In a dispute between a general contractor and its window subcontractor arising from a $500 million construction project in Manhattan, a question arose concerning the extent to which an insurer providing subcontractor default insurance to the general contractor (as inferable, ensuring the GC against subcontractor defaults) could provoke arbitration against the subcontractor after paying the general contractor’s claim for the subcontractor’s default.

The construction project encountered significant delays, leading the general contractor to issue a notice of default to the window subcontractor and file a claim with the subcontractor default insurer. The claim resulted in a payment of over $14 million from the insurer to the GC. To recover this amount from the subcontractor, the general contractor and the insurer jointly initiated arbitration proceedings against the subcontractor through the American Arbitration Association.