CERTAIN UNDERWRITERS AT LLOYD'S, LONDON v. CENTURY INDEMNITY COMPANY Petition to Stay Arbitration...

7/28/2019 CERTAIN UNDERWRITERS AT LLOYD'S, LONDON v. CENTURY INDEMNITY COMPANY Petition to Stay Arbitration and

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IN U N IT E D S T A T E S D IS T R IC T C O U R TF O R T H E S O U T H E R N D I S T R I C T O F N E W Y O R KC E R T A I N U N D E R W R I T E R S A T L L O Y D ' S ,L O N D O N ,

Peti t ioner,v.C E N T U R Y I N D E M N I T Y C O M P A N Y ,successo r t o IN S U R A N C E C O M P A N Yof N O R T H A M E R I C A ,

Respondent .

Civi l Act ion No. 13-CV-3731 AKHE C F C A S E

P E T I T I O N T O S T A Y A R B I T R A T I O N A N D C O M P E L A R B I T R A T I O NPet i t ioner Certain Underwri ters at Lloyd's , London ("Underwri ters") , by thei r

undersigned attorneys, as and for their Peti t ion to stay the single arbitrat ion of multiplereinsurance contracts demanded by Respondent Century Indemni ty Company f/k/a InsuranceCompany of North America ("Century") and to compel separate arbi t rat ions of eachreinsurance contract pursuant to the terms of those contracts al lege as follows:

N A T U R E O F T H E P R O C E E D I N G1. This act ion arises from Cen tury 's dem and that Underw ri ters arbi t rate a dispute

between the part ies regarding coverage for certain asbestos losses under eleven di fferentreinsurance contracts i ssued to Century by Underwri ters ( the "Reinsurance Dispute") and thatthe arbitrat ion be consolidated into a single proceeding. 1 See Arbitrat ion Notice at Exhibit K toAffi rmat ion of Sarah Courtman in Support of Pet i t ion ("Courtman Aff.") .

1 Although Century dem anded arbitration of eleven different contracts, Underwriters address only those contractsthat have been billed and that either have a New Y ork choice of forum clause (1968 Global Slip Contracts) or aresilent on the choice of foru m (Treaty 101 Contracts).

Case 1:13-cv-03731-AKH Document 1 Filed 06/03/13 Page 1 of 8


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2. No ne of the contrac ts at issue perm it or require the con solidation of arbitrat ionproceedings wi thin the layers of those contracts or across the di fferent reinsurance programsrepresented by those contracts . (Exhibi t s A-J) Further, Underwri ters have not consented to anysuch consol idat ion. (Courtman Aff. ^14)

3. Und erwri ters ' a t tempts to resolve this confl ict inform al ly have been unsu ccess fulto date. Arbitrat ion cannot proceed unti l this conflict is resolved and Underwriters are notconfident the conflict over the number of arbitrat ion panels that must be consti tuted can beresolved wi thout the cou rt ' s assistance.

4. In this proc eedin g, Un derw riters seek an Ord er a) staying Ce ntu ry's at temp t tocreate a single arbitrat ion of multiple contracts that do not provide for such consolidation and b)compell ing separate arbitrat ions of those contracts over which this Court has jurisdictionpursuant to the terms of those contracts.

P A R T I E S , J U R I S D I C T I O N A N D V E N U E5. Pet i t ioner Certain Underw ri ters at Lloy d's , Londo n, consists of Uni ted Kingdo m

syndicates of individual Names who underwri te the reinsurance contracts in quest ion.Underwriters are not ci t izens of the United States.

6. Upon informa t ion and bel ief , Resp onden t Century i s a corporat ion organizedunder the laws of Pennsylvania, with i ts principal place of business located in Philadelphia,Pennsylvania.

7. This Cou rt has subjec t ma tter jurisdic tion over this action purs uant to 9 U.S .C,203 because this proceeding concerns commercial arbi t rat ion agreements that are not ent i relybetween cit izens of the United States and therefore fal l within the Convention of theRecogni t ion and Enforcement of Foreign Arbi t ral Awards ("Convent ion") and pursuant to 9



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U.S.C. 4 (Federal Arbitrat ion Act) as this court would have jurisdiction of this matter 28U.S.C. 133 2(a) (2) save for the arbi trat ion agreem ents.

8. In addit ion, this Cou rt has jurisd iction over this action purs uant to 28 U.S .C.1332(a)(2) because the amount in cont roversy exceeds $75,000, exclusive of interest and costs ,and is between cit izens of a State and cit izens of a foreign state.

9. This Court has personal jurisdict ion over Century Indem ni ty Com pany asCentury is l icensed to do business in the State of New York.

10. Ve nue in this district is prop er purs uan t to the Fed eral Arb itrat ion Ac t 4 and

204 because the commercial cont racts in quest ion contain arbi t rat ion agreements that providethat arbitrat ion shall take place in New York State (1968 Global Slip Contracts) or they aresilent as to the forum in which arbitrat ion should take place (Treaty 101).

