Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

You are here: Home / Archives for Carlton Fields

Carlton Fields

ENGLISH APPELLATE COURT AFFIRMS ENGLISH JURISDICTION AND APPLICATION OF ENGLISH LAW TO REINSURANCE AGREEMENT FORMED IN SWITZERLAND

by

In a case pending in English court brought by a property insurer against Swiss-based Glacier Reinsurance AG, another reinsurer, and an English reinsurance brokerage, Glacier moved to dismiss, contending that the proper venue for the claims against it was a court in Switzerland, its domicile. The English court denied Glacier’s motion and the English Appellate Court affirmed. The court applied Article 6 of the Lugano Convention and applicable interpretive case law, which provide that a defendant may be sued in the state of domicile of one of its co-defendants when necessary to avoid the risk of irreconcilable judgments. The court explained that this risk exists when the same situation in law and in fact applies to the claims of multiple defendants. The court held that English Law governed the claims against Glacier because Glacier made a “demonstrable choice” of English law when, among other things, it participated in the London market. The court noted that the reinsurance agreement, which was presented to Glacier and accepted by Glacier in Switzerland, should not be construed as a separate placement in the Swiss market. The court also stressed the “commercial need” for a dispute involving multiple parties to be determined by one tribunal. Gard Marine & Energy Ltd. v. Lloyd Tunnicliffe, [2009] EWHC 2388 (Ct. App. Oct. 6, 2010).

This post written by Michael Wolgin.

INTERNATIONAL ASSOCIATION OF INSURANCE SUPERVISORS 17TH TRI-ANNUAL CONFERENCE

by

The International Association of Insurance Supervisors (IAIS) — a consortium of insurance and reinsurance regulators and supervisors from 190 jurisdictions around the world — had its tri-annual conference and general meeting in Dubai on October 29, 2010. The conference featured discussions about regulatory reforms in light of continuing global financial crises. The IAIS adopted a “Strategic Plan and Financial Outlook” for 2011 to 2015, to ensure resources are in place to strengthen overall supervision. It also approved a two-year roadmap to ensure timely progress toward high level goals. The IAIS will undertake research and analysis of systemic risk in the insurance sector, and the means by which to assess those risks from qualitative and quantitative standpoints. It adopted eight “supervisory papers,” which revised the insurance core principles with supporting standards and guidance materials. The IAIS also announced the signing of two more signatories to the IAIS Multilateral Memorandum of Understanding, the members of which voluntarily agree to be bound by certain minimum regulatory standards (no U.S. authority has yet signed). For more details, see the attached Press Release.

This post written by John Pitblado.

CALIFORNIA OFFICE OF ADMINISTRATIVE LAW INVALIDATES CALIFORNIA DOI IRAN DIRECTIVE

by

In July, we reported on a California Department of Insurance directive requiring insurance companies to divest themselves of investments in Iran. Recently, the California Office of Administrative Law reviewed the DOI’s rules and determined that the challenged directive met the definition of a “regulation” pursuant to California Government Code § 11342.600. Accordingly, the directive should have been, but was not, adopted pursuant to the Administrative Procedures Act. Thus, the OAL concluded that the directive as issued was invalid. The American Council of Life Insurers, 2010 OAL Determination No. 21 (Oct. 11, 2010).

This post written by John Black.

ARBITRATION ROUND-UP

by

Manifest Disregard:

Amway Global v. Woodward, Case No. 09-12946 (USDC E.D. Mich. Sept. 30, 2010) (rejecting multiple manifest disregard of law challenges, including that arbitrator, in applying Michigan law, failed to follow Fifth Circuit ruling that plaintiff’s standard agreement was illusory and unenforceable under Texas law)

Church Insurance Co. v. Ace Property & Casualty Insurance Co., Case No. 10-00698 (USDC S.D.N.Y. Sept. 23, 2010) (granting unopposed petition to confirm award; court’s independent review found no evidence of manifest disregard)

Exceeding Arbitrators’ Authority:

Wachovia Securities, LLC v. Brand, Case No. 08-02349(USDC D.S.C. Aug. 26, 2010) (granting motion to confirm award; panel did not exceed authority to make award under South Carolina Frivolous Civil Proceedings Sanctions Act)

Ike America, LLC v. Kredit Karte, Inc., Case No. 10-03153 (USDC E.D. Pa. Sept. 1, 2010) (granting motion to confirm award; rejecting argument that award was improper because the award creditor’s sole shareholder was an Italian national whose immigration status did not allow him to collect income from the award, and argument that arbitrator exceeded authority because part of the award held the award debtor responsible for the actions of a non-party)

Octagon, Inc. v. Richards, Case No. 10-00652 (USDC E.D. Va. Oct. 5, 2010) (holding that because an arbitration agreement severable from an unlawful agreement covered the dispute, the matter was arbitrable, and because the dispute was of the type contemplated by both parties to be submitted to arbitration, the arbitrator did not exceed her powers)

Choice of Law:

Eyewonder, Inc. v. Abraham, Case No. 08-03579 (USDC S.D.N.Y. Sept. 3, 2010) (California rules governing unconscionability of employment agreement did not apply where sufficient contacts supported “a sufficiently reasonable relationship between New York and the transaction”)

Remand for Clarification:

Ernest v. Lockheed Martin Corp., Case No. 07-02038 (USDC D. Colo. Sept. 1, 2010) (denying motion to partially vacate arbitration award and motion to confirm arbitration award to allow remand to arbitrator for a mutual, final and definite award on the limited issue of back pay damages; observing that remand for clarification is necessary when there is more than one reasonable interpretation of the arbitration panel’s award)

Personal Jurisdiction:

NGC Network Asia, LLC v. Pac Pacific Group International, Inc., Case No. 09-08684 (USDC S.D.N.Y. Sept. 20, 2010) (denying motion to transfer, stay or dismiss petition; movant agreed to arbitrate in New York and thus also consented to personal jurisdiction and venue there)

Claim Preclusion:

Belmont Partners, LLC v. Mina Mar Group, Inc., Case No. 10-00005 (USDC W.D. Va. Oct. 1, 2010) (granting motion to confirm the arbitration award and denying motions to suspend and vacate the award; judgment by Canadian court had claim preclusive effect barring this court from deciding whether to modify or vacate the award)

Timeliness of Motion to Vacate:

R&Q Reinsurance Co. v. American Motorist Insurance Co., Case No. 10-02825 (USDC N.D. Ill. Oct. 14, 2010) (denying motion to vacate as untimely since it was filed one day after the “three month” deadline in Federal Arbitration Act section 12, declining to read “three months” to mean ninety days)

Arbitrator Bias:

CRC, Inc. v. Computer Sciences Corp., Case No. 10-04981 (USDC S.D.N.Y. Oct. 14, 2010) (rejecting motion for vacatur of a partial arbitration award and disqualification of the American Arbitration Association panel that issued it based on assertion of arbitrator bias due to professional connections between the arbitrator’s law firm and the law firm representing the respondent)

This post written by Brian Perryman.

TREATY TIP: THE IMPORTANCE OF SPECIFYING A NON-PAYMENT INTEREST RATE

by

How important is it to specify the rate at which unpaid amounts will accrue interest under a reinsurance agreement? In a Treaty Tip, Tony Cicchetti provides two examples from recent court opinions that illustrate the importance of covering this topic in a reinsurance contract.

This post written by Tony Cicchetti.