As Chinese insurance companies expand their overseas operations, the frequency of insurance disputes in foreign jurisdictions has also increased. In addition to traditional litigations and institutional arbitrations, there are various alternative dispute resolution methods available for resolving international insurance disputes. One such method is arbitration under relevant rules of insurance industry association.
Recently, AnJie Broad assisted a Chinese P&C insurance company in defending a reinsurance arbitration under the ARIAS US arbitration rules. Throughout the case, we assisted the client navigate multiple reinsurance claims involved in the dispute, engaging in proactive communication with opposing counsel to request a stay of the arbitration proceedings. This effort brought our client valuable time to continue processing the claims. Ultimately, with our assistance, the parties reached an amicable settlement, avoiding the negative consequences of a hasty loss in an overseas trial.
This article draws on our experience handling this case to provide an introduction to the basics of ARIAS US arbitration. We aim to offer guidance to Chinese insurance companies facing potential overseas disputes, helping them avoid the losses that can arise from rushed and disorganized responses to foreign disputes.
I. Introduction to ARIAS US
ARIAS stands for the AIDA Reinsurance and Insurance Arbitration Society, which is the international association for reinsurance and insurance arbitration under the International Insurance Law Association (AIDA).
AIDA (Association Internationale de Droit des Assurances) is a global organization that brings together lawyers, academics, regulators, and others with an interest in comparative insurance law and regulation. Founded in 1960 in Luxembourg, AIDA has since expanded to include approximately 50 national branches. The organization is dedicated to advancing the understanding and practice of international insurance law.
(Logo of AIDA)
ARIAS US is the U.S. branch of ARIAS. Founded in 1994 and based in Chicago, ARIAS US is a non-profit organization committed to improving the arbitration process for both international and domestic insurance and reinsurance markets in the United States. ARIAS US has certified a group of qualified arbitrators, enabling parties involved in disputes to appoint professionals who can resolve disagreements in an efficient and expert manner.
(Logo of ARIAS US)
As of now, ARIAS has a total of seven global branches, including the US branch, as detailed below:
| Branch | Time of Foundation |
| ARIAS-UK | 1991 |
| ARIAS-US | 1994 |
| CEFAREA ARIAS France | 1995 |
| ARIAS Germany | 2006 |
| ARIAS LATAM | 2011 |
| ARIAS ASIA (Hong Kong) | 2017 |
| ARIAS-Ireland | 2021 |
Bylaw of ARIAS US describes the its objectives as follows:
- To promote the integrity of the private dispute resolution process, particularly in the insurance and reinsurance industry.
- To promote just awards in accordance with industry practices and procedures.
- To certify objectively qualified and experienced individuals to serve as arbitrators.
- To provide training sessions in the skills needed to be certified as arbitrators.
- To propose model rules of arbitration proceedings and model arbitration clauses.
- To promote high ethical standards in the conduct of arbitration proceedings.
- To foster the development of arbitration law and practice as a means of resolving national and international insurance and reinsurance disputes in an efficient, economical and just manner.
Therefore, we can see that ARIAS US is not a traditional arbitration institution. Instead, it serves as a specialized dispute resolution body under the umbrella of the industry association. In other words, it does not offer arbitration case management services typically provided by arbitration institutions. Rather, its mission and function are to support arbitration activities for the parties involved, enhancing the overall dispute resolution standards within the insurance industry. Its activities include formulating arbitration rules, providing a candidate panel of arbitrators, and offering training for arbitrators. The organization’s objectives strongly reflect its role as a service-oriented industry association.
Since ARIAS US does not manage or intervene in arbitration cases, the arbitration proceedings conducted under the ARIAS US rules fall under the category of “ad hoc arbitration”, which is a common practice in international arbitration. Ad hoc arbitration, in contrast to institutional arbitration, is a system where the parties, in accordance with their arbitration agreement, independently establish the arbitration tribunal. Even when a permanent arbitration institution is involved, the institution does not manage the procedural aspects; instead, the parties agree on a temporary procedure or refer to specific arbitration rules, or they may authorize the tribunal to determine its own procedures. Ad hoc arbitration and institutional arbitration are two different types within the arbitration framework. PRC domestic arbitration bodies like CIETAC and BAC are examples of institutional arbitration.
