Ronald S. Gass
Reinsurance and Insurance Arbitrator and Umpire
Reinsurance and Insurance Dispute Resolution Services Consultant

Party Must Be "Aggrieved" by an Alleged Failure, Neglect or Refusal of an Adverse Party to Arbitrate Before a Federal Court Has Jurisdiction to Compel Arbitration under the Convention Act

In a decision construing the interrelationship between the Federal
Arbitration Act ("FAA") requirement that a party must be aggrieved by an adverse party's alleged failure, neglect or refusal to arbitrate and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("Convention Act"), a Connecticut federal district court ruled that it lacked subject matter jurisdiction and that the cedent's petition to compel arbitration must be denied in the absence of sufficient factual allegations demonstrating an actual failure to arbitrate. The cedent brought a declaratory judgment action against over 100 Lloyd's syndicates seeking to compel them to arbitrate a $35.5 million claims payment dispute arising from a series of blanket casualty reinsurance treaties written between 1976 and 1983. The cedent's petition alleged "upon information and belief" that one or more of the reinsurers did not "intend" to arbitrate and would refuse to arbitrate in response to its arbitration demand. The demand's stated 30-day response deadline had apparently been extended to an unknown date, and the reinsurers' time to respond had not yet expired.

Rejecting the argument that the FAA's "aggrieved party" requirement was in conflict with and, thus, inapplicable to actions brought under the Convention Act, the court held that the facts alleged in the cedent's petition were insufficient to demonstrate that the reinsurers had taken the requisite "unequivocal position" that they would refuse to arbitrate. Consequently, the court was without a justiciable case or controversy to decide and dismissed the cedent's petition without prejudice.

Hartford Accident & Indem. Co. v. Equitas Reinsurance Ltd., Civil No. 3:01CV99(AVC), 2002 U.S. Dist LEXIS 7951 (D. Ct. Mar. 5, 2002).


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