OPINION AND ORDER

SHIRA A. SCHEINDLIN, District Judge.

I. INTRODUCTION

Scandinavian Reinsurance Company Limited ("Scandinavian Re") petitions the Court to vacate a final award (the "Petition") from an arbitration that occurred between Scandinavian Re and St. Paul Fire Marine Insurance Company, St. Paul Reinsurance Company, Ltd. and St. Paul Re (Bermuda) Ltd. (collectively, "St. Paul" or "Respondents") (the "Scandinavian Re Arbitration"). Scandinavian Re contends that two of the arbitrators exhibited evident partiality by failing to disclose their simultaneous involvement in an arbitration between Platinum Underwriters Bermuda, Ltd. ("Platinum Bda") and PMA Capital Insurance Company ("PMA") (the "Platinum Bda Arbitration") that involved "a common witness, similar disputed issues and contract terms, and the company that succeeded to the business of St. Paul." St. Paul cross-petitions to confirm the arbitration award. For the reasons discussed below, Scandinavian Re's Petition is granted and St. Paul's cross-petition is denied.

II. BACKGROUND

A. The Underlying Reinsurance Dispute Between Scandinavian Re and St. Paul

On or about August 21, 1999, Scandinavian Re and St. Paul entered into a Retrocessional Casualty Stop Loss Agreement (the "Scandinavian Re Agreement") under which St. Paul ceded a portion of its casualty reinsurance portfolio to Scandinavian Re. The Scandinavian Re Agreement was a finite retrocessional agreement — meaning that the amount of risk transferred from St. Paul to Scandinavian Re was limited. The Scandinavian Re Agreement contained an arbitration provision whereby the parties agreed that "any dispute arising out of the interpretation, performance, or breach of [the Scandinavian Re] Agreement . . . [would] be submitted for decision to a panel of three arbitrators." The arbitrators were required to be "disinterested."

Eventually, disputes regarding the Scandinavian Re Agreement arose. Broadly, the disputes involved (1) whether a cap on Scandinavian Re's liability should be read into the Scandinavian Re Agreement because the parties intended to pass only a limited amount of risk to Scandinavian Re or alternatively, whether the Scandinavian Re Agreement should be rescinded because St. Paul misrepresented the amount of liability Scandinavian Re faced under the Scandinavian Re Agreement and; (2) whether the Scandinavian Re Agreement created one experience account that applied to the entire term of the Scandinavian Re Agreement or separate experience accounts for each year covered by the Scandinavian Re Agreement.

B. The Scandinavian Re/St. Paul Arbitration

1. Selection of the Arbitrators

On September 26, 2007, St. Paul demanded arbitration. Under the Scandinavian Re Agreement, each party was to appoint an arbitrator and the two party-appointed arbitrators would appoint a neutral umpire. Scandinavian appointed Jonathan Rosen and St. Paul appointed Peter Gentile. Rosen and Gentile selected Paul Dassenko to be the umpire and Scandinavian Re and St. Paul accepted his appointment on November 29, 2007.

Although the Scandinavian Re Agreement did not require empaneling arbitrators certified by the AIDA Reinsurance and Insurance Arbitration Society ("ARIAS"), all three arbitrators were ARIAS certified. ARIAS certified arbitrators are required to "abide by and be subject to the ARIAS-US guidelines for arbitrator conduct." The guidelines require arbitrators to "disclose any interest or relationship likely to affect their judgement" and resolve all doubts in favor of disclosure. The ARIAS disclosure requirements specifically state:

1. Before accepting an arbitration appointment, candidates should make a reasonable effort to identify and disclose any direct or indirect financial or personal interest in the outcome of the proceeding or any existing or past financial, business, professional, family or social relationship that others could reasonably believe would be likely to affect their judgment, including any relationship with persons they are told will be potential witnesses.

. . .

3. The duty to disclose all past and present interests is a continuing obligation throughout the proceeding. If any previously undisclosed interests or relationships described in Comment 1 are recalled or arise during the course of the arbitration, they should be disclosed immediately to all parties and the other arbitrators.

