Century Indemnity Co. v. Certain Underwriters at Lloyd’s, London
3d Cir. (Penn), October 15, 2009
This matter involves the appeal of the District Court’s Order granting defendant’s motion to compel arbitration of a disputed claim based on a set of reinsurance agreements. The Court of Appeals was asked to decide whether the parties had entered into a valid arbitration agreement such that the District Court properly compelled plaintiff to arbitrate its dispute arising from the retrocessional agreements between plaintiff and defendant.
Before compelling a party to arbitrate pursuant to the Federal Arbitration Act, a court must determine that (1) there is an agreement to arbitrate and (2) the dispute at issue falls within the scope of that agreement. The presumption in favor of arbitration applies to the second factor but does not apply to the first factor.
In determining whether there is a valid agreement to arbitrate between the parties, ordinary state-law principles of contract apply to the first part of the two-step inquiry. Because the FAA requires the court to place arbitration agreement son an equal footing with other contracts when determining whether the parties have agreed to arbitrate, the court cannot subject a purported arbitration agreement otherwise within the scope of the FAA and satisfying its requirements to a standard more demanding than that which would apply to other contractual agreements. The FAA and the Supreme Court holds that arbitration agreements are not subject to more stringent requirements.
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Sarah Fang and Jeffrey Kingsley
https://www.goldbergsegalla.com/attorneys/Fang.html
https://www.goldbergsegalla.com/attorneys/Kingsley.html