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Case Update: INA v. PSMIC - December 2008 Order Vacated and Judgment Appealed

by ~ Catherine Colinvaux (Email) (Web Site)

In our last issue of Cover Notes, MReBA reported on the decision in Insurance Co. of North America v. Public Service Mutual Ins. Co., 2008 WL 5205970 (S.D.N.Y. Dec. 12, 2008) ("INA v. PSMIC I") (Harold Baer, J.), requiring an arbitration to "commence anew" after resignation of one party's arbitrator. For the parties, the implications of the ruling were substantial because, before INA's party arbitrator resigned for health reasons, the arbitration panel had made an interim (non final) ruling in PSMIC's favor that the PSMIC characterized as outcome determinative.

In deciding to order that the arbitration must start again from scratch, Judge Baer had recognized the "potential for abuse of a rule that can afford a losing party a 'second bite at the apple' upon the resignation of its party-appointed arbitrator," but, he noted, on the facts of this case, "there is no suggestion of any misconduct here and neither party disputes the severity of health condition that forced [INA's arbitrator] to resign."

More recently, however, additional facts have come to light which caused Judge Baer to reconsider his opinion. Specifically, in an order dated June 29 and entered July 30, 2009, Judge Baer vacated the prior judgment in INA's favor and issued an new ruling that the arbitration should resume before the original panel.

Judge Baer noted that within a month after the date that his initial order was issued, "PSMIC learned that not only had [its arbitrator's] health improved to the point that he was actively seeking appointment as an arbitrator, but that this recovery preceded issuance of" Judge Baer's initial ruling that the arbitration must commence anew. Further, it was undisputed that INA was aware of the improvement in its arbitrator's health and change in circumstances, but had not brought these facts to the Court's attention at oral argument.

Based on these changed, and previously undisclosed facts, Judge Baer found "special circumstances" justifying departure from the usual rule that an arbitration must commence anew when an arbitrator becomes unavailable during the course of the arbitration. Rather, Judge Baer ordered the prior arbitration to reconvene with INA's original arbitrator resuming his role. "Should [the original arbitrator] be unable or unwilling to rejoin the panel of his own accord (i.e., without intermeddling by INA)," INA will be permitted to name a replacement.

On August 25, 2009, INA appealed Judge Baer's recent order to the United States Court of Appeals for the Second Circuit.gucci outlet,rolex watches for sale,replica bvlgari watches and iwc replica can be found here.


For more information, contact Catherine Colinvaux at ccolinvaux@zelle.com.

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