Opinion
No. CV 03-0823599
March 27, 2006
MEMORANDUM OF DECISION
The sole issue which remains is whether interest should be paid on the arbitration award. In the arbitration award decision the matter was addressed:
5. This decision will not include the payment of interest, due to the unreasonably long time that Industrial Risk Insurance took to enforce its rights under ARCONDI.
"The dispute arose on December 7, 1994 when a fire loss occurred to an electric power transformer of Allegheny Power Systems, Inc. (Allegheny) at its substation in Stephens City, Virginia. Industrial Risk Insurers (IRI) insured Allegheny under an all-risk property insurance policy. Hartford Steam Boiler Inspection and Insurance Company (HSB) reinsured the boiler and machinery portion of the all-risk policy under a reinsurance certificate. IRI sought approximately $2.2 billion in reinsurance coverage and other monetary relief from HSB. HSB disputed the claimed coverage. IRI and HSB agreed to submit the dispute to a panel of three arbitrators and entered into an Arbitration Accord and Protocol. IRI selected arbitrator Anthony Clark; HSB selected arbitrator Harry Fall; and Robert Mangino was selected as umpire. The parties conducted discovery, disclosed their experts and submitted briefs. On January 20 and 21, 2003 each party presented to the three member panel their evidence, the testimony of their witnesses with full opportunity of cross examination and oral arguments. On February 11, 2003 the panel issued its final decision signed by two of the arbitrators, umpire Robert Mangino and party-arbitrator Anthony Clark in favor of IRI and awarded $2,217,537.22. Harry Fall, the party-arbitrator for HSB, submitted a written dissent dated February 13, 2003." (Corrigan, JTR).
The principle of limited judicial review has been expressed by the Supreme Court in OG/O'C'onnell Joint Venture v. Chase Family Limited Partnership, 203 Conn. 133, 523 A.2d 1271 (1987).
When arbitration is created by contact we recognized that this autonomy can only be preserved by minimal judicial intervention. (Citations omitted.) Because the parties themselves, by virtue of the submission, frame the issues to be resolved and define the scope of the arbitrator's powers, the parties are generally bound by the resulting award. (Citations omitted.) Since the parties consent to arbitration, and have full control over the issues to be arbitrated, a court will make every reasonable presumption in favor of the arbitration award and the arbitrator's acts and proceedings. (Citations omitted.) The party challenging the award bears the burden of producing evidence sufficient to invalidate or avoid it and only upon a showing that it "falls within the proscriptions of Section 52-418 of the General Statutes or procedurally violates the parties' agreement" will the determination of an arbitrator be subject to judicial inquiry. (Citations omitted.) 203 Conn. at 145-46.
In City of New Haven v. AFSCME, Council 15, Local 530, 208 Conn. 411, 544 A.2d 186 (1988), the Connecticut Supreme Court reiterated the longstanding, basic principle supporting the autonomy of arbitration and minimal judicial review of consensual arbitration awards. See also, City of Middletown v. Police Local 1361, 187 Conn. 228, 445 A.2d 322 (1982). Addressing a challenge on public policy grounds to an arbitrator's award, the Supreme Court in City of New Haven v. AFSCME Council 15, Local 530, 208 Conn. 411, stated:
This court has long endorsed arbitration as "an alternative method of settling disputes `intended to avoid the formalities, delay, expense and vexation of ordinary litigation.' (Citations omitted.) We have recognized that when arbitration is consensual, rather than statutorily imposed, judicial review is limited in scope. (Citations omitted.) If the parties mutually agree to submit their dispute to arbitration, the resulting award is not reviewable for errors of law or fact. (Citations omitted.) Judicial review of unrestricted submissions is limited to a comparison between the submission and the award to see whether, in accordance with the powers conferred upon the arbitrators, their award conforms to the submission. (Citations omitted.) 208 Conn. at 410-11.
In deciding whether an arbitrator has exceeded his power, the Court only examines the submission and the award to determine whether the award conforms to the submission. In OG/O'Connell, supra, the Supreme Court emphasized this rule, writing that:
Unless the submission provides otherwise, an arbitrator has authority to decide factual and legal questions and courts will not review the evidence, or, where the submission is unrestricted, the arbitrator's determination of legal questions. (Citations omitted.) In this case, because neither the plaintiff's demand for arbitration nor the defendant's answer contained any conditional language restricting the powers of the arbitrators, the submission was unrestricted. (Citations omitted.) Since the award conforms to the submission, the defendants' claim that the arbitrators exceeded their powers is without merit. 203 Conn. at 153-54.
"When the scope of the submission is unrestricted, the resulting award is not subject to de novo review even for errors of law so long as the award conforms to the submission . . . (Citations omitted.)" Saturn Construction Co. v. Premier Roofing Co., 238 Conn. 293, 304 (1996).
The scope of judicial review of arbitration is very narrow. Our courts favor arbitration as a means of settling differences and uphold the finality of arbitration awards except where an award clearly falls within the proscriptions of Conn. Gen. Stat. § 52-418. Exley v. Connecticut Yankee Grey Hound Racing, 59 Conn.App. 224, 228, cert. denied 254 Conn. 939.
Sec. 52-418 in relevant part:
(3) If the arbitrators have been guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown or in refusing to hear evidence pertinent and material to the controversy or of any other action by which the rights of any party have been prejudiced; or (4) if the Arbitrators have exceeded their powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made.
This court cannot find that it was an egregious mis-performance of duty in violation of Conn. Gen. Stat. § 52-418(a)(3) or (4). The court cannot correct errors of fact or law, substituting its judgment for the arbitrators where the submission was unrestricted. Exley v. Connecticut Yankee Grey Hound Racing, 59 Conn.App. 224, 228, cert. denied 254 Conn. 939 (2000).
For the reasons stated, the court denies the payment of interest to Industrial Risk Insurers.