DAR Secures Victory in 9th Circuit

DAR Attorneys Eric Brenneman and Zachary Hamilton succeeded in the Ninth Circuit Court of Appeal in a case involving arbitrator qualifications under a reinsurance certificate. In Public Risk Innovation, Solutions, and Management v. AmTrust Financial Services, Inc., the Court of Appeal considered whether to affirm the district court’s rulings that (1) service with a joint powers authority properly qualified a party arbitrator under the terms of the contract; and (2) the time is of the essence clause does not apply when a party appoints its party arbitrator within the time specified, even though that individual is ultimately not qualified to serve. Reinsurer AmTrust argued that the Certificate required arbitrators to be disinterred current or former officials of property or casualty insurance or reinsurance companies and a JPA was not insurance as a matter of law. The appellate court agreed with the ceding company PRISM that, although JPA coverage is not “insurance,” the court must apply the terms used in the contract, which described it as such. Moreover, allowing one party to pick a party arbitrator from its segment of the coverage industry was consistent with the general purpose of waiving litigation in favor of arbitration before a three-arbitrator panel. The Court of Appeal also reasoned that, even though PRISM’s party arbitrator ultimately did not qualify to serve, the time is of the essence clause does not apply when a party acts in good faith within the time specified.