## Facts

- Pacific Reinsurance Management Corporation (PRMC) managed a reinsurance pool for Ohio Reinsurance Corporation (Ohio Re) and other participating reinsurers under a Management Agreement and related reinsurance arrangements.
- Disputes arose between PRMC and the participating reinsurers, including claims seeking fraud-based relief and rescission, and the parties were compelled to arbitrate under broad arbitration clauses.
- During the arbitration, the panel issued an “interim final order” requiring funds to be placed into an escrow account consisting of balances that would be owed to PRMC if the Management Agreement were ultimately found valid after a final merits hearing (exceeding $20 million).
- PRMC petitioned a federal district court to confirm the interim escrow order, and the court confirmed it.
- Ohio Re and the other reinsurers sought to stay the arbitration and to bar the panel from retaining outside counsel to implement the escrow arrangement; the district court denied that relief.
- Ohio Re and the other reinsurers appealed, challenging the confirmability and validity of the interim escrow order.

## Issues

1. Whether an arbitral interim order requiring parties to contribute to an escrow account as pre-hearing security is sufficiently “final” to be reviewed and confirmed by a federal court under the Federal Arbitration Act.
2. Whether the arbitrators exceeded their powers by ordering escrow/security pending the final merits hearing.

## Decision

- The Ninth Circuit affirmed the district court’s confirmation of the interim escrow order and the denial of the reinsurers’ requests to stay or restrict the arbitration.
- The court held the interim escrow order was “final” for purposes of judicial review and confirmation because it definitively resolved a discrete, immediate issue (security) intended to be enforceable when issued.
- The court held the order did not exceed the arbitrators’ authority under the parties’ broad submission of disputes to arbitration, which permitted interim equitable relief needed to preserve the effectiveness of any eventual award.

## Legal Principles

- An arbitral order granting interim equitable relief may be treated as final as to that discrete issue and may be confirmed under the Federal Arbitration Act when it is intended to have immediate effect and enforceability.
- Interim relief in arbitration may be necessary to preserve assets or performance so that a later merits award is not rendered ineffective.
- Broad arbitration clauses authorizing arbitration of “any dispute” generally permit arbitrators to fashion interim measures, including escrow or security, to maintain the status quo and protect the meaningfulness of the final award.
- Courts reviewing arbitral interim measures focus on whether the arbitrators acted within the scope of the parties’ submission rather than reexamining the merits of the underlying dispute.

## Conclusion

The Ninth Circuit upheld confirmation of an arbitration panel’s interim escrow/security order, treating it as final on a discrete issue and concluding that, under broad arbitration clauses, arbitrators may require pre-hearing security to ensure a later merits award is not rendered ineffective.


Pac. Reinsurance Mgmt. Corp. v. Ohio Reinsurance Corp., 935 F.2d 1019 (9th Cir. 1991)