2. The Arbitrators' Disclosures

Prior to his appointment, Dassenko completed a jointly submitted questionnaire"[t]o help the parties evaluate the qualifications of umpire nominees . . . and to identify any potential conflicts of interest." The umpire questionnaire listed many companies affiliated with both Scandinavian Re and St. Paul. Neither Platinum Underwriters Holdings Ltd. ("Platinum Holdings") nor its wholly-owed subsidiary company Platinum Bda (collectively "Platinum") was listed. The questionnaire asked about Dassenko's present and prior involvement with Scandinavian Re, St. Paul, the listed companies, the specific claims at issue, and the Scandinavian Re Agreement. The questionnaire also asked whether Dassenko had "ever served as an arbitrator, umpire, attorney, or expert witness in a matter involving any of the parties listed above or any subsidiaries, affiliates or parent companies of such parties."

In response to the questionnaire, Dassenko made disclosures regarding relationships with companies affiliated with both Scandinavian Re and St. Paul. Dassenko additionally disclosed that he was currently serving as arbitrator in a matter where he had been appointed by a party adverse to a Scandinavian Re affiliate and where Rosen was the umpire. Dassenko further disclosed that he had once before served on an arbitration panel with Rosen. Dassenko did not mention working with Gentile on any arbitration nor did he disclose any relationship with Platinum.

On February 25, 2008, an organizational meeting was held where Scandinavian Re and St. Paul had an opportunity to further question Dassenko about the disclosures in his umpire questionnaire. Rosen and Gentile also made disclosures regarding their involvements with Scandinavian Re, St. Paul, counsel for both parties, and the other arbitrators. After the disclosures, Dassenko assured the parties that "[a]ll three of us [arbitrators] acknowledge disclosure is an ongoing responsibility, and as we become aware of relationships or situations that require additional disclosure, we represent that we will undertake this at the earliest opportunity to the parties to this matter."

Throughout the arbitration, the arbitrators made a variety of additional disclosures. Several of those disclosures involved Dassenko and Gentile's relationships with witnesses. Additionally, Dassenko reaffirmed his belief that "it's important to make as full disclosure as possible." and, Gentile acknowledged that he had a "responsibility to disclose potential conflicts on an ongoing basis."

At no time did Dassenko or Gentile disclose that, after being empaneled as arbitrators in the Scandinavian Re Arbitration, they were both chosen to be arbitrators in the Platinum Bda Arbitration. Nor did they disclose that a witness in the Scandinavian Re Arbitration, Bart Hedges, was also a witness in the Platinum Bda Arbitration. Scandinavian Re did not learn that Dassenko and Gentile served together on the Platinum Bda Arbitration until October 22, 2009. Scandinavian Re states that if Dassenko or Gentile had disclosed their connection with the Platinum Bda Arbitration, Scandinavian Re would have objected to their continued service in the Scandinavian Re Arbitration and sought their recusal if they refused to voluntarily resign.

3. The Arbitration Proceedings

After discovery, depositions, and briefing, an evidentiary hearing was held in New York from June 14, 2009 through July 2, 2009. Hedges testified via video conference on June 23, 2009. Both Scandinavian Re and St. Paul included Hedges on their preliminary witness lists, submitted on March 27, 2009, and their final witness lists, disclosed on June 2, 2009. During Hedges's testimony, Gentile greeted Hedges by stating, "we have met a few times in the past, mainly in Bermuda, so I say hello to you again." During his testimony, Hedges stated that Scandinavian Re "would never have entered" the Scandinavian Re Agreement if it had been made aware of the amount of liability it could potentially face.

On August 19, 2009, the arbitrators issued a written award ("The Scandinavian Re Award"). The Scandinavian Re Award states:

[a] majority of the Panel finds that the [Agreement] between St. Paul and [Scandinavian Re] is valid and enforceable and shall be applied based on the written terms of that Agreement; all of [Scandinavian Re's] objections to the validity of the [Scandinavian Re Agreement] and the performance thereof, including but not limited to [Scandinavian Re's] claims for rescission, reformation, other equitable relief and damages are accordingly denied.

