Certain Underwriting Members Of Lloyd’s Of London v. Florida Department Of Financial Services

892 F.3d 501 (2nd Cir. 2018)

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Nature of the Case

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Facts

ICA insures workers compensation claims in the construction industry. Lloyds provide ICA with second and third layer reinsurance. Their agreements contain an arbitration clause requiring that disputes be adjudicated by an arbitration panel consisting of three members: one party-appointed arbitrator for each party, and the neutral umpire. The only contractual qualification is that the arbitrators 'be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters.' Lloyd declined an ICA claim. ICA demanded arbitration, and it appointed Alex Campos as its arbitrator, and the two party-appointed arbitrators selected Ben Hernandez as a neutral umpire. Each arbitrator was called upon to disclose pre-existing or concurrent relationships with a party. ICA was represented at the disclosure meeting by Gary Hirst, Chairman and Chief Investment Officer, and arbitration counsel. Campos disclaimed any appreciable link to ICA. Campos's pre-existing and concurrent relationships with ICA's representatives were considerably more extensive than Campos disclosed. The panel favored ICA's interpretation and granted ICA net damages of over $1.5 million. Lloyds moved to vacate the Award on several grounds, including 'evident partiality' on the part of Alex Campos, manifest disregard of the law, and prejudicial procedural misconduct. The district court granted the motion to vacate the award. Campos's 'undisclosed relationships' with ICA representatives were found to be 'significant enough to demonstrate evident partiality.' ICA appealed.