When Petitions to Vacate and Confirm and Motions to Seal Collide

Most reinsurance arbitrations proceed under a confidentiality order or agreement. When the arbitration is over, if a party goes to court to confirm or vacate, a motion to seal is often made in an effort to comply with the parties’ agreement on confidentiality. But it is up to the court whether to seal.

In Tyson International Co., Ltd. v. Partner Reinsurance Europe, SE, No. 1:25-cv-03152 (ALC) (SDNY Mar. 31, 2026), after a long and complicated arbitration involving a captive insurance company’s dispute with its reinsurer over settlement of a substantial fire loss in a poultry rendering facility and the valuation of the property, the arbitration panel issued an award in favor of the cedent but at an amount substantially lower than the amount sought from the reinsurer. Accordingly, the cedent sought to vacate that portion of the award concerning the valuation issue, or alternatively, vacating the entire award and remanding it back to the panel. The reinsurer sought to confirm. Both parties sought to seal various portions of the submissions.

In a separate decision, the court denied the petition to vacate the award and granted the petition to confirm the award. The court found that the cedent did not allege a statutory basis for vacatur and rejected the claims of manifest disregard of the law and that the panel exceeded its authority. Notably, the court quoted the honorable engagement language in the arbitration clause in support of its denial of the motion to vacate.

As to the requests to seal, the court granted the motions in part and denied the motions in part. The court noted that both parties conceded that the documents they sought to seal were judicial documents, which puts the burden on the proponents to show that sealing is necessary to preserve higher values.

The court categorized the exhibits into three categories: (1) the contracts/policies in the underlying dispute; (2) transcripts and opinions from the arbitration; and (3) internal correspondence. This was in addition to the petitions and memoranda of law.

Confidentiality was touted as a key protection of arbitration and the basis for sealing. Also that sealing was appropriate because of proprietary business information in the documents. The court agreed that the documents in category 1 should remain sealed, but denied the request for the other two categories because they contained large portions of non-commercial and non-confidential information. Thus, the court ordered the parties to file redacted portions of the documents in the last two categories.

Fifth Circuit Definitively Rejects Manifest Disregard As a Ground for Vacatur of an Arbitration Award

The grounds for vacating an arbitration award under the Federal Arbitration Act (“FAA”) are limited. For decades, however, parties have raised manifest disregard of the law as a ground for vacatur. Many courts have limited or rejected manifest disregard as a basis to vacate an arbitration award. In a recent decision, the Fifth Circuit Court of Appeals in a non-reinsurance case has relegated manifest disregard to the dustbin of history.

In United States Trinity Energy Services, L.L.C. v. Southeast Directional Drilling, L.L.C., No. 24-10823 (5th Cir. Apr. 28, 2025), parties to a pipeline construction contract arbitration cross-petitioned to confirm and vacate a final award. The Texas District Court denied the petition to vacate and granted the petition to confirm. The losing party appealed to the 5th Circuit on this basis:

Trinity Energy appeals on the grounds that “the arbitration panel
exceeded its authority and acted in manifest disregard of the law.” The
contractor specifically contends the arbitration panel “failed to harmonize
numerous subcontract provisions limiting Trinity’s obligation to pay
Southeast’s standby costs.”

In affirming the order confirming the arbitration award, the circuit court flatly rejected manifest disregard of the law as a basis for vacating an arbitration award under the FAA. The court stated what we all know: vacating an arbitration award happens only in very unusual circumstances and that judicial review of an arbitration award is extraordinarily narrow.

The court noted that only limited circumstances allow for vacatur of an arbitration award. Indeed, stated the court, Section 10 of the FAA provides the exclusive statutory grounds. In addressing the argument that the arbitration panel exceeded its powers, the court held as follows:

The final award reveals the arbitration panel reviewed the evidence presented, considered the effects of various provisions in the subcontract, and concluded that Trinity Energy
owed Southeast Drilling for stand-by costs. Vacatur is therefore unjustified under § 10(a)(4) because Trinity Energy failed to show the arbitration panel exceeded its powers by disregarding the subcontract entirely. The parties bargained for this dispute resolution arrangement, and we conclude this arbitration panel’s “construction holds, however good, bad, or ugly.” (citations omitted).

