Two Recent Cases on Umpire Neutrality Issues

A recurring issue in some recent reinsurance arbitration proceedings is the apparent inability of the parties to select neutral umpires to oversee the proceedings.  With a large number of disputes adjudicated by a relatively small number of arbitrators, it is becoming increasingly difficult for parties to select a slate of ‘disinterested’ umpire candidates as required under certain reinsurance agreements.  Generally, one party challenges the other party’s proposed slate of umpires on the grounds that the umpires have a conflict of interest and/or cannot be a true neutral in the arbitration proceedings.

For example, in the case Everest Reinsurance Company v. Century Indemnity Company, the reinsurer (Everest) challenged the reinsured’s (Century) proposed slate of umpires on the grounds that the umpires had participated in a number of prior arbitrations involving Century.  Since these umpires had significant prior experience with the cedent, Everest was concerned about possible conflicts of interest and bias related issues.  Everest went to court, alleging that Century had refused to resolve conflict of interest issues related to the appointment of a neutral umpire.   According to Everest, Century refused to participate in or agree to any of the other umpire selection methods proposed to ensure a fair process.  Everest argued that the court should select a neutral umpire because there was a lapse by Century in the umpire selection process.  Although the judge dismissed the action in May of this year, (without prejudice for lack of jurisdiction), it left open the possibility for Everest to refile the action in state court.

Similarly, in the case Seaton Insurance Company v. Century Indemnity Company, the reinsurer (Seaton) leveled similar charges against Century’s proposed slate of umpires.  Seaton claimed that Century had failed to select a slate of disinterested umpires as required under the reinsurance agreements. It also argued that there was a lapse in the umpire selection process and the court had the authority to appoint a neutral umpire.  Although the parties entered into a stipulation to dismiss the action in June 2011, the dismissal was without prejudice, leaving open the possibility for further litigation.

With such a small pool of reinsurance arbitrators, parties are often hard pressed to find umpires who have not been involved in one way or another in disputes involving the same parties or disputes dealing with similar issues.  In light of this reality, there is always the possibility that a party or both parties will challenge a proposed slate of umpires on the grounds that the umpires have a potential conflict of interest or are biased.   Where parties are unable to resolve the umpire selection issues themselves, they often turn to the courts for resolution.  Unfortunately, by turning to the courts, the parties may jeopardize the benefits traditionally inherent in the arbitration process such as confidentiality, privacy and expediency.

For more information about these cases and the issues it raises, please do not hesitate to contact us at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .  For your reference we have included a copy of Everest Re's Petition to Appoint Umpire and Seaton's Opposition to Century's Motion to Dismiss and Memorandum of Law.

This update is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This update may be considered advertising material under applicable state laws.