In the reinsurance world, when a dispute ensues between the same parties regarding one or multiple claims that arise under multiple treaties, a host of contentious issues can develop. An increasingly common fight between cedants and reinsurers is whether to arbitrate claims that arise under numerous treaties "separately on a contract-by-contract basis or collectively in a consolidated arbitration." Certain Underwriters at Lloyd's London v. Westchester Fire Ins. Co., No. 06-1457, 2007 WL 1673876, at *3 (3d Cir. June 12, 2007).

Why the Consolidation Fight?

Why do reinsurers and cedants fight over consolidation? Why does the issue of consolidation often escalate between the parties? There are a number of strategic reasons why parties in reinsurance disputes engage in this fight -- and most of them only benefit the lawyers.