Confirming a Reinsurance Arbitration Award

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Reinsurance arbitration awards, like most commercial arbitration awards, are subject to confirmation in the courts. This turns the final arbitration award into a court judgment ripe for enforcement if necessary. This is nothing new and when there is no opposition to the petition to confirm there is no mystery as to the result. While the odd case does exist where the court will not confirm an arbitration award, generally an unopposed confirmation will be granted. So why talk about this then? Because sometimes it is good to revisit basic rules and concepts. That’s what a federal court did recently in confirming an unopposed reinsurance arbitration award.

In AIU Insurance Co. v. Bothina International Insurance Co. Ltd., No. 21-cv-5164 (VEC) (S.D.N.Y. Aug. 2, 2021), an arbitration panel issued a final award in favor of the cedent concerning the payment of asbestos-related losses. The cedent filed a petition to confirm the award and the reinsurer did not oppose the petition.

In confirming the award, the court took the time to outline the basic tenets of confirmation under Section 9 of the Federal Arbitration Act. It is a worthwhile refresher. The court noted that an unopposed petition to confirm is treated like a motion for summary judgment. Unless the undisputed facts fail to show that the movant is entitled to judgment as a matter of law, the petition must be confirmed. Confirmation is required unless the award is vacated, modified or corrected. The petition also must be filed within the one-year time period from issuance of the final award. The parties’ arbitration agreement must also provide that a judgment may be entered on the arbitration award by a specific court (see FAA § 9). As long as there is at least barely colorable justification for the award, the award will be confirmed.

Finding that the cedent met all the conditions, the award was confirmed and judgment was entered.

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