The Scandinavian Re Award further states that "[t]he Panel finds that the [Scandinavian Re Agreement] provides for separate Experience Accounts for each underwriting year covered by the [Scandinavian Re Agreement] and rules that the experience accounts should be administered and applied in the manner set forth by St. Paul at the hearing."

C. The Platinum Bda/PMA Arbitration

In 2003, PMA and Platinum Bda entered into a finite retrocessional agreement under which PMA ceded certain insurance risks to Platinum Bda (the "Platinum Bda Agreement"). Hedges appears to have negotiated and signed the Platinum Bda Agreement on behalf of Platinum Bda. On June 2, 2008, Platinum demanded arbitration to resolve a dispute concerning the validity and scope of the Deficit Carry Forward Provision contained in the Platinum Bda Agreement. Specifically, Platinum Bda sought "a declaration that, in the calculation of the balance of the Experience Account under Article 15 of the [Platinum Bda Agreement], Platinum [Bda] is entitled to the benefit of the deficit carry forward from PMA's 1999-2001 contract with St. Paul Re." Platinum Bda and PMA also disputed whether the Platinum Bda Agreement created one experience account or three separate annual experience accounts. Platinum Bda appointed Gentile as its party-arbitrator and Dassenko was chosen as the umpire. David Thrillkill served as PMA's party-appointed arbitrator.

On September 23, 2008, Platinum Bda, PMA and the arbitrators held an organizational meeting at which the arbitrators disclosed their potential conflicts of interest. Among other things, Dassenko disclosed that he was currently serving as an arbitrator with Gentile on another "matter where [he] was appointed in December of 2007." The matter that Dassenko referred to was the Scandinavian Re Arbitration. However, Dassenko never stated that Scandinavian Re or St. Paul were involved in that arbitration. During Gentile's disclosures Gentile acknowledged that he and Dassenko "currently serve on one arbitration panel together. [Dassenko] is the umpire. This is ongoing, and a hearing is scheduled for May of `09." Gentile was also referring to the Scandinavian Re Arbitration. During his disclosures, Gentile additionally stated "[w]ith respect to the parties, PMA, Platinum and Platinum's predecessor, St. Paul Re, this is the first matter that I will be serving on an arbitration on." Neither Gentile nor Dassenko clarified that St. Paul entities were parties in their mutual concurrent arbitration.

The parties met with the Arbitrators in Philadelphia on March 31, 2009, April 1, 2009, and May 20, 2009 to present evidence, testimony, and legal argument. Hedges's videotaped deposition was presented on March 31, 2009. Platinum's counsel used Hedges's testimony to argue that the Platinum Bda Agreement should be enforced as written. On May 22, 2009, the arbitrators issued an award (the "Platinum Bda Award") finding, inter alia, that all references to a deficit carry forward provision in the Platinum Bda Agreement would be "`removed from the contract.'" On June 3, 2009, PMA filed a petition to vacate, or in the alternative to modify, the Platinum Bda Award arguing that the arbitrators' decision was "impermissibly contrary to both the relief sought by the Parties and the plain language of the [Platinum Bda Agreement]." On September 17, 2009, Judge Paul S. Diamond of the Eastern District of Pennsylvania vacated

the Platinum Bda Award on the grounds that it could not be rationally derived from the parties' submissions and it was "completely irrational."

D. The Relationship Between St. Paul and Platinum Bda

The parties disagree about the extent of the relationship between St. Paul and Platinum. Scandinavian Re characterizes Platinum Bda as St. Paul's "successor entity" and asserts that in 2002, The St. Paul Companies "created Platinum and then sold shares to the public in an [initial public offering ("IPO")]." Scandinavian Re points to the Platinum Holdings Form S-1 Registration Statement, which indicates that The St. Paul Companies and its subsidiaries agreed to contribute "substantially all of its continuing reinsurance business and assets relating thereto" to Platinum Holdings' consolidated operations. Platinum Holdings' consolidated operations included Platinum Bda, and Platinum Regency Holdings, a wholly owned intermediate holding subsidiary, which owned Platinum Underwriters Reinsurance, Inc. ("Platinum US") and Platinum Re (UK) Limited.

