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For many decades, the reinsurance marketplace has adopted
arbitration as the preferred mode of dispute resolution. The
expressed goals of arbitration are familiar — timely and
efficient resolution of disputes by a panel of experts familiar
with the intricacies of the business. One way that the Federal
Arbitration Act (FAA) facilitates those goals is by promoting
finality. The grounds for vacating an award pursuant to the FAA are
highly limited and difficult to sustain. See 9 U.S.C.
§ 10(a).
Despite those obstacles, over the last several years it has
become commonplace for losing parties to reinsurance arbitrations
to challenge the award in court. Thus, even after a lengthy
arbitration, the parties now often engage in months, or even years,
of appellate litigation before learning whether an award will
stand.