Compared to institutional arbitration, ad hoc arbitration offers more flexibility to meet the parties’ specific needs. The parties can freely agree on and select the arbitration rules, and they can also design, amend, or supplement the temporary arbitration rules according to their preferences or authorize others to do so. Arbitration conducted under the ARIAS US arbitration rules reflects a strong element of party autonomy, which will be further described below.
II. Introduction to ARIAS US Arbitration Rules
As mentioned earlier, one of the key functions of ARIAS US is to provide arbitration rules for the resolution of insurance and reinsurance industry disputes. The organization has developed the following arbitration rules:
- ARIAS US Rules for the Resolution of U.S. Insurance and Reinsurance Disputes
- ARIAS US Neutral Panel Rules for the Resolution of U.S. Insurance and Reinsurance Disputes
- ARIAS US Streamlined Rules for the Resolution of U.S. Insurance and Reinsurance Disputes
- ARIAS US Panel Rules for the Resolution of Insurance and Contract Disputes
The four sets of arbitration rules mentioned above are broadly similar, though each has its own distinct features, offering parties flexibility to choose the most appropriate set for their specific situation.
For example, the ARIAS US Rules for the Resolution of U.S. Insurance and Reinsurance Disputes is the standard set of rules for ARIAS US, characterized by its broad applicability and suitability for most insurance and reinsurance dispute cases. The ARIAS US Neutral Panel Rules for the Resolution of U.S. Insurance and Reinsurance Disputes establishes a more complex procedure for the appointment of arbitrators compared to the standard rules. The ARIAS US Streamlined Rules for the Resolution of U.S. Insurance and Reinsurance Disputes are designed for cases involving disputes under USD 1 million, and under such rules, a sole arbitrator will handle the case. The ARIAS US Panel Rules for the Resolution of Insurance and Contract Disputes introduces ARIAS US’s assistance in the arbitrator appointment process, enabling parties to designate arbitrators smoothly and facilitating the progression of the arbitration process.
It is worth noting that, with the exception of the streamlined rules, the other three sets of ARIAS US arbitration rules contain the following provisions:
“These Rules are not intended to supersede any express contractual agreement between the Parties. Accordingly, the Parties may agree on any rules or procedures not specified herein, or may alter these Rules by written agreement. These Rules shall control any matters not changed by the Party-agreed procedures.”
The Panel shall have all powers and authority not inconsistent with these Rules, the agreement of the Parties, or applicable law.”
It is evident that the intention behind ARIAS US’s arbitration rules is not to compel parties to strictly adhere to its procedural framework. On the contrary, these rules reflect a high degree of respect for party autonomy, allowing parties to modify the arbitration rules as needed to facilitate the arbitration process. At the same time, the tribunal holds significant authority in managing and advancing the arbitration proceedings.
Therefore, we advise insurance companies to be mindful that, in specific cases, even if the parties have selected particular arbitration rules, they should also give due attention to any specific procedural provisions outlined in the disputed agreements or arbitration clauses. In cases where the parties’ agreement conflicts with the arbitration rules, the parties’ agreement should take precedence.
III. Introduction to the ARIAS US Arbitration Process
Taking the ARIAS US Rules for the Resolution of U.S. Insurance and Reinsurance Disputes as an example, the arbitration process under ARIAS US generally consists of the following stages:
- Commencement of Arbitration and Respondent’s Reply
The ARIAS US arbitration process is initiated when the claimant sends a Notice of Arbitration to the respondent. Once the respondent or its designated representative receives the claimant’s Notice of Arbitration, the arbitration proceedings officially commence.
The Notice of Arbitration shall include the following details: (1) Petitioner and the name of the contact person to whom all communications are to be addressed (including telephone and e-mail information); (2) Respondent against whom arbitration is sought; (3) contracts at issue; and (4) a short and plain statement of the nature of the claims and/or issues. In addition, the Claimant shall appoint one arbitrator in its Notice of Arbitration.
It is important to note that, unlike traditional institutional arbitration, initiating arbitration under the ARIAS US arbitration rules does not require the claimant to send any notification directly to ARIAS US itself. ARIAS US also typically does not intervene in the arbitration proceedings or send any notifications to the respondent regarding the initiation of the arbitration. This may be unfamiliar to domestic insurance companies that are accustomed to arbitration institutions managing the arbitration process.
