Arbitration Award

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7^th Circuit Court of Appeals

Case Name: Continental Casualty Company v. Certain Underwriters at Lloyds of London,

Case No.: 20-2892

Officials: WOOD, HAMILTON, and KIRSCH, Circuit Judges.

Focus: Arbitration Award

It would be difficult to overstate the strength of the Supreme Court’s support for arbitration when the parties have elected to resolve their disputes using that mechanism. The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., embodies a “national policy favoring [arbitration] and plac[ing] arbitration agreements on equal footing with all other contracts.” Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581 (2008) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006)).

Arbitration and adjudication in court differ in a number of meaningful ways. One central distinction relates to the exceedingly narrow scope for judicial review of a final arbitral award. Whereas a decision by a court of first instance is usually subject to de novo review for questions of law, and more deferential, yet still meaningful, review for questions of fact, arbitration awards are largely immune from such scrutiny in court. The FAA spells out a narrow set of reasons that may support a court’s confirmation, vacatur, or modification of an award, see 9 U.S.C. §§ 10–11, and the Supreme Court held that these “provide exclusive regimes” for review. Hall Street Assocs., 552 U.S. at 590.

Recognizing this unfavorable terrain, Continental Casualty Co. and Continental Insurance Co. (collectively, “Continental”) nevertheless seek in this appeal to set aside an arbitral award. The award arose out of a dispute between Continental and Certain Underwriters at Lloyds of London (“Underwriters”) over the way in which reinsurance furnished by Underwriters should be calculated and billed. As required by contract, Underwriters submitted this matter for arbitration, and the arbitral panel (“the Panel”) ruled in their favor. At Continental’s request, the Panel later issued a supplemental award, called here Interim Order No. 3, in which it clarified how its primary award applied to certain future billings. Convinced that the arbitrators had strayed beyond the scope of the agreement, Continental brought this suit to set aside Interim Order No. 3, as well as a Post-Final Award Order in which the Panel denied Continental’s motion for reconsideration of the interim order.

If our job were to assess the merits of Continental’s position in the same way that we approach ordinary appeals, it is possible that we might come to a different conclusion. But we are constrained by the FAA, as interpreted by the Supreme Court. We therefore affirm the district court’s order confirming the primary arbitral award, Interim Order No. 3, and the Post-Final Award Order denying Continental’s motion to reconsider.

Affirmed

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Derek A Hawkins is Corporate Counsel, at Salesforce.