A Case Against Reinsurance Arbitration?

Private arbitration has long been the dispute resolution forum of choice in the treaty reinsurance business. Arbitration of disputes, with decisions made by experienced industry executives familiar with “custom and practice” in the industry, has itself become the “custom and practice.”

Most treaties contain arbitration clauses requiring all disputes to be resolved by a panel of three arbitrators with experience in the industry. Under these provisions, reinsurance arbitrators are often relieved of the obligation to follow the strict rules of law that would apply in court, and are encouraged to view the relationship between cedent and reinsurer as an “honorable engagement,” with the goal of arriving at a just result.

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