FRAGMENTED JUSTICE: CONSOLIDATION AND CONSENT IN MULTI-PARTY INSURANCE ARBITRATION

Abstract

Large commercial insurance disputes are created from a single incident but typically involve many different insurers and numerous contracts. In this way, each individual contract will have its own separate arbitration clause. The result of this type of structure is that instead of one formal consolidated arbitration proceeding, there will be several arbitrations occurring simultaneously. This fragmentation will result in an increase in both; (1) costs, (2) delays, and (3) the potential for inconsistent results across each arbitration. Models currently established for resolving disputes will encounter challenges when attempting to effectively manage this type of situation. Court cases have jurisdiction limitations and a lack of adequate jurisdictional enforcement outside of domestic borders. ad hoc arbitration requires both parties to give express consent at the time of entering into the contract, thus it will not provide for any form of coordination of the arbitrations as there are no built-in mechanisms for coordinating multiple arbitrations under an ad hoc format. Therefore, the question becomes, can an Institutional arbitration effectively address the need for coordination. The author addresses this question using both a doctrinal and comparative approach. This article will focus on how institutional rules provide for the consolidation and joinder of arbitrations. Additionally, this article will evaluate the consolidation and joinder mechanisms based on the fundamental tenets of arbitration law; consent, jurisdiction, procedural fairness, and enforceability pursuant to the New York Convention and UNCITRAL Model law. Through the analysis of institutional rules, it is clear to the author that institutional rules provide for and clearly define Consent prior to the commencement of the Arbitration by the development of an established procedural framework. This procedure permits for coordinated adjudication while still permitting parties to maintain their Independence. Additionally, the use of a procedural framework to consolidate renders the Enforcement of the Awards less problematic due to the alignment of the process to the procedural due process principles that will be applied by the Courts at the Seat and Enforcement of these Awards.
The paper discusses how fragmented procedures affect how resources are allocated. There are multiple arbitration processes happening at the same time increasing costs and adding complexity. This pressure is put most heavily on the weaker party both by structure and financially especially to the lower and female dominated insured organisations.
As institutional consolidation begins to remove any redundancy and give easier access to the arbitration system, coordination between institutions should create a more efficient way to provide access and ultimately resolve their disputes while adhering to arbitration law. This paper asserts that with multi-party insurance disputes, the method for achieving coordinated enforcement decisions through the arbitration process is through institutional arbitration being an option for that stability under arbitration law.