St. Paul contends that Platinum Bda "does not now, nor has it ever, shared any corporate interrelatedness with St. Paul." In support of this contention, St. Paul submits the affidavit of Ronald H. Smillie, Vice-President of Travelers Special Services. Smillie states that based on his knowledge of the industry and his review of SEC filings, his "understanding" is that "St. Paul has not had any corporate interrelationships with Platinum Bda," although The St. Paul Companies, of which St. Paul was a part, Travelers Companies Inc. ("Travelers"), and Travelers Special Services "had dealings and/or a relationship with Platinum US and Platinum Holdings."

Scandinavian Re alleges that St. Paul "administers [the] agreement [under which St. Paul contributed its reinsurance business and assets to Platinum Holdings' consolidated operations] and receives several hundred thousand dollars in fees annually from Platinum." St. Paul admits that Travelers Special Services receives approximately $300,000 "to administer claims and to provide actuarial and administrative services," but claims that these fees are for business ceded by St. Paul to Platinum US. The parties agree that Travelers currently holds a financial stake in Platinum. However, St. Paul explains that since January 10, 2005 Travelers has only held options to acquire 702,140 shares of Platinum Holdings' common stock. If Travelers exercised all its options, it would own approximately 1.3% of Platinum Holdings' common stock. The parties also agree that following Platinum Holdings' IPO, approximately 180 St. Paul employees left to join Platinum Holdings' consolidated operations, including

Platinum Bda. Elizabeth Mitchell, who was instrumental in negotiating the Scandinavian Re Agreement and was a pivotal witness in the Scandinavian Re arbitration, left St. Paul to join Platinum US. During her testimony in the Scandinavian Re Arbitration, Mitchell discussed the relationship between The St. Paul Companies and Platinum Holdings.

III. APPLICABLE LAW

A. Confirmation of an Arbitration Award Under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention") applies to arbitration proceedings that arise out of commercial legal relationships where at least one foreign party is involved. Under the Convention:

Within three years after an arbitral award falling under the Convention is made, any party to the arbitration may apply to any court having jurisdiction under this chapter for an order confirming the award as against any other party to the arbitration. The court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.

Section V of the Convention states that a court may refuse to confirm a foreign award if it "has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made." Accordingly, the Convention permits "a court in the country under whose law the arbitration was conducted to apply domestic arbitral law, in this case the [Federal Arbitration Act ("FAA")], to a motion to set aside or vacate that arbitral award."

B. Vacature of an Arbitration Award Under the FAA

Under the FAA, the party challenging an arbitral award has the burden of proving the existence of grounds to vacate. Section 10(a)(2) of the FAA allows a court to vacate an arbitration award "where there was evident partiality or corruption in the arbitrators, or either of them." In Morelite Construction Corp. v. New York City District Carpenters Benefit Funds, the Second Circuit held "that `evident partiality' . . . will be found where a reasonable person would have to conclude that an arbitrator was partial to one party to the arbitration." Under the Morelite standard, the party moving to vacate an arbitration award must show more than an appearance of bias, but proof of actual bias is not required.

The Second Circuit has "`not been quick to set aside the results of an arbitration because of an arbitrator's alleged failure to disclose information'" and there is no per se rule requiring vacatur of an award whenever an undisclosed relationship is discovered. This is because "`a principal attraction of arbitration is the expertise of those who decide the controversy,' that `[e]xpertise in an industry is accompanied by exposure . . . to those engaged in it, and the dividing line between innocuous and suspect relationships is not always easy to draw.'" However, "[a]n arbitrator who knows of a material relationship with a party and fails to disclose it meets Morelite's `evident partiality' standard." Additionally, "arbitrators must take steps to ensure that the parties are not misled into believing that no nontrivial conflict exists." Accordingly, when "an arbitrator has reason to believe that a nontrivial conflict might exist, he must (1) investigate the conflict (which may reveal information that must be disclosed . . .) or (2) disclose his reason for believing there might be a conflict and his intention not to investigate."

