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Jurisdiction Issues

INTERPRETATION OF TREATY’S “ACT-AS-ONE” PROVISION HELD TO BE A PROCEDURAL ISSUE FOR ARBITRATORS TO DECIDE

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National Casualty is one of several reinsurers providing reinsurance to Munich Re under a single treaty. Munich Re submitted claims under the treaty that were denied by National Casualty and another reinsurer, Wasau. The treaty provided disputes would be submitted to arbitration and that if more than one reinsurer was involved in the same dispute, all the reinsurers would constitute and act as one party. Wasau refused to submit to the arbitration, however, and National Casualty refused to proceed without Wasau, taking the position that the treaty’s “act-as-one” clause prohibited the arbitration from going forward without Wasau as a party. Munich Re successfully moved to compel. The district court held that whether the “act-as-one” provision prohibited a separate arbitration against National Casualty was a threshold procedural issue for the arbitrators to decide. Munich Reinsurance America, Inc. v. National Casualty Co., Case No. 10 Civ. 5782 (USDC S.D.N.Y. April 26, 2011).

This post written by Ben Seessel.

SECOND CIRCUIT REMANDS FOR CONSIDERATION OF PERSONAL JURISDICTION ISSUES WITH RESPECT TO ORDER CONFIRMING CHINESE ARBITRATION AWARD

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Last year, we reported that the Southern District of New York had confirmed an arbitration award made by the China Maritime Arbitration Commission against Pactrans Air & Sea, Inc. (“Pactrans”), notwithstanding Pactrans’ argument that the award was being challenged before the proper authorities in China. The judgment recognizing the award was subsequently appealed by Pactrans on jurisdictional grounds. The Second Circuit Court of Appeals remanded the case, instructing the district court to determine whether it decided the issue of its personal jurisdiction over Pactrans, and, if not, to enter an order to show cause why it should not dismiss the case for lack of personal jurisdiction. China Nat’l Chartering Corp. v. Pactrans Air & Sea, Inc., No. 09-4956 (2d. Cir. Jan. 19, 2011).

This post written by Ben Seessel.

COURT STANDS BY “NERVE CENTER” DETERMINATION IN REINSURANCE DISPUTE

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On January 27, 2011, we reported on a court’s application of the “nerve center” test to dismiss for lack of diversity of citizenship a case seeking the return of excess reinsurance deposit. The insurer alleged its domicile in the complaint, but failed to allege the location of its principal place of business. The nerve center was the “single place” where direction, control and coordination originated. The court earlier found that to be the state where the insurer’s president, secretary, and director were located, and not the state where most of the insurer’s board of directors and board meetings were located. The court has now denied the plaintiff’s motion to reconsider that finding, holding that plaintiff’s motion was “nothing more than a request for a second bite at the apple.” Health Facilities of California Mutual Insurance Co., Inc. v. British American Insurance Group, Ltd., Case No. CV 10-3736 (USDC C.D. Cal. April 5, 2011).

This post written by Michael Wolgin.

COURT EXERCISES PERSONAL JURISDICTION OVER CANADIAN CORPORATION BUT FINDS MOTION TO VACATE PARTIAL FINAL ARBITRAL AWARD IS NOT JUSTICIABLE

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Pearl Seas Cruises, LLC (“PSC”), a Marshall Islands company whose members are Connecticut residents, petitioned a Connecticut federal district court to vacate a partial final arbitral award issued by a panel of arbitrators in connection with its dispute against Canadian corporation, Irving Shipbuilding Incorporated (“ISI”). ISI moved to dismiss, arguing that the court lacked personal jurisdiction over it and that PSC’s petition was premature because no final arbitration award had been issued yet by the panel. The court held that because ISI’s sales pitch, contract negotiations, and several meetings to resolve issues regarding contract performance occurred in Connecticut, ISI had the required minimum contacts with Connecticut to subject it to the court’s jurisdiction. However, the court held that PSC’s petition was not justiciable because the panel had not yet issued a final arbitral award. Pearl Seas Cruises, LLC v. Irving Shipbuilding, Inc., Case No. 10-1294 (USDC D. Conn. Feb. 9, 2011)

This post written by Ben Seessel.

REINSURANCE LAWSUIT VOLUNTARILY DISMISSED

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On August 24, 2010, we reported that Folksamerica Reinsurance (n/k/a White Mountains Reinsurance) had been given 60 days to perfect service against Constructora Del Litoral in an action arising out of Constructora’s alleged failure to indemnify Folksamerica for sums paid in connection with reinsuring surety bonds issued for a construction project in Ecuador. In the latest development, the parties agreed to a joint stipulation of dismissal of the action with prejudice, although Folksamerica will not be precluded from pursuing claims against the defendants in Ecuador. The district court entered an order dismissing the case on February 25, 2011. Folksamerica Reinsurance Co. v. Constructora Del Litoral, S.A., Case No. 10-20560 (S.D. Fla. Feb. 25, 2011).

This post written by John Black.