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Note: As a result of an adverse arbitration award, Sompo Japan Insurance, Inc. (Insurer) posted an LC in the amount of US$6,100,000 in favor of Global Reinsurance Corporation - U.S. Branch (Reinsurer). When Reinsurer drew down approximately US$3,500,000, Insurer protested and sought arbitration as to the propriety of the drawing. Reinsurer filed an action in the US federal courts seeking an order requiring Insurer to replenish the LC. When the court dismissed the case for lack of jurisdiction, Reinsurer initiated an arbitration which was consolidated with Insurer's arbitration demand. Both parties sought summary judgment, and the tribunal ordered Insurer to post an LC for its portion of outstanding losses within thirty days. On Insurer's motion for reconsideration, the panel confirmed its decision.

Seeking to enforce the interim order, Reinsurer filed a petition in the U.S. federal courts for an order confirming the tribunal's order. Insurer moved to dismiss the petition and sought modification on the ground that the order was fundamentally unfair.

The U.S. District Court for the Southern District of New York, Daniels, J., granted Reinsurer's motion, concluding that Insurer had received a fair hearing, and ordered it to post an LC pursuant to the arbitration interim order. The court noted that "the panel advised [Reinsurer] that it should not draw down the LOC entered in the interim order without the panel's prior approval."

[JEB/az]

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