C. Statute of Limitations

Under section 12 of title 9 of the United States Code, a party wishing to "vacate, modify, or correct" an arbitration award must serve notice of the motion on "the adverse party or his attorney within three months after the award is filed or delivered." If the adverse party is not a resident of the district in which the award was made, "then the notice of the application shall be served by the marshal of any district within which the adverse party may be found in like manner as other process of the court." The phrase "in like manner as other process of the court" refers to Rule 4 of the Federal Rules of Civil Procedure. Rule 4 states that to serve process, "[a] summons must be served with a copy of the complaint."

IV. DISCUSSION

A. Statute of Limitations

St. Paul argues that Scandinavian Re's Petition is time barred because Scandinavian Re failed to serve a summons on St. Paul prior to the expiration of the three-month statute of limitations. The facts regarding service of the Petition are undisputed. The parties received the Scandinavian Re Award by email on August 19, 2009. On November 16, 2009, St. Paul's counsel agreed to accept service of the Petition on St. Paul's behalf. That same day, Scandinavian Re served the Petition, its memorandum of law, and all supporting affidavits on St. Paul's counsel. Scandinavian Re did not serve a summons.

Scandinavian Re argues it did not need to serve a summons along with its Petition. First, Scandinavian Re alleges that prior to filing the Petition, it confirmed with the clerk's office for the Southern District of New York that a summons is never issued with a petition. Second, Scandinavian Re points to Homes Ins. Co. v. RHA/Penn. Nursing Home, Inc. where the court rejected the argument that a petition to confirm an arbitration award should be dismissed because the petitioner failed to serve a summons. The court reasoned that section 9 of title 9 of the United States Code, only contemplated service of "`notice of the application' to confirm the [arbitration] award . . ., not a summons." Homes Ins. Co. is persuasive. Sections 9 and 12 appear to refer to Rule 4 only to indicate the manner of service, not to indicate which documents must be served. Scandinavian Re's service of its Petition was sufficient to give St. Paul notice of its petition to vacate the Scandinavian Re Award. Such service is sufficient to comply with Section 12.

Even if Scandinavian Re's failure to serve the summons resulted in defective service, such a defect can be excused by considerations of fairness in cases that result from arbitration proceedings. This is because, when parties enter into an agreement to arbitrate in a particular forum, they consent to personal jurisdiction in the courts of that forum. Therefore, the only purpose of process in cases resulting from arbitration proceedings within a court's jurisdiction is to alert the opposing party that a court action has commenced, not to establish personal jurisdiction over the opposing party.

Here, the arbitration provision in the Scandinavian Re Agreement states that "[u]nless the panel [of arbitrators] agrees otherwise, arbitration will take place in New York, New York" and that "[j]udgement upon the award may be entered in any court having jurisdiction thereof." Accordingly, by agreeing to arbitrate in New York City and agreeing that the award could be enforced by courts having jurisdiction over New York City, Scandinavian Re and St. Paul consented to personal jurisdiction in this Court. Thus service was only necessary to alert St. Paul of the Petition to Vacate. Scandinavian Re's failure to serve a summons can be excused in the interests of justice because Scandinavian Re provided actual notice of the Petition to St. Paul thereby effectuating the sole purpose of service.

B. Evident Partiality

Scandinavian Re argues that this case is governed by Applied Industrial Materials Corp. v. Olvalar Makine Ticaret Ve Sanayli A.S. (" Applied Industrial"). In Applied Industrial the Second Circuit determined that "an arbitrator who knows of a material relationship with a party and fails to disclose it meets Morelite's `evident partiality' standard: A reasonable person would have to conclude that an arbitrator who failed to disclose under such circumstances was partial to one side." St. Paul argues that Applied Industrial is inapplicable to this case because it addresses an undisclosed relationship between an arbitrator and a party to the arbitration, whereas this case addresses the undisclosed relationships "between two arbitrators and/or . . . between an arbitrator and a non-party." St. Paul's attempt to distinguish Applied Industrial is unconvincing. A reasonable person concludes that an arbitrator is partial to one side because the undisclosed relationship is material, not because the material relationship is with a party. In other words, the significance of the undisclosed relationship is the decisive factor, not which people the relationship involves.

