The Court of Appeals recently reaffirmed New York’s public policy favoring arbitration and the ability of parties to consensually define the parameters of their dispute resolution process. In American International Specialty Lines Insurance Company v. Allied Capital Corporation, a unanimous court rejected a challenge to an arbitral award from a party who claimed that the arbitral panel had exceeded its authority by reconsidering an initial determination that decided some, but not all, of the issues submitted by the parties.

Background

Ciena Capital LLC (Ciena) and its majority owner Allied Capital Corporation (Allied and, collectively with Ciena, the insureds) settled qui tam claims brought by the federal government arising out of the insureds’ alleged participation in a loan origination fraud. The settlement required the insureds to make a $10.1 million payment to the government. The insureds then sought payment of their defense costs and indemnity for the settlement payment under two insurance policies issued by American International Specialty Lines Insurance Company (AISLIC).

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