“History Doesn’t Repeat Itself, But It Often Rhymes”
Panelists Michael Steinlage, a Partner with Larson King LLP, Andy Meerkins, a Partner with Foley & Lardner LLP, and Keith A. Dotseth, an ARIAS Certified Arbitrator presented at the April 2026 Chicago Regional Education Day on the topic of collateral estoppel. Particularly, the role collateral estoppel has played in insurance and reinsurance arbitrations and the circumstances under which collateral estoppel could apply to an arbitration award. Recent court decisions have raised new questions regarding the preclusive effect of arbitration awards and who gets to make decisions concerning preclusion. This panel of experienced practitioners examined the legal, contractual, and practical role of collateral estoppel in arbitration.
Collateral estoppel is a fundamental legal and equitable principle that operates to limit a party’s ability to relitigate an issue that was previously decided against that same party. Also called issue preclusion, the doctrine’s purpose is designed to promote judicial efficiency, protect parties from multiple lawsuits, and prevent inconsistent results by preventing any relitigation of an ultimate issue of fact.
While collateral estoppel has been raised and applied with regularity in courts, its role in reinsurance arbitrations has historically been less clear. This is due, in part, to the fact that reinsurance arbitrations are traditionally decided in private proceedings in which the arguments and awards are confidential. Also, the discretion that arbitrators are granted to decide matters based on industry custom and practice rather than strict application of law may contribute to its more limited role in reinsurance disputes.
Below are some of the highlights from the presentation:
- The common elements to establish collateral estoppel were discussed and explained. Clarification was imparted regarding the difference between res judicata, which applies to claims versus collateral estoppel, which applies to issues. The defensive use and offensive use of collateral estoppel was also examined.
- The panel reviewed recent decisions from the 6th and 7th Circuit. Amerisure Mutual v. Swiss Re involved the issue of whether a cedent can be collateral estopped by an arbitration award in a subsequent litigation with a different reinsurer. The 6th Circuit affirmed the District Court’s grant of summary judgment in favor of the different reinsurer, finding the cedent collateral estopped on a policy interpretation issue decided in the prior arbitration. The 7th Circuit decision in Nationwide v. Continental Ins. Co. determined the issue of who decides whether collateral estoppel applies – the Court or the arbitration panel? The holding in that case was that preclusion issues are to be decided by the arbitrators.
- Arguments for applying collateral estoppel in arbitration were examined such that it is consistent with the “honorable engagement” clause and is the primary means of enforcing finality. Likewise, it supports the goal of efficient and final arbitrations. Arguments against collateral estoppel in an arbitration setting take account of the arbitrator’s power to adjudicate disputes without regard to the strict rules of law. An overriding purpose of reinsurance arbitrations is to actually effectuate the general business purpose and get to the merits of the dispute between the parties. Preclusion does not allow the merits to be reached. Arbitration panels are now more likely to entertain applications for collateral estoppel.
- The question of whether collateral estoppel is procedural or substantive impacts the question of “who decides.” Courts have historically deferred to arbitration based on the FAA’s liberal policy favoring arbitration. The Supreme Court recently in Morgan v. Sundance stated that the policy of the FAA “is to make arbitration agreements as enforceable as other contracts, but not more so.” 596 U.S. 411, 418 (2022). This Supreme Court decision now opens the door on the procedural or substantive issue and whether the parties consented to have that issue decided by the arbitrators.
To watch the full session, this presentation is available now on AIRROC On-Demand.
