When a party receives and arbitration demand and there is a dispute about whether there is an agreement to arbitrate between the parties, participating in the early stages of the arbitration may be problematic for a subsequent effort to dispute arbitrability. This issue can arise when there has been an assignment or transfer of a reinsurance agreement or the right to the reinsurance receivables to an assignee who seeks to arbitrate against the original counterparty. In a recent case, a New York state court had to address these issues.
In Employers Insurance Company of Wausau v. Dominion Insurance Receivable Inc., No. 653628/2022 (N.Y. Sup. Ct, N.Y. Co. Jun. 21, 2023), the assignee of reinsurance recoverables obtained from the Liquidator of an insolvent company brought an arbitration demand against the insolvent company’s retrocessionaire to recover recoverables the assignee claimed was owed. The retrocessionaire, while reserving all rights, participated in the early stages of the arbitration, including whether to consolidate the disputes arising from several agreements and provisionally appointing an arbitrator subject to its reservations over consolidation.
Some five months after the arbitration demand, the retrocessionaire petitioned to stay the arbitration because of language in the assignment agreement that gave exclusive jurisdiction to the court over disputes. The assignee countered with a motion to compel arbitration under the retrocessional agreement.