Matter of American Home Assurance v. Clearwater Ins.
NEW YORK COUNTY
Alternative Dispute Resolution
Justice Michael Stallman
Petitioner insurers sought appointment of an umpire, or third arbitrator, to preside over arbitrations in accordance with treaties between petitioners and respondent insurer. Respondent cross-claimed requesting that an umpire be selected from its own list of individuals. The court rejected respondent's argument that the appointment of the umpire by the court was not allowed as it was not mentioned in the treaties. Petitioners proposed the court use a ranking method in selecting the umpire, while respondent urged the court to utilise the "strike and draw" method, claiming it was now the usual and customary procedure in the insurance industry. The court was persuaded by another judge's approach to combine the proposed methods and adopted it, but with a modification to the extent the umpire must be drawn by random lot in the event of a tie in the rankings of the umpire. Also, contrary to respondent's contention, the court concluded that selecting the umpire before the arbitration began avoided the additional expense of conducting more than one arbitration in case of disagreement between the already selected two arbitrators.