Confirming an arbitration award is straightforward, but what about confirming an arbitration award in a yearly renewable term life reinsurance dispute even after the business is recaptured?
In General Re Life Corp. v. American General Life Insurance Co., No. 24-CV-2089 (VEC) (S.D.N.Y. Jun. 18, 2024), the parties arbitrated a yearly renewable term (“YRT”) reinsurance premium increase dispute. A final arbitration award was issued in favor of the reinsurer. Instead of paying the reinsurance rate increase, the cedent recaptured all the policies. That would seem to end the matter.
Nevertheless, the reinsurer sought to confirm the final award in court under section 9 of the Federal Arbitration Act (“FAA”). The cedent did not object to confirmation, but argued that confirmation was unnecessary because of the recapture.
In granting the petition to confirm, the court noted that under the FAA, an arbitration award must be confirmed upon request of one of the parties unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of the FAA. Here, because all the statutory requirements had been met (the reinsurance contract had an arbitration clause that specified an award could be confirmed in court, the petition was made within one year of the award, jurisdiction was proper in the Southern District of New York, and the award was not modified or vacated), the court was required to confirm the final award. As the court stated: “[t]he FAA mandates that courts proceed with confirmation unless a basis for modification or vacatur exists, and Respondent has not moved to vacate or modify the award.”
There is a bit of a trend in parties seeking to confirm arbitration awards even though the adverse party has paid the award or, in this case, recaptured the policies. There are legitimate reasons to do so but some are using confirmation to do an end-around confidentiality. The bottom line, however, is that the courts have no discretion to deny confirmation if all the statutory requirements are met.
