New York Federal Court Allows Final Arbitration Award to Remain Sealed

Reinsurance arbitrations are typically confidential and generally proceed with a confidentiality agreement in place protecting all arbitration information, including the final award, from disclosure. This is in contrast to legal proceedings, including proceedings collateral to arbitrations, where generally the public’s right to judicial documents outweighs the parties’ privacy. In recent years, when parties to reinsurance arbitrations have gone into court to confirm, enforce, modify or vacate arbitration awards, courts have been reluctant to keep the final awards under seal. In fact, some parties have used this trend as a litigation strategy to “unseal” confidential final arbitration awards by going to court to confirm an award where there was no indication that the losing party would not comply with the award.

Bucking that trend, a New York federal court recently allowed the final arbitration award to remain sealed. Is the tide turning?

In West Coast Life Insurance Co. v. Swiss Re Life & Health America, Inc., No. 21 Civ. 5317 (VB) (S.D.N.Y. Jun. 28, 2021), the parties concluded a life reinsurance arbitration over whether the reinsurer could increase reinsurance rates. A final arbitration award was issued and both parties filed the award with the federal court under seal and moved to confirm the award.

Of course, the court confirmed the award as there was no objection and both parties agreed to confirmation. But that is not the issue here. Both parties requested that the final award be sealed in the first instance and remain sealed.

The court noted that generally arbitration awards filed with a petition to confirm that award are considered “judicial documents that directly affect [] the Court’s adjudication of that petition,” see Aioi Nissay Dowa Ins. Co. v. ProSight Specialty Mgmt. Co., 2012 WL, 3583176, at *6 (S.D.N.Y. Aug. 21, 2012), and therefore sealing of the award requires that the movant demonstrate that “sealing is necessary to preserve higher values.” Id. 

Here, however, the court decided otherwise. The court’s rationale for keeping the award sealed is set forth below:

[B]ecause the parties jointly request that the Court confirm the final award, the final award itself does not “directly affect the Court’s adjudication of that petition.” Id. Thus, the final award is not a “judicial document” subject to a presumption of access. Moreover, the Court is persuaded by the parties’ assertion that the final award should be sealed because it is subject to a confidentially agreement and contains confidential, sensitive, and proprietary information that could potentially prejudice the outcomes of related legal disputes not before the Court as well as prejudice the parties in future competitive business negotiations.

Obviously, those who wish to keep reinsurance arbitration awards confidential are overjoyed with this decision given the many other cases that have gone the other way. This outcome, however, likely will not hold up where there is a dispute about the award or where one party is opposing confirmation.