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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
1996 LC CASE SUMMARIES Misc. No. 88-0600, 1996 U.S. Dist. LEXIS 14318 (E.D. Pa. Oct. 1, 1996)
Topics:
Arbitration.
Type of Lawsuit:
Reinsurer brought motion to vacate arbitration award and beneficiary cross-motioned to enforce the award.
Principals:
Plaintiff/Reinsurer/Applicant: Meadows Indemnity Co., Ltd.;
Defendant/Insurer/Beneficiary: Arkwright Mutual Insurance Co.
Underlying Transaction:
Reinsurance agreement.
LC:
Standby. Silent as to whether subject to UCP.
Procedural History:
The United States District Court for the Eastern District of Pennsylvania, Bechtle, J., denied the applicant's motions to vacate an arbitration award.
Rule:
Arbitration panel did not overstep its power by requiring the applicant to post a letter of credit to cover the amount of the dispute prior to any hearings.
Article
Factual Summary: Under a reinsurance contract, the reinsurer refused to increase the amount of the letter of credit to cover the insurer's increased reserves, claiming that the insurer miscalculated the amount.
The parties took their dispute to arbitration where the panel, in an award which did not state its grounds, required that the reinsurer post a letter of credit as prehearing security whereupon the reinsurer moved to vacate the order. The court denied the motion.
Legal Analysis:
1. Arbitration: Rejecting the applicant's argument that the arbitration panel exceeded its power in ordering the security, the court concluded that there was a rational basis for the award in the reinsurance agreement, and the award was not in manifest disregard of it. Thus, the award met the test under the controlling Federal Arbitration Act.
©1997 INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE
COPYRIGHT OF THE INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE
The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.