This section contains the nature of the case and procedural background.

Contracts apparently representing the agreement of Sphere (P) to reinsure risks are in D's files. P denies that it has agreed to any such reinsurance. A broker called Euro International Underwriting (EIU) wrote the reinsurance on P's behalf. EIU had actual authority to represent P, but only up to an annual limit of risks. P contends that D knew that EIU had gone over the top so that EIU had neither actual nor apparent authority. P wants the dispute resolved in court. D contends that the parties have agreed to arbitrate. It relies on the language in the short form agreements (called slip policies) that EIU signed. The district court ruled in P's favor by interpreting the text of the slip policy not to provide for arbitration. D appealed.

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