The underlying arbitration involved the nonpayment of certain asbestos-related claims ceded by Westchester Fire to Lloyd’s under multiple reinsurance contracts. Lloyd’s sought to arbitrate the disputes under each reinsurance contract, while Westchester Fire moved to consolidate the arbitrations into a single proceeding. The United States District Court for the District of New Jersey held that the question of whether there should be consolidated or separate arbitration proceedings concerns matters of contract interpretation, not arbitrability, and thus was an issue for the arbitrators to decide . In affirming the District Court’s decision, the Third Circuit relied upon two Supreme Court decisions which, while not specifically addressing consolidation, held that questions of arbitral procedure and contract interpretation should be resolved by arbitrators, and not courts.
The issue of whether multiple disputes between related parties should be consolidated often arises in reinsurance arbitrations. While the case law in this area is far from settled, courts in the First, Seventh, Ninth and now Third Circuit, as well as a District Court in the Second Circuit, have held that the consolidation question should be answered by arbitrators and not the courts.
Click here to read the Third Circuit’s opinion.