In the recent case we have handled, the Notice of Arbitration was sent by the overseas claimant to the brokers handling the reinsurance business disputed, thus completing the service to the domestic respondent and initiating the arbitration. Throughout the entire case, no ARIAS US personnel were involved.
Furthermore, the Arbitration Rules explicitly state that the claims set out in the Notice of Arbitration may be amended prior to the Organizational Meeting. Any amendments made after the Organizational Meeting must be approved by the tribunal.
Once the respondent receives the Notice of Arbitration, they are required to respond within 30 days. The response shall include: (1) identification of the entities on whose behalf the Response is sent and the name of the contact person to whom all communications are to be addressed (including telephone and e-mail information); (2) designation of the Respondent’s Party-appointed arbitrator, in accordance with ¶ 6.3; (3) a short and plain response to the Petitioner’s statement of the nature of its claims and/or issues; and (4) a short and plain statement of any claims of the Respondent. Additionally, the respondent shall appoint one arbitrator in its response.
The respondent’s reply may be amended prior to the Organizational Meeting. Any modifications made after the Organizational Meeting require the tribunal’s consent.
2. Establishment of the Tribunal
According to the Arbitration Rules, both the claimant and respondent must each appoint one arbitrator within 30 days after the arbitration proceedings commence. If no appointment is made within this time, the other party may appoint the second arbitrator.
For the respondent, this 30-day period begins from the date they receive the Notice of Arbitration. As such, the respondent faces a relatively tight timeline, as they must complete a range of tasks within 30 days, including reviewing the arbitrator panel list and candidate arbitrators’ backgrounds, selecting and connecting an arbitrator, and completing the appointment process—all without the assistance of an arbitration institution. This can be a significant challenge for parties unfamiliar with ARIAS US arbitration.
In the recent case we have handled, the domestic insurance company failed to appoint an arbitrator within 30 days of receiving the Notice of Arbitration. The claimant then attempted to appoint the second arbitrator on behalf of the respondent, which would have resulted in a substantial procedural disadvantage to the respondent.
However, after carefully reviewing the relevant reinsurance policy disputed, we discovered that the policy set a 45-day deadline for appointing arbitrators in case of a consolidated arbitration. Since the claimant alleged to file a consolidated arbitration against the respondent and we intervened before the 45-day deadline had expired, we raised an objection to the claimant and successfully completed the respondent’s arbitrator appointment within this timeframe. The claimant ultimately accepted our position and recognized the arbitrator appointed by the respondent.
Regarding arbitrator qualifications, the Arbitration Rules specify that arbitrators must be current or former officers or executives of insurance or reinsurance companies and must be certified by ARIAS. Currently, ARIAS US has certified more than 100 arbitrators for appointment.
Once the parties have appointed one arbitrator each, the two party-appointed arbitrators shall select an Umpire within 30 days of the appointment of the second arbitrator.
As for arbitrator fees, the Arbitration Rules state that the appointing party shall bear the costs of its selected arbitrator, while the fees for the Umpire shall be shared equally between both parties.
3. Pre-Hearing Procedures: Organizational Meeting and Discovery
The arbitrators will convene a pre-hearing Organizational Meeting to confirm key arbitration matters, including reviewing the qualifications of the arbitrators and officially confirming the tribunal’s establishment, determining the arbitration schedule, and clarifying the disputed issues. After the Organizational Meeting, the fundamental process and schedule of the arbitration will be set, and the tribunal’s establishment will be confirmed.
Following the meeting, the parties will proceed with discovery according to the schedule confirmed in the Organizational Meeting. The tribunal will lead the discovery process.
4. Arbitration Hearing
The Arbitration Rules does not provide extensive details on procedures of the hearing. Instead, it grants the tribunal significant discretion. The Arbitration Rules state that “The Panel shall not be obligated to follow the strict rules of law or evidence”. This highlights that decisions regarding the procedures of the hearing will largely depend on the tribunal’s discretion.
