A dispute arose between Certain Underwriters at Lloyd’s London and R.A. Wilson & Associates, Ltd concerning an insurance policy. After a lawsuit was filed, the court ordered the parties to proceed to arbitration based upon the insurance policy’s arbitration agreement.
The arbitration agreement required that each party appoint an arbitrator, and that the two arbitrators “shall appoint a third.” In the event that the arbitrators failed to agree, then either the arbitrators or the parties could apply to the “appointer for the appointment of a third arbitrator.” The agreement defined the “appointer” as the “President of the Chartered Institute, or Vice President of the Institute if the President is unavailable,” but did not specify what method the “appointer” (or party arbitrators) should use to make the selection.
After the parties were unable to agree on a method of selecting the third arbitrator, R.A. Wilson commenced an action pursuant to 9 U.S.C. § 5 requesting that the court “establish a method for the appointment of the third-arbitrator.” The court denied R.A. Wilson’s request, finding that the arbitration agreement gave the party arbitrators and/or appointer the discretion to use their professional judgment in deciding upon an appropriate method for choosing the third arbitrator. The court noted that it did not matter whether the agreement adequately defined that method. As such, the court was required under the Federal Arbitration Act to enforce the clause as written, and any intervention under 9 U.S.C. § 5 was improper.
Click here to review a copy of the court’s decision, captioned R.A. Wilson & Assoc. Ltd. v. Certain Interest Underwriters at Lloyd's London, No. 10-CV-2322 (E.D.N.Y. 2010).