by ~ Kristin Suga Heres (Email) (Web Site)
The Honorable Nancy Gertner (Ret.) opened MReBA’s Fifth Annual Symposium on October 3, 2013 with a candid keynote address that offered attendees a unique opportunity to hear a respected jurist-turned-arbitrator’s views on the idiosyncratic world of modern reinsurance arbitrations.
Judge Gertner was appointed to the federal bench by President Clinton in 1994 and served for seventeen years on the U.S. District Court for the District of Massachusetts before stepping down in 2011 to pursue a professorship at Harvard Law School. In reinsurance circles, Judge Gertner is perhaps best known for her authorship of the Massachusetts District Court’s 1998 opinion in the oft-cited Commercial Union Ins. Co. v. Seven Provinces Ins. Co., Ltd. case, 9 F. Supp. 2d 49 (D. Mass. 1998). In addition to teaching at Harvard, Judge Gertner also brings her substantial experience to bear in offering alternative dispute resolution services to private parties in commercial matters, including reinsurance disputes.
A world fit for English barristers and port wine
In her keynote address, Judge Gertner explained that she grappled with reinsurance issues for the first time shortly after being appointed to the District Court, and that reinsurance has been a recurring theme in her career ever since. She relayed that, at first, the world of reinsurance was both unfamiliar and a bit daunting. With terms like uberrimae fidei frequently bandied about, reinsurance seemed to be a world suited for “English barristers and port wine.” Instead of shying away from the challenge, however, Judge Gertner took pleasure in immersing herself in this new world and understanding what it was about. Refusing to abdicate her judicial role to clerks, Judge Gertner worked painstakingly through the complex and nuanced issues with which she was presented and wrote her own opinions—a task she clearly savored.
Judge Gertner quickly discerned that reinsurance litigation presented significant contradictions. Judge Gertner explained that, in her early work in reinsurance cases, she was struck by the collision between the informality of the “crudely drafted” documents forming the basis of reinsurance relationships (e.g., agreements memorialized on paper napkins) and the intense scrutiny these documents received when before the federal court.
A world at a crossroads
Now that she has left the bench and embarked on new adventures in the world of reinsurance arbitrations, Judge Gertner shared her view that reinsurance, specifically reinsurance arbitration, is a discipline in transition. Judge Gertner identified several key areas that, in her estimation, require attention going forward.
For instance, Judge Gertner explained that she finds the role of party-appointed arbitrators (advocate? neutral? both?) “extraordinarily confusing.” Judge Gertner opined that the ambiguous role of the party arbitrators creates more work for the umpire and renders the task of umpire selection absolutely critical.
Judge Gertner is also struck by some parties’ desire not to receive a reasoned award. For someone accustomed to issuing written opinions during her tenure on the bench, this remains a foreign, and somewhat disquieting, notion. However, Judge Gertner went further, describing this as a trend with “dangerous” implications for all involved in reinsurance arbitrations. Specifically, Judge Gertner opined that the absence of a reasoned arbitration award poses substantial difficulties when parties later seek a trial court’s review of the award.
Judge Gertner also expressed concern that the cost of reinsurance arbitrations is spiraling out of control. While the perceived cost-savings benefits of arbitration are often touted, these savings may not be realized to the extent that parties insist on engaging in costly discovery disputes. Judge Gertner noted that she has sometimes felt pressure to limit these disputes in her role as an umpire.
Addressing the crowd of attorneys and reinsurance professionals, Judge Gertner further observed that, “You’re at an interesting crossroads.” Judge Gertner indicated a desire to see reinsurance arbitrations become more formal. Specifically, Judge Gertner urged her audience to develop a body of rules so that judges can review awards in a more disciplined fashion. She indicated a need for a body of substantive law above and beyond the ARIAS rules in order to avoid a situation in which an umpire is “a black box.” Judge Gertner also identified a need to ensure that arbitrators have experience or training in the customs and practices of the reinsurance industry so that they have the context necessary to understand the disputes before them. Summarizing her comments, Judge Gertner addressed to the audience her “plea for more,” indicating her view that there is a need for more “rationality” and less “lawlessness” in the process.
In response to a request from the audience for guidance on how to deal with courts that are seemingly hostile to resolving arbitration-related disputes, Judge Gertner invited the reinsurance bar to take a cue from the patent bar, which has historically approached the courts directly to advocate for rules and policies that are beneficial to that unique practice area. By approaching the bench in a “political” fashion as a cohesive bar, reinsurance practitioners can help shape the way that courts address issues unique to that area of law. “If you don’t squeak, nothing will change.”
Judge Gertner’s comments also provided a rare behind-the-scenes glimpse into the federal judiciary, where she indicated that there is substantial pressure on judges to avoid issues and press parties to settle. Judge Gertner indicated that she was once instructed: “If you write a decision, you have failed.” Judge Gertner took issue with this philosophy, opining that a judge’s job is not to simply make cases “go away.”
Judge Gertner is the author of several books including The Law of Juries (2009) and In Defense of Women: Memoirs of an Unrepentant Advocate (2011).
Ms. Heres is a senior associate in the Boston office of Zelle Hofmann Voelbel & Mason LLP. She may be reached at firstname.lastname@example.org.
© 2013 Zelle Hofmann Voelbel & Mason LLP. All rights reserved.
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