Additionally, the Arbitration Rules specifies that the parties may agree on the tribunal’s discretion as follows:
“The Panel Shall interpret this contract as an honorable engagement, and shall not be obligated to follow the strict rules of law or evidence. In making their Decision, the Panel shall apply the custom and practice of the insurance and reinsurance industry, with a view to effecting the general purpose of the this contract.”
We can see that the Arbitration Rules encourage the tribunal to adopt a “substance over form” approach in its rulings, emphasizing that the tribunal should address issues in accordance with the practices and customs of the insurance and reinsurance industry. This aligns with the rule requiring arbitrators to be professionals with industry experience in the insurance sector.
For foreign parties, this rule offers a dual effect. On the one hand, it alleviates concerns about unfamiliarity with U.S. insurance laws, enabling a more confident approach to the proceedings. On the other hand, it places significant demands on the legal counsel’s understanding of insurance industry practices, particularly those specific to the U.S. insurance market.
5. Issuance of the Arbitral Award
The Arbitration Rules specifies that the tribunal should generally render its award within 30 days after the hearing concludes. The tribunal’s decision is made by a majority vote, with the minority in disagreement deferring to the majority’s ruling.
As for the scope of arbitral award, the Arbitration Rules stipulates that: “The Panel is authorized to award any remedy permitted by the Arbitration Agreement or subsequent written agreement of the Parties. In the absence of explicit written agreement to the contrary, it is within the Panel’s power to award any remedy allowed by applicable law, including, but not limited to: monetary damages; equitable relief; pre- or post- award interest; costs of arbitration; attorney fees; and other final or interim relief”.
Therefore, we can see that the tribunal also enjoys considerable autonomy regarding the scope of the arbitral award.
Regarding the form of the award, the tribunal typically issues a simple award that outlines the outcome of the case, usually without including a detailed reasonings. However, the arbitration rules also stipulate that: “If both Parties request a written rationale for the Panel’s final award, the Panel shall provide one. If one Party requests a written rationale but the other party objects, the decision whether to issue one is at the Panel’s discretion.”
In conclusion, based on the above Arbitration Rules, we can observe the following significant characteristics of arbitration under the ARIAS US Arbitration Rules:
- Parties’ agreements prevail
- Emphasis on Industry Practices
- Simple Procedure and Fast Pace
- Tribunal-led Process
IV. Enforceability of ARIAS US Awards in Mainland China
For respondents in mainland China, a key concern regarding ARIAS US arbitration cases is whether the arbitral award can be enforced in mainland China.
Since both China and the U.S. are parties to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), parties can apply to PRC courts to recognize and enforce an arbitral award made in the U.S.
According to the Notice of the Supreme People’s Court on the Enforcement of Foreign Arbitral Awards under the New York Convention, if there are no special circumstances such as invalid arbitration agreement, serious flaws in the arbitration procedure, overstepping jurisdiction, defects in the award’s validity, or violations of China’s public policy, PRC court will generally recognize and enforce foreign arbitral awards. In addition, according to the Supreme People’s Court’s Provisions on the Judicial Review of Arbitration Cases, if a PRC court intends to refuse recognition of a foreign arbitral award, it must report the decision to the higher PRC court and the Supreme People’s Court for approval. Therefore, the likelihood of a PRC court rejecting the recognition and enforcement of a foreign arbitral award is relatively low.
It is worth noting that although the arbitration under the ARIAS US rules is ad hoc arbitration rather than institutional arbitration, according to Article 543 of the Interpretation of the Civil Procedure Law of the People’s Republic of China, arbitration awards made by an ad hoc tribunal outside of China can still be recognized and enforced by PRC courts in accordance with the New York Convention. Therefore, the ad hoc nature of the ARIAS US arbitration does not affect the recognition and enforcement of related arbitral awards by PRC courts.
V. Conclusion and Insights
From the above, it is evident that the arbitration under the ARIAS US rules differs significantly from the arbitration procedures typically encountered by domestic insurance companies. However, this difference does not affect the enforceability of the arbitral award in mainland China. Therefore, insurance companies involved in such arbitration cases should still give these matters due attention.
Furthermore, since the arbitration process is fast-paced, once involved in a dispute, we recommend that insurance companies engage professional lawyers as soon as possible to safeguard their procedural and substantive interests and avoid potential losses resulting from unfamiliarity with international arbitration rules.