F A C T U A L B A C K G R O U N D11. Und erw riters are party to eleven separate and dist inct contrac ts that reinsure d

certain l iabil i t ies arising from writ ings of Century's predecessor INA, in the years 1961 to 1970consist ing of two "programs" of reinsurance known general ly as "Treaty 101" and " the GlobalSlip." For the purposes of this action, those programs consist of the following contracts:

All Contracts Nam


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12. Th e Trea ty 101 Con tracts and the Glob al Slip Con tracts reinsure d claims arisingin certain cont ractual ly defined ci rcumstances from Century 's insurance wri t ings includingcertain pol icies of primary and excess comprehensive general l iabi l i ty insurance that Centuryissued to i ts insureds, including Caterpil lar Tractor Company ("Caterpil lar"). Caterpil lar isbased in Peoria, I l l inois and manufactures const ruct ion and mining equipment , diesel andnatural gas engines, industrial gas turbines and diesel-electric locomotives.www.ca terp i l l a r . com/company

13. On M ay 17, 2012 , Cen tury subm itted bil l ings to Un derw riters und er som e of thecontracts com prising the Global Slip and Trea ty 101 with regard to asbes tos products lossessuffered by Caterpil lar arising out of numerous lawsuits fi led against Caterpil lar by individualsclaiming to have been exposed to asbestos as a resul t of Caterpi l lar ' s equipm ent .

14. Und erw riters paid a port ion of certain bil l ings prese nted pur suan t to a reserv ationof rights but declined to pay others on the ground that Century's al location of Caterpil lar'slosses to the underlying policies and the reinsurance contracts at issue was incorrect .

15. Un der write rs' at tempts to resolv e this al location dispute throug h writ tencorrespondence, in person meet ings, and audi ts of Century 's f i les were unsuccessful .

16. On March 15, 2013, Century dem anded arbit rat ion against Underw ri ters underTreaty 101 for the periods 1961 through 1967, inclusive, al l layers, ("Treaty 101 Contracts"),the Global Slip Treaty for the 1968 period inclusive, al l layers ("1968 Global Slip Contracts")

2 Upon information and bel ief, bi l ls have not yet been submit ted on the second and third layers of Treaty101 from January 1, 1965 to December 31, 1967 or third layer Global Sl ip Contract from January 1,1968 to December 31, 1968.

http://www.caterpillar.com/companyhttp://www.caterpillar.com/company


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and the Global Slip Contracts for the periods 1969 through 1970, inclusive, al l layers ("1969-1970 Global Slip Contracts") (collectively, the "Global Slip Contracts").

17. Eac h of the reinsu ranc e contracts contains an arbitrat ion agre em ent requirin g thepart ies to submit any contractual dispute between them to arbitrat ion and these arbitrat ionagreements are binding on Underwri ters and Century.

18. In this Peti t ion, Und erwr iters addre ss the bil led contracts and only those billedcontracts wi th arbi t rat ion clauses designat ing New York as the appropriate forum for arbi t rat ion(the 1968 Global Slip Contracts) and those that are si lent on the required forum for arbitrat ion

(the Treaty 101 Contracts).19. For jurisdict ional reasons, Unde rwri ters do not address 1969-1970 Global Slip

Contracts as they are subject to arbitrat ion agreements requiring arbitrat ion to take place in the"Ci ty of the Com pan y's H ead O ffice i s located unless mutual ly agreed upon by the C om panyand the Reinsurers."

20. Upon informa t ion and bel ief , Cen tury 's "Head Of fice" i s located in Phi ladelphia,Pennsylvania.

21. Cop ies of each contra ct addres sed in this Peti t ion are at tached to the supportingAffidavit as Exhibits A-J and made a part of this Peti t ion.

22. Th e Trea ty 101 Con tracts are subjec t to arbitrat ion agree men ts that prov ide:In the event of any dispute between the Company and the Reinsurers inconnection with this Agreement, such dispute shall be submitted to arbitrat ion.As soon as one party demands arbitrat ion and has named an arbitrator, the otherparty binds i tself to name an arbitrator within one month and the two arbitratorsshall then select an um pire. In case of their being una ble to agree upon anumpire, each of them shall name three, of whom the other declines two, and thedecision shall be ma de by draw ing lots. Th e um pire shall act und er the saidAgreement or submission wi th the same force and effect as i f he had been



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specifically named therein, and the decision of the majori ty of the court ofarbitrat ion shall be final and binding upon the contracting part ies.Each party to this Agreement shall submit i ts case to the arbitrators within onemo nth af ter receipt of advice s of the selection of an umpire. The arbitrators a reempowered, however, to prolong the terms granted herein to ei ther party inwhic h to hand in their doc um ents. Eac h party to this Ag reem ent shall pay thefees and expenses of i ts arbitrator, unless otherwise agreed, and the remainingcosts of the court of arbitrat ion shall be borne as the court of arbitrat ion shalldirect . Arb itrat ion shall take place in such place as agreed upo n by thearbitrators, and the arbitrat ion law of New York State shall govern sucharbitrat ion.

