Arbitration requirements, found either within the basic D&O policy form or as an attached endorsement, may appear innocuous but can contain onerous language. Such clauses can be troublesome, especially where binding arbitration is made a mandatory provision of the policy. Arbitration ordinarily means a proceeding voluntarily undertaken by parties who want a dispute resolved on the merits of the case by an impartial decision maker, whose decision the parties agree to accept as final and binding. Arbitration usually imports a procedure that is speedy, economical, and bears equally on insured and insurer. While arbitration is favored by many courts as a means of relieving overburdened calendars, it often favors the insurer and can still prove expensive. The following is a discussion of various arbitrations provisions that appear in D&O insurance policies.
Mandatory and Binding Arbitration
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