St. Paul does not (and cannot) argue that either Dassenko or Gentile disclosed their service as arbitrators in the Platinum Bda Arbitration or that they had heard testimony from Hedges less than three months prior to his testimony in the Scandinavian Re Arbitration. Dassenko and Gentile were clearly aware of their involvement in the Platinum Bda Arbitration and Hedges's appearance as a witness. Accordingly, the only issue is whether the undisclosed relationships involved in the Platinum Bda Arbitration were material.

St. Paul argues that the undisclosed relationships were trivial because (1) neither Dassenko nor Gentile had any financial (or other) interest in the outcome of the arbitration; and (2) neither Dassenko nor Gentile had any direct relationship with St. Paul. St. Paul also concludes that the contemporaneous timing of the Scandinavian Re Arbitration and the Platinum Bda Arbitration is irrelevant because Scandinavian Re "does not allege the existence of a relationship between the Arbitrators and a party." A financial interest in the outcome of the arbitration or a direct relationship with a party are relevant considerations when determining whether a relationship is material to the arbitration at issue. However, the absence of these factors is not dispositive as to whether a relationship is material — all of the circumstances must be considered, including the timing of the arbitrators' relationships with each other, and with witnesses to the arbitration.

In this case, the Scandinavian Re Arbitration and the Platinum Bda Arbitration were presided over by two common arbitrators, overlapped in time, shared similar issues, involved related parties, included Hedges as a common witness that supported interpreting the Platinum Bda Agreement as written but interpreting the Scandinavian Re Agreement in light of Scandinavian Re's intent at the time it entered into the agreement. Additionally, Mitchell was employed by Platinum US at the time she appeared as a witness in the Scandinavian Re Arbitration. By participating in both the Scandinavian Re Arbitration and the Platinum Bda Arbitration, Dassenko and Gentile placed themselves in a position where they could receive ex parte information about the kind of reinsurance business at issue in the Scandinavian Re Arbitration, be influenced by recent

credibility determinations they made as a result of Hedges's testimony in the Platinum Bda Arbitration, and influence each other's thinking on issues relevant to the Scandinavian Re Arbitration. By failing to disclose their participation in the Platinum Bda arbitration, Dassenko and Gentile deprived Scandinavian Re of an opportunity to object to their service on both arbitration panels and/or adjust their arbitration strategy. Dassenko and Gentile's failure to disclose their participation in the Platinum Bda Arbitration and their recent consideration of Hedges's testimony is not excused even if they believed in good faith that they would not be influenced by the information they learned during the course of the Platinum Bda Arbitration.

Taken together, these factors indicate that Dassenko and Gentile's simultaneous service as arbitrators in the Scandinavian Re Arbitration and the Platinum Bda Arbitration constituted a material conflict of interest. Support for this conclusion is strengthened by a comparison of the relationships involved in the Platinum Bda Arbitration with other less significant or temporally remote relationships that Dassenko and Gentile considered important enough to disclose. Dassenko and Gentile's failure to disclose their participation in the

Platinum Bda Arbitration meets the Morelite standard for evident partiality because the undisclosed relationships involved in the Platinum Bda Arbitration collectively were material and Dassenko and Gentile had actual knowledge of those relationships.

V. CONCLUSION

For the reasons set forth above, Scandinavian Re's petition to vacate the arbitration award is granted and St. Paul's cross-petition to confirm the arbitration award is denied. This matter is remanded for arbitration in front of a new panel of arbitrators selected in accordance with the Scandinavian Re Agreement. The new panel of arbitrators shall not include Dassenko, Gentile, or Rosen. St. Paul is ordered to return and/or release all funds paid or posted by Scandinavian Re in response to orders made by the arbitration panel during the Scandinavian Re Arbitration, return funds drawn by St. Paul from letters of credit posted by Scandinavian Re, and take any other steps necessary to return both parties to the positions that they were in as of September 26, 2007, the day St. Paul demanded arbitration. St. Paul must refrain from drawing on any collateral posted by Scandinavian Re until a further order of this Court or an order from the new panel of arbitrators permits them to do so. Any interim orders of the original arbitration panel are set aside. The Clerk of the Court is directed to close these motions and this case (09 Civ. 9531).

SO ORDERED.

See S-1 Excerpts at 3.