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Reinsurance Arbitration: A Discussion of Neutral Panels and Reasoned Awards

By John M. Nonna and Marc L. Abrams
October 08, 2004

Traditionally, arbitration panels in the reinsurance industry have been tripartite panels with each party choosing its own arbitrator and the party-appointed arbitrators choosing a neutral umpire. Courts have recognized that party-appointed arbitrators may be advocates for the appointing party. Sphere Drake Ltd. v. All Am. Life Ins. Co., 307 F.3d 617, 620 (7th Cir. 2002). (“In the main party appointed arbitrators are supposed to be advocates.”) While the industry has become accustomed to the system of advocate arbitrators and there are those who champion this system, there has been a growing consensus that neutral panels may be preferable to advocate arbitrators.

Another tradition in reinsurance arbitration has been the practice of issuing awards that are not reasoned. This practice has come into question.

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