## Facts

- Banco de Seguros del Estado, a Uruguayan state-owned reinsurer, entered quota share reinsurance treaties with Mutual Marine Offices, Inc., a New York insurer/reinsurer, covering umbrella liability policies for periods between 1978 and 1984.
- A dispute arose after MMO claimed Banco failed to pay its share of losses under the treaties.
- MMO commenced arbitration on February 27, 2001 under the treaties’ arbitration clause.
- Before a merits hearing, the arbitral panel issued an interim order (Nov. 26, 2001) requiring Banco to post an irrevocable letter of credit for $708,714.04 as prejudgment security.
- The panel denied Banco’s request for reconsideration in a second interim order (Dec. 19, 2001).
- Banco filed in federal court to vacate the interim orders; MMO cross-moved to confirm them under the Inter-American Convention on International Commercial Arbitration.

## Issues

1. Whether an interim arbitral order requiring prejudgment security, entered before a merits hearing, constitutes a reviewable and confirmable “arbitral award” under the Inter-American Convention.
2. If reviewable, whether any Convention-based defense justified vacatur or refusal of recognition/enforcement (including lack of arbitrators’ authority or public policy).

## Decision

- The court held the interim security orders were reviewable “arbitral awards” because they finally resolved the discrete issue of security and imposed an immediate, definite obligation.
- The court applied the deferential recognition/enforcement standard governing international arbitral awards under the Inter-American Convention.
- The court denied Banco’s petition to vacate and granted MMO’s cross-motion to confirm the interim orders.

## Legal Principles

- Under the Inter-American Convention, a court confirms an arbitral award unless a party proves one of the limited, enumerated defenses to recognition/enforcement.
- An arbitral ruling may be treated as sufficiently “final” to qualify as an award when it conclusively decides a separate issue (such as security) and requires immediate performance, even if the merits remain unresolved.
- Broad arbitration clauses in reinsurance agreements can authorize arbitrators to grant interim relief needed to protect the effectiveness of a later merits award, including requiring a party to post prejudgment security.
- Courts do not reexamine the merits of the arbitrators’ decision when reviewing an international arbitral award; review is confined to the Convention defenses.

## Conclusion

The court confirmed the arbitration panel’s interim orders requiring Banco to post prejudgment security, holding that the orders were confirmable awards under the Inter-American Convention and that Banco failed to establish any recognized ground to vacate or deny enforcement.


Banco de Seguros del Estado v. Mut. Marine Offices, Inc., 230 F. Supp. 2d 362 (S.D.N.Y. 2002)