Exhibi t s A-D

23. Th e 1968 Glob al Slip Con tracts contain arbitrat ion agree me nts wh ich pro vide asfo l lows:

If any dispute shal l ari se between the GROUP and the REINSURERS wi threference to the interpretat ion of this CONTRACT or thei r r ights wi th respect toany transaction involved, the dispute shall be referred to three arbitrators, one tobe chosen by each party and the third by the two so chosen. If ei ther party refu sesor neglects to appoint an arbitrator within thirty (30) days after the receipt ofwrit ten notice from the other party requesting i t to do so, the requesting party maynom inate two arbitrators, wh o shall cho ose the third. Each party shall subm it i tscase to the arbitrators within thirty (30) days of the appointment of the arbitrators.The arbi t rators shal l consider this CONTRACT an honorable engagement ratherthan me rely a legal ob ligation; they are rel ieved of all judic ial form ali t ies and m ayabstain fro m follow ing the strict rules of law. Th e decision of a ma jori ty of thearbi t rators shal l be f inal and binding on both the GROUP and the REINSURERS.The expense of the arbitrators and of the arbitrat ion shall be equally dividedbetween the GR OU P and the RE INS UR ER S. Any such arbi t rat ion shal l takeplace in New York, New York, unless some other locat ion i s mutual ly agreedupon by the GROUP and the REINSURERS.Exhibi ts E-G

24. Neithe r Trea ty 101 nor Glob al Slip 1968 pro vide for, perm it , or requireconsolidation of arbitrat ion proceedings within the contracts of ei ther program.

25. Neithe r Trea ty 101 nor Glob al Slip 1968 pro vide for, perm it , or requireconsol idat ion of arbi trat ion proceed ings across di ffere nt reinsurance program s.



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26. Underw ri ters have not agreed or consented to Cen tury 's proposed consol idat ion.27. To the contrar y, Un derw riters hav e declined to arbitrate the Caterp il lar dispu te in

one proceeding as demanded by Century and Underwri ters have appointed an arbi t rator to serveon their behalf with regard to each separate contract .

28. W hile dispu ting the need to do so, Cen tury has also appo inted an arbitrator toserve on i ts behalf with regard to each sep arate contract . (Exhibit S)

A S A N D F O R U N D E R W R I T E R S ' F I R S T C L A I M F O R R E L I E F29. Underw ri ters repeat and real lege the al legat ions contained in paragraphs 1-28

above as though fully set forth herein.30. Und erw riters are party to eleven separa te and dist inct contracts com prising two

program s of reinsurance know n as Treaty 101 and the Global Sl ip.31. Century has dem anded that Underw ri ters part icipate in a consol idated arbit rat ion

proceeding regarding a coverage dispute between them under those contracts .32. No ne of those contrac ts perm it , require, or prov ide for cons olidation of

arbitrat ion.33. Underw ri ters have not agreed to consol idate the Reinsura nce Dispute into one

arbitrat ion.34. Century refuse d to proceed wi th separate arbi t rations of each contract pursuan t to

the terms of those contracts.35. Underw ri ters at tempted to reach a com prom ise wi th Century on this i ssue but

have been unable to do so to date.36. Th e arbitrat ions cann ot procee d in acco rdan ce with the terms of the contrac ts

unless the Court orders them to proceed.



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37. No previo us application has been ma de to this Cou rt or any other Cou rt for therelief requested herein.

WHEREFORE, Underwri ters respect ful ly request that the Court :38. Enter an Order as fol lows

a. staying the single arbitrat ion of the reinsu ranc e Disp ute that Cen tury at tempted tocom men ce unde r the Treaty 101 Contracts and the Global Sl ip Contracts; and

b. com pell ing arbitrat ion of each of the Trea ty 101 and 1968 Global Slip Contractsseparately pursuant to 9. U.S.C. 4 and 203;

c. directing the part ies to proceed with ump ire selection under each of the Treaty101 Contracts and 1968 Global Slip Contracts pursuant to the express terms ofthose contracts within the next thirty days; and

d. for such other and furthe r rel ief as to the Court may deem just and prop er.Dated: May 31, 2013

Certain Underwri ters at Lloyd's , LondonBy its at torneys,/s/ Sarah C. CourtmanSarah Col leen Courtman, EsquireAt torney No. : SC1821K IS S E L H IR S C H & W IL M E R L L P580 Whi te Plains RoadTarrytown, NY 10591Phone: (914) 750-5933Fax: (914) 750-5922scour [email protected]

mailto:[email protected]:[email protected]

CERTAIN UNDERWRITERS AT LLOYD'S, LONDON v. CENTURY INDEMNITY COMPANY Petition to Stay Arbitration...

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