Confidentiality Agreement Executed as Part of Arbitration Not Subject to Arbitration

Trustmark Insurance Company v. John Hancock Life Insurance Company
(N.D.Ill. January 21, 2010)
The parties to a reinsurance contract disagreed regarding whether certain retrocessional business was part of the reinsurance contracts.  As a result, they entered into arbitration.  As part of the arbitration, the parties entered into a Confidentiality Agreement under which documents and the ultimate findings were subject to confidentiality.  The arbitrators also signed the Confidentiality Agreement.
After that arbitration, another dispute arose and the parties again turned to arbitration.  One of the parties selected an arbitrator from the first arbitration. The arbitrator was subject to the Confidentiality Agreement.  While the second party was concerned with the arbitrator's ability to honor the agreement and the arbitrator himself expressed concern that it might be difficult to segrate the information, he was ultimately appointed.
At arbitration, the party prevailing in the first arbitration sought to "authorize use of all  materials from the First Arbitration," and prohibit the matters resolved by the first panel from being relitigated.  The common arbitrator did not recuse himself from those deliberations, and the Second Panel determined that the Confidentiality Agreement extended to the second arbitration. The party aggrevied by the first arbitration (and breach of the Confidentiality Agreement) sought to enjoin the second arbitration on the basis that the Confidentiality Agreement was not subejct to arbitration, and that the common arbitrator breached the Confidentiality Agreement by ruling on extending the Confidentiality Agreement.
The court held that because the Confidentiality Agreement contained no arbitration clause, the parties could not be forced to arbitrate issues that it did not agree to arbitrate and granted the injunction.
A copy of the decision is found here
Sarah Delaney and Sharon Angelino

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