On August 8, 2022, an Illinois federal court affirmed an arbitral award of pre-hearing security, over the objection that a pre-hearing security is not a “final award” within the meaning of the FAA, 9 U.S.C. § 10(a)(4). Am. Zurich Ins. Co. v. Sun Holdings, Inc., No. 22 C 2744, 2022 WL 3154213 (N.D. Ill. Aug. 8, 2022).
American Zurich Insurance Company (Zurich) provided insurance to Sun Holdings, Inc. (Sun). Their agreement included a paid deductible program with an arbitration clause adopting the American Arbitration Association’s (AAA) Commercial Arbitration Rules and limiting any award to compensatory damages. A dispute arose, and Zurich sought damages in excess of $1 million.
Arbitration commenced with the AAA, who appointed a three-member panel. The panel issued orders directing Sun to pay $1,001,945.60 in pre-interest security, which Sun did not do. Zurich filed a petition in the Northern District of Illinois to confirm the award of pre-hearing security; Sun cross-moved to vacate the award.