STORY FROM: Reinsurance & Arbitration

Court Must Decide Arbitrability of Applied Underwriters Dispute, Calif. Appeals Court Says

SAN DIEGO — The court, not an arbitrator, must determine whether a lawsuit challenging the legality of Applied Underwriters’ workers’ compensation program is arbitrable, a California appeals court has held, explaining that arbitration agreements and delegation clauses are independent contracts, and therefore a court must resolve challenges to their validity.

In an Oct. 19 opinion, the California Court of Appeal, 4th District, concluded that the dispute is not arbitrable because the agreements containing the arbitration clauses were never approved by the state insurance commissioner.

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