Arbitrability of Preclusive Effect of Prior Confirmed Award
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In a commercial arbitration dispute, the United States Court of Appeals for the First Circuit affirmed the district court’s decision concerning the authority of an arbitral tribunal to determine the preclusive effect of a prior award, even though the award was confirmed by the federal court. Emp’rs Ins. Co. of Wausau v. OneBeacon Am. Ins. Co., 744 F.3d 25 (1st Cir. 2014).
Background and Procedural History
Two insurance companies, Employers Insurance Company of Wausau and National Casualty Company, filed a petition for declaratory relief regarding the preclusive effect of a prior arbitration confirmed by a federal court order. The plaintiffs contended that the question of preclusion is a matter for the federal court. The defendants, OneBeacon American Insurance Company and other insurance companies, filed a motion to dismiss and a cross-petition to compel arbitration. The district court granted the defendants’ motion to dismiss, and the First Circuit affirmed.
During a 20-year period, between 1966 and 1986, one of the defendants, OneBeacon, had a program to enter into reinsurance contracts (MLEC Program). Employers Insurance Company of Wausau entered into agreements with the defendants in 1973 and 1974 that were identical to the MLEC Program agreements between the defendants and another company, Swiss Re, not a party to this court proceeding.
In December 2007, the defendants commenced an arbitration proceeding under their MLEC agreements with Swiss Re. Swiss Re was successful, and the District Court of Massachusetts confirmed the award.
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