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Trustmark V. John Hancock: A Significantly Flawed Decision With The Potential To Wreak Havoc For Confidentiality Agreements In Arbitration

Publisher: Mealey''s Litigation Report: Reinsurance
March 19, 2010
Day Pitney Author(s) Daniel L. FitzMaurice

Issues of arbitral procedure belong to arbitrators, not courts. In 2002, the Supreme Court's opinion in Howsam identified as exceptions to this rule only two, "gateway" issues of arbitrability: "whether the parties are bound by a given arbitration clause" and "whether an arbitration clause in a concededly binding contract applies to a particular type of controversy." In all nine of its subsequent decisions related to arbitration and the Federal Arbitration Act ("FAA"), the Supreme Court has consistently maintained the strong federal policy favoring arbitration and the restricted nature of judicial involvement in and review of arbitral awards. Likewise, federal courts of appeal have uniformly rejected invitations to intrude into pending arbitrations, including attempts to disqualify sitting arbitrators. Against this body of law stands a recent decision in which a federal district court interrupted a pending arbitration, over four years after its commencement and shortly before the hearing on the merits, to decide an issue of arbitral procedure and enjoin a party from using its chosen party-arbitrator. Trustmark Insurance Co. v. John Hancock Life Ins. Co., No. 09 C 3959, 2010 U.S. Dist. LEXIS 4698 (N.D. Ill. Jan. 21, 2010) (appeal pending) ("Trustmark II"). Trustmark II is more than aberrational, it is simply wrong.