August 21, 2020 Articles

The Southern District of New York Denies Request to Vacate AAA Insurance Coverage Award

The petitioners claimed, in part, that arbitrators were biased because they accepted appointments to other arbitrations involving the respondents.

By Erin Gleason Alvarez

In a recent ruling, the U.S. District Court for the Southern District of New York refused to vacate an arbitration award where the petitioners claimed, in part, that arbitrators were biased because they accepted appointments to other arbitrations involving the respondents. Two arbitrators were offered additional appointments on separate arbitration panels involving the respondents. The district court determined there was no evidence of partiality because the two arbitrators were mutually selected by the parties in accordance with the “strike and rank” method of selection under the rules of the American Arbitration Association (AAA).

In Galilea, LLC v. AGCS Marine Insurance Co., Liberty Mutual Insurance Co., and Starstone National Insurance Co., 427 F. Supp. 3d 518 (S.D.N.Y. 2019), the petitioners alleged that the arbitration award should be voided because (1) the arbitrators exceeded their power by proceeding in New York rather than in Montana, by conducting the arbitration under the rules of the International Centre for Dispute Resolution (ICDR), and by exercising jurisdiction over the petitioners’ counterclaims; (2) the arbitrators exhibited manifest disregard for the law by admitting the insurance application into the proceeding; and (3) there was evident partiality on the part of two of the arbitrators.

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