment to enforce their private arbitration award.

Given the trend in the courts to refuse to grant the requests to seal the papers on a petition to confirm an arbitration award, parties need to think about whether going to court to confirm provides them with advantages that outweigh the possibility that the public (i.e. other parties who may have disputes with them) will obtain unfettered access to what was supposed to be confidential materials.

The Clearwater case may provide us with some judicial analysis to help parties make that determination.