Continental Casualty Co. v. Certain Underwriters at Lloyds of London, No. 20-2892 (7th Cir. 2021)
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Continental’s primary insurance companies covered risks such as mass tort and pollution liability and purchased reinsurance policies from Underwriters. For over 40 years, the parties agreed on the methodology for calculating reinsurance obligations. In 2010, Continental outsourced its claims handling to Resolute, which made higher demands for payment from Underwriters under a new methodology. Underwriters objected and sought arbitration. A panel conducted a hearing and found Continental’s new methodology contrary to the parties’ established course of dealings. Concerned that the Final Award was not clear about Underwriters’ future reinsurance liability obligations, Continental asked the Panel to clarify whether the statement “Petitioners have paid the full amount due” related only to past bills or if it was meant to cover past and future billings. The Panel denied Continental’s motion for clarification but added that Underwriters had "fully and finally discharged its past, present and future obligations" for the accounts. Continental argued the award amounted to a sanction and that the Panel lacked the authority to issue sanctions or penalties.
Continental then sought confirmation of the Final Award but vacatur of the subsequent Order, citing the Federal Arbitration Act (FAA), 9 U.S.C. 9–10. The district court confirmed everything. The Seventh Circuit affirmed, noting the FAA’s narrow set of reasons that may support a court’s confirmation, vacatur, or modification of an award.
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