Jurisdiction Issues

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

April 14, 2011 by Carlton Fields

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

April 6, 2011 by Carlton Fields

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.

MCCARRAN-FERGUSON ACT “REVERSE-PREEMPTS” FEDERAL JURISDICTION IN INSURANCE REHABILITATION CASE

March 24, 2011 by Carlton Fields

A Wisconsin federal district court has held that it may not interfere with an insurance rehabilitation case proceeding in state court. On January 18, 2011, the federal court ruled that it lacked jurisdiction to consider the legality of a state court’s order made in the context of an insurance rehabilitation proceeding. The state court enjoined the United States from taking certain actions against the claims-paying assets of the segregated accounts of Ambac Assurance. Shortly thereafter, the United States commenced a collateral attack against the state court and others, seeking to enjoin the state court from enforcing its rehabilitation plan or any injunction insofar as it affected the United States. The federal court once again ruled it lacked jurisdiction, holding that the McCarran-Ferguson Act “reverse-preempted” I.R.C. § 7401 (which authorizes injunctions for enforcement of internal revenue laws), the federal-question statute, and the federal-tax-issue jurisdiction statute. An injunction would “impair” or “supersede” state laws authorizing the state court to issue rehabilitation orders. The court also rejected the United States’ argument that the McCarran-Ferguson Act cannot preempt sovereign immunity. The case was dismissed for lack of subject matter jurisdiction. United States v. Wisconsin State Circuit Court for Dane County, Case No. 11-99 (USDC W.D. Wis. Feb. 18, 2011).

This post written by John Black.

NINTH CIRCUIT: DISTRICT COURTS HAVE REMOVAL JURISDICTION OVER CASES RELATED TO CONVENTION ON FOREIGN ARBITRAL AWARDS

March 23, 2011 by Carlton Fields

In a recent opinion, the Ninth Circuit Court of Appeals ruled on the novel question of whether a district court had removal jurisdiction under 9 U.S.C. § 205 where a defendant raises an affirmative defense relating to an arbitral award falling under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The case arose from a dispute over medical licensing rights between entities from the British Virgin Islands, Israel, and California. After an arbitration decision finding that Infuturia Global had a valid license to develop, market, and use certain medical techniques, a California federal district court lifted an existing litigation stay on a related state court action. Infuturia moved to remand, arguing that removal was improper under 9 U.S.C. § 205 because defendants were not party to the foreign arbitration agreement. On appeal, the Ninth Circuit affirmed the district court’s ruling, holding that because an arbitration agreement or award falling under the Convention “relates to” an action’s subject matter if it could conceivably affect the action’s outcome, a district court does indeed have jurisdiction. Infuturia Global Ltd. v. Sequus Pharmaceuticals, Inc., Case No. 09-16378 (9th Cir. Feb. 7, 2011).

This post written by John Black.

SUIT DISMISSED AGAINST FINNISH REINSURER FOR LACK OF PERSONAL JURISDICTION

January 12, 2011 by Carlton Fields

Neles-Jamesbury Inc. filed suit for breach of contract against Pohjola Ins., a Finnish insurer, arising from a reinsurance contract between Pohjola and Lumbermens Mutual Casualty. NJI sought to hold Pohjola directly liable, alleging that Lumbermens was acting as Pohjola’s agent. Lumbermens had issued a comprehensive insurance policy covering NJI. The policy was stamped “Facultative Reinsurance” and contained the notation “reverse flow business 100% reinsured by Pohjola Ins. Co.” After Lumbermens denied coverage on certain claims, NJI filed suit against Lumbermens in Massachusetts state court. When NJI learned Lumbermens was having financial trouble, it sued Pohjola, which suit was removed to federal court. The federal court granted Pohjola’s motion to dismiss for lack of personal jurisdiction, finding that the Finnish company’s relationship with Lumbermens was not a mere agency and thus the Pohjola’s contacts with Massachusetts did not reach the levels necessary for personal jurisdiction. Neles-Jamesbury, Inc. v. Pohjola Ins. Co., LTD., Case No. 10-40055 (USDC D. Mass. Dec. 7, 2010).

This post written by John Black.