Parties to reinsurance arbitrations often file in court to confirm (or vacate) arbitral awards. Some file even though the adverse party has complied with the arbitration award. When doing so, they invariably invoke the confidentiality agreement in the proceeding to seal the award and other related documents used in the petition to confirm. Must the court confirm and must the court seal the documents? We have seen this movie before.
In General Re Life Corp. v. American General Life Insurance Co., No. 23-cv-05219(ALC) (S.D.N.Y. Mar. 28, 2024), the reinsurer brought a petition to confirm an arbitration award arising out of a Yearly Renewable Term (“YRT”) reinsurance rate increase dispute and both parties sought to seal exhibits and portions of the petition to confirm.
The cedent, rather than pay the increased reinsurance rates ordered by the arbitration panel, opted to recapture the business. It challenged the court’s jurisdiction to hear the petition for lack of jurisdictional amount because the recapture negated the monetary amount of the award.
The court refused to seal the documents (including the final award), accepted jurisdiction and confirmed the award. In so doing, the court found that all the documents for which sealing was sought all directly affected the court’s adjudication of the petition. As to the parties’ confidentiality agreement, something that is agreed to in nearly every reinsurance arbitration, the court noted that “Courts in this District have consistently held that Parties’ interest in a confidentiality agreement enacted between them is not sufficient on its own to overcome the interest of public disclosure and transparency.” Further the court held that “[t]he Parties do not unseat this Court’s widely held view here as their confidentiality agreement “itself recognizes that the interest in confidentiality is not absolute [because] disclosure is permitted when necessary to confirm . . . an award.” (citations omitted). In a footnote, the court stated that “the contents of the arbitration information are judicial documents upon which this Court bases its rulings here such that the constitutional and federal common law public interest applies.”
The court rejected what it described as the parties’ “vague, general and undifferentiated claims of impending harm” and stated that “[t]he Final Award and arbitral communications are highly relevant to the dispute here not only because they form the foundation of the Court’s decision on whether to confirm the Award but also because they are integral to the Court’s adjudication of Respondent’s jurisdictional claims.” The motions to seal were denied.
On the jurisdictional argument raised by the cedent, the court held that the amount in controversy requirement was satisfied as the final award and the reinsurer’s demand in arbitration exceeded $75,000. The court noted that ‘[t]he mere fact that the Arbitration Panel granted an alternative award under which Respondents could elect to recapture the reinsurance contracts does not drive the award amount to $0.” The court dismissed the jurisdictional challenge and confirmed the award (there was no argument to vacate the award for any substantive reason).
