Reinsurer’s Petition To Compel Arbitration Stayed Where Cedent Claims Issue Is Already Pending In State Court

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A federal district court has stayed a case where Nationwide Mutual Insurance Company petitioned to compel arbitration of a dispute that its cedent Liberty Mutual Insurance Company claims was already adjudicated by an arbitration panel and confirmed by a state court judgment. Nationwide sought to compel arbitration on the issue of whether Liberty Mutual breached its obligations under an access to records provision of the parties’ reinsurance treaties. In support, Nationwide cited the breadth of the treaties’ arbitration clauses and the strong federal policy favoring arbitration. Liberty Mutual countered that the very issue Nationwide sought to arbitrate was already decided as part of a panel’s decision regarding Nationwide’s payment obligations under the treaties and that Liberty Mutual had already moved to enforce a state court judgment confirming that very arbitration award. The court presumably agreed with Liberty Mutual that the identical claims were at issue before the state court, a fact which Nationwide disputed, and that the federal action should therefore be stayed in deference to the state court’s pending decision to enforce its own judgment under the Colorado River abstention doctrine, or in the interests of comity and sound judicial administration. Nationwide Mutual Insurance Co. v. Liberty Mutual Insurance Co., Case No. 1:13-CV-12910 (USDC D. Mass. Feb. 21, 2014).


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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