## Facts

- Westchester Fire Insurance Company obtained reinsurance coverage from Certain Underwriters at Lloyd’s London under multiple treaties addressing asbestos-related liabilities, including a Comprehensive Catastrophe Liability Excess treaty and a Special Casualty Contingency treaty.
- Each treaty consisted of several separate reinsurance contracts.
- Each contract contained an arbitration clause, but none addressed whether disputes could or must be consolidated.
- A dispute arose concerning allegedly burdensome claim-handling and documentation requirements and alleged nonpayment under the reinsurance.
- Westchester served two arbitration demands, one tied to each treaty, seeking arbitration of the coverage/payment disputes and anticipating a consolidated approach.
- The Underwriters filed petitions in federal district court seeking to compel arbitration in a nonconsolidated, contract-by-contract manner and to stay arbitration to the extent it proceeded on a consolidated basis.
- Westchester cross-moved to compel arbitration of the threshold question whether arbitration should proceed in separate proceedings or in a single consolidated proceeding.

## Issues

1. Whether the decision to conduct consolidated arbitration versus separate arbitrations under reinsurance contracts whose arbitration clauses are silent on consolidation is a “question of arbitrability” for a court or a procedural issue for arbitrators under the Federal Arbitration Act.

## Decision

- The Third Circuit affirmed the district court.
- The court held that the consolidation versus separate-arbitrations question is for the arbitrator(s), not the court.
- The Underwriters’ efforts to require nonconsolidated arbitration via judicial order were rejected, and arbitration was compelled to include determination of the consolidation issue.

## Legal Principles

- Courts generally decide gateway “questions of arbitrability,” such as whether an arbitration agreement binds the parties and whether it covers a particular type of controversy.
- Procedural questions that arise from the dispute and affect how arbitration proceeds are presumptively for the arbitrator, not the court.
- When parties concededly agreed to arbitrate and the contract is silent on the structure of the arbitral proceeding (including consolidation), the dispute concerns the type or mode of arbitration and is treated as procedural for the arbitrator to resolve.

## Conclusion

Because the parties agreed to arbitrate and the only dispute concerned whether arbitration should proceed in a consolidated or separate format under arbitration clauses silent on consolidation, the Third Circuit held that arbitrators must decide that procedural question.


Certain Underwriters at Lloyd’s London v. Westchester Fire Ins. Co., 489 F.3d 580 (3d Cir. 2007)