Park Avenue Life Ins. Co. v. Allianz Life Ins. Co. of N.A., No. 19-cv-1089 (JMF) (S.D.N.Y. Sept. 25, 2019).

Under the FAA, a court must grant an order seeking confirmation of an arbitration award unless the award is vacated, modified or corrected. 9 U.S.C. § 9. But, where the award is ambiguous, it should be remanded to the arbitrators for clarification.

The dispute was over a life reinsurer’s obligations to pay for costs and claims arising out of an agreement with regulators to pay death benefits that would escheat to the government after a Death Master File search indicated that the insured person died. By majority, the arbitration panel mostly found for the reinsurer. In a paragraph addressing the reinsurer’s continuing obligations, the majority made the following pronouncement:

[The reinsurer] shall continue to be obligated to indemnify [the cedent] for all death benefits paid under the terms of the [policies] covered by the Coinsurance Agreement. Notice of any deaths can arise pursuant to claims made by Policy owners or beneficiaries, or by way of periodic searches of the Death Master File or any other death data base search tool by [either party].

The reinsurer argued that the award required reimbursement of only those death benefit payments that arise from claims made by beneficiaries. The cedent argued that the award continued to require the reinsurer to reimburse payments that arise from claims made either by designated beneficiaries or by escheatment.

The court found that the award was susceptible of two meanings and was unable to say that one or the other of the two interpretations presented was definitively correct. The court remanded the matter back to the arbitration panel to clarify certain questions addressing escheatment claims, but suggested that the panel should “broadly aim to underscore the meaning and effect of the award so that the court will know exactly what it is being asked to enforce.” 

Notably, and consistent with the recent trend in many courts, the court denied the parties’ request to keep the arbitration award and related materials under seal. The court held that there was no basis to keep any of the documents at issue in this application under seal and rejected the argument that the confidentiality agreement could in any way bind the court (this point was conceded). The court ordered the unsealing of the entire record (which included the award).