Certain Underwriters at Lloyd’s London v. Westchester Fire Insurance Company

Westchester Fire Insurance Company (Westchester Fire) (defendant) purchased reinsurance coverage from certain Lloyd’s of London underwriters (the underwriters) (plaintiffs) pursuant to two groups of contracts. One group of contracts was called the Comprehensive Catastrophe Treaty, and the other was called the Specialty Contingency Treaty. The reinsurance contracts in both groups contained arbitration clauses. Following a dispute over onerous claim procedures, documentation requirements, and unpaid bills, Westchester Fire sent two arbitration-demand letters to the underwriters—one under the Comprehensive Catastrophe Treaty contracts and the other under the Specialty Contingency Treaty. The contracts were silent as to whether disputes would be arbitrated separately or consolidated. The underwriters filed two petitions with the district court—one directed at the Comprehensive Catastrophe Treaty and the other directed at the Special Contingency Treaty. The petitions asked the district court to compel arbitration under some of the contracts but to stay arbitration under the remaining contracts, arguing that the arbitrations should not be consolidated because each contract had its own arbitration clause. Westchester Fire cross-moved to compel arbitration on the threshold issue of whether each contract should be arbitrated separately or collectively via a single consolidated arbitration. The district court denied the underwriter’s petitions, granted Westchester Fire’s cross-motion, and deferred to an arbitrator to decide whether to direct a consolidated arbitration of the underlying claims or arbitrate each dispute on a contract-by-contract basis. The underwriters appealed.