Getting to manifest disregard, the court noted that manifest disregard is not one of the statutorily enumerated grounds for vacatur and articulated the appellant’s argument as follows:

Although “manifest disregard of the law” is not a freestanding ground for vacatur of an arbitration award in our circuit (citation omitted), Trinity Energy alleges that manifest disregard of the law remains viable “as an independent ground for review or as a judicial gloss on the enumerated grounds for vacatur set forth at 9 U.S.C. § 10.” In other words, Trinity Energy essentially ignores its inapplicability as an independent basis while simultaneously attempting to subterfuge this non-statutory ground for vacatur within § 10(a)(4).

This the court rejected, holding that “[o]ur court has never held that “manifest disregard of the law” is a basis to establish that arbitrators “exceeded their powers” under § 10(a)(4).”

In short, we cannot substitute a court panel’s judgment in place of an arbitration panel’s decision by recognizing “manifest disregard of the law” as a basis for vacatur embedded within § 10(a)(4).

In the Fifth Circuit, any attempt to use manifest disregard as a basis to vacate an arbitration award will fail. Of course, this applies to arbitration awards rendered in reinsurance disputes as much as any other commercial arbitration.

Don’t Cry For Me – Reinsurance Judgment Against Argentina Vacated

Legacy reinsurance liabilities against certain non-US reinsurers that have gone into insolvency or have been absorbed by non-US governments remain an issue for many US ceding companies. Some US ceding companies have fought long and hard to win arbitrations, enter judgments and then try to enforce those judgments against the non-US reinsurers or their governments. Success in doing this has been up and down. A recent case goes into great detail in addressing one cedent’s journey to enforce judgments against Argentina.

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Without a Contractual Relationship, Claims Against Reinsurers Fail

To sustain a claim against reinsurers there has to be a contractual relationship between the party making the claim and the reinsurers. That is the prevailing rule in all jurisdictions, subject to rare exceptions. Nevertheless, policyholders, when left without a recovery from their insurer, will try to make out a claim directly against their insurer’s reinsurers. Typically, this effort meets with little success as we described in a blog post back in 2020.

Earlier this year, in a complicated credit insurance/reinsurance transaction involving a special purpose vehicle, a policyholder left without an insurance recovery tried again to recover its loss from its insurer’s reinsurers. The result was the same.

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Georgia Supreme Court Reverses and Remands Appellate Court Order Reversing Order Confirming Arbitration Award

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There is a whole world of automobile service contracts sold by car dealers that are sometimes “reinsured” by affiliated reinsurers. Many disputes have arisen out of these deals and many of these disputes are arbitrated.

In a recent case in Georgia, an arbitration award in an auto service contract dispute was issued and confirmed by the court. On appeal, the court of appeals vacated the arbitration award based on manifest disregard of the law. The Georgia Supreme Court took the case on certiorari and reversed the court of appeals and remanded the matter.

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Arbitrator Disclosure and Vacating Awards

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The issue of whether an arbitration award can be vacated based on bias or prejudice because of an alleged non-disclosure by the arbitrator has long plagued commercial arbitration. Many arbitration codes and organizations promote robust and fulsome disclosures by arbitrators, yet there are always occasions where the losing party claims that the arbitrator was biased or prejudiced and that the alleged nondisclosure was at the root of the problem.

The courts, however, have found that to vacate an award, there has to be a showing of actual bias or prejudice that affects the award. The courts have also found that while more forthcoming disclosure should have occurred, the alleged nondisclosure, by itself, is often not close enough to support vacatur of the award.

In a recent case, this scenario played out again in the context of a property appraisal under an insurance policy.

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The Limits on Challenging an Arbitration Award in an Insurance Dispute

Losing parties in arbitrations often seek to vacate the arbitration award claiming that the arbitrator was guilty of misconduct or manifestly disregarded the law. Convincing a court to vacate an arbitration award is not easy and is not typically successful. Under US law, particularly the Federal Arbitration Act (“FAA”), there is no appeal from an arbitration award and the bases to vacate the award are narrow and limited. See FAA, § 10.

In a recent Summary Order, the Second Circuit Court of Appeals, reiterated these principles, although the court did grant some relief to the party seeking vacatur.

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