When the party-arbitrators in this reinsurance arbitration reached an impasse over umpire appointment, an Illinois federal district court stepped in to appoint one in response to an action brought by the cedent pursuant to Section 5 of the Federal Arbitration Act. The reinsurer argued that because the cedent was U.S.-based, the branch issuing the reinsurance agreement was in the U.K., and the reinsurer’s parent company was in Australia, the umpire must be from a neutral country based on international arbitration rules drawn from either the United Nations Committee on International Trade Law or the American Arbitration Association.
Rejecting the reinsurer’s contention, the court found no basis in the parties’ reinsurance agreement to apply these international rules, which expressly provided that the arbitration panel was to consider Illinois law to the extent that it looked to any substantive law. Finding no “substantial proof” that an umpire from the U.S. would somehow be biased against the reinsurer, it held that someone from the U.S. would be “best qualified” to serve as the umpire in this dispute. The court then proceeded to review each umpire candidate’s qualifications based on “questionnaires,” and appointed the one candidate who had had no prior involvements with any of the parties, counsel, or party-arbitrators.
Continental Casualty Co. v. QBE Insurance, 03 C 2222, 2003 U.S. Dist. LEXIS 17826 (N.D. Ill. Oct. 6, 2003).