Pressure for WTC Settlements Mounts, Mediators Named

Now that the plans for rebuilding the World Trade Center are once again going forward (See IJ Web site Oct. 29), how to solve the ongoing claims involving the site has taken on an even greater importance. Last week saw both hope and disappointment.

Two potentially decisive mediators were named to try and reach settlements in different areas. Federal Judge John Martin, who had successfully shepherded the case between Swiss Re and Silverstein Properties, will again become a central figure. Martin, who retired from the bench last summer, was named by his successor, Judge Michael B. Mukasey, as a special mediator to try to bring the two sides together. No one knows more about the dispute than he does.

In a related move N.Y.’s Governor George Pataki named former U.S. Senator George Mitchell, who brokered the Northern Ireland peace accords, to mediate the dispute between Deutsche Bank (DB) and its insurers concerning the bank’s building adjacent to the WTC site. DB sued both AXA and Allianz last August (it had already settled claims with Chubb and Zurich) seeking to recover the value of the building, which it has declared should be demolished. The site has been sealed off since Sept. 11, and is apparently in poor condition.

Martin and Mitchell certainly have their work cut out for them, but if they can succeed, it would greatly advance the rebuilding of the WTC. Both Silverstein and Swiss Re have accepted Martin’s mediation efforts, and are scheduled to meet with him on Thursday Nov. 6. If an agreement in the rancorous “one occurrence/two occurrences” dispute can be reached, it would not only avoid two projected trials, but also a lengthy appellate process. Pataki and other officials are well aware, that unless there is an agreement, funding the WTC’s rebuilding could be delayed for years.

A third dispute, between Silverstein and GMAC Commercial Mortgage, his principle lender, remains unsettled. The parties had indicated that they were very close to reaching an agreement last week (See IJ Web site Oct. 29), but so far they haven’t done so. Another hearing before New York State Supreme Court Judge Herman Cahn is scheduled for Nov. 12. In the meantime he has requested GMAC to free up some $25 million from an escrow account of insurance proceeds it controls, so that Silverstein can pay rent for October.