Originally from ADR and the Law - 20th Edition

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The U.S. District Court for the Northern District of Ohio held that an arbitrator could award costs even where the arbitration agreement did not specifically allow for it, since the procedures governing the arbitration allowed for the award of costs. Aasma v. American Steamship Owners Mutual Protection and Indemnity, 238 F. Supp. 2d 918 (N.D. Ohio 2003).
From 1959-1975, States Steamship Co. was insured by The West of England Shipowners Mutual Insurance Association (West). In 1986, merchant seamen employed by States filed personal injury lawsuits against the company claiming they were injured by exposure to asbestos during their service aboard States’ vessels. Before these claims were filed (in 1979), however, States had filed a bankruptcy proceeding, which officially closed in 1991. Because States never responded to the plaintiffs’ complaints, default judgments were entered against the company in 1990.
The plaintiffs sought a declaration that they were entitled to proceed directly against West for payment on the claims against States. Since there was an arbitration clause in the insurance contract between West and States, West sought a stay pending arbitration. The Sixth Circuit held that the plaintiffs “have no conceivable claim against West that did not derive from the contract between West and States.” As a result, the court held that the plaintiffs were bound by the arbitration clause.