January 27, 2021

Volume XI, Number 27

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Third Circuit Holds That an Arbitration Award Was a Judicial Record and Must Be Unsealed

People often agree to arbitrate their disputes because they presume that, unlike litigation, the proceedings will be confidential. An increasing number of court decisions suggest that this presumption may be unwarranted. Last month, the United States Court of Appeals for the Third Circuit held that an arbitration award filed with a petition to confirm the award was a judicial record and therefore subject to the common-law right of access.

In Pennsylvania National Mutual Casualty Insurance Group v. New England Reinsurance Corp., Nos. 20-1635, 20-1872, 2020 WL 7663878 (3d Cir. Dec. 24, 2020), insurance company Penn National obtained a favorable arbitration award against two of its reinsurers. It then filed with the United States District Court for the Middle District of Pennsylvania a petition to confirm the award and reduce it to a judgment. Penn National filed the arbitration award with the court and requested that it be sealed, which the court granted.

Before the reinsurers could respond to the petition to confirm, the parties settled and Penn National withdrew its petition. Then one of Penn National's reinsurers—a reinsurer that was not a party to the action—moved the Court to intervene and unseal the arbitration award. The District Court unsealed the award pursuant to the common-law right of access, which allows members of the public to access documents in a judicial proceeding.

In affirming, the Third Circuit held that if a document makes its way into the clerk's file, then it is subject to the presumption of common-law right of access.

The Third Circuit also held that Penn National could not overcome the presumption of access because it failed to demonstrate a clearly defined injury. Penn National argued that other reinsurers might decline to pay Penn National and contest their contractual obligations if they knew of the contents of the award. But this was not enough for the Court. It reasoned that this was not a clearly defined injury because it "could not determine how many possible relationships could be impacted, the amount of money that could be at stake, the types of actions other parties may pursue, or the likelihood that any such actions would be successful." Id. at *2.

The Third Circuit's holding is only one example of a trend in which courts are increasingly deciding to unseal arbitration awards—a trend that has special implications for any party concerned with maintaining the confidentiality of arbitration awards. 

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© 2020 Miller, Canfield, Paddock and Stone PLC National Law Review, Volume XI, Number 12
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About this Author

Frederick A. Acomb International Disputes Lawyer Miller Canfield
Principal

Frederick Acomb defends and prosecutes transnational litigation and international arbitration matters for clients located throughout the world. His work regularly takes him around the globe. He has appeared before arbitration tribunals in Asia, Europe, and North America.

Fred has also represented international and domestic clients in more than 70 automotive supply chain disputes. As former general counsel to the firm, he has a unique perspective on client service that he endeavors to bring to every engagement.

313.496.7607
Emily G. Ladd Litigation Attorney Miller, Canfield, Paddock and Stone Ann Arbor, MI
Associate

Emily Ladd is an associate in Miller Canfield's Litigation and Dispute Resolution Group. Emily practices general commercial litigation and represents a broad range of individual and corporate clients in both state and federal court. She is also active in the firm's International Disputes Group, where she represents international and domestic clients in transnational disputes.

Emily joined Miller Canfield after graduating from the J. Reuben Clark Law School at Brigham Young University, where she was in the top 10 percent of her class. She was previously a judicial intern for Justice...

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