AXA Corporate Solutions sued Lumbermens Mutual for indemnity under bonds and other reinsurance agreements. After the district court dismissed the claims asserted in both the Amended Complaint and the Second Amended Complaint, the Second Circuit Court of Appeals reversed. The court of appeals found that dismisssal was inappropriate since the agreements were ambiguous as to whether they created a reinsurance obligation between the parties, and the scope of any reinsurance obligation. Such heavily fact dependent issues precluded dismissal. AXA Corporate Solutions Insurance Co. v. Lumbermens Mutual Casualty Co., Case No. 06-2923 (2d Cir. July 11, 2007).
Arbitration / Court Decisions
Court Approves Settlement of Coverage Dispute Involving Asbestos Liabilities and UK Scheme of Arrangement
A US Bankruptcy Court has approved a settlement with a London market insurer that includes that insurer in an earlier approved settlement with insurers providing a bankrupt copper company with coverage for asbestos-related claims. The London market insurer is itself a party to a scheme of arrangement being administered in London. This opinion is an interesting intersection of the UK scheme of arrangement process and US bankruptcy laws. The motion seeking approval of the settlement contains details of the settlement and attaches copies of pertinent documents. In re ASARCO LLC, Case No. 05-21207 (US Bank. Ct. S.D. Tex. Mar. 23, 2007).
Court Finds Dispute As To Payment Of Claim Is Arbitrable
A reinsurance contract had what is termed a narrow arbitration provision, requiring arbitration only of disputes relating to the interpretation of the contracts. The service of suit clause provided for the resolution by a court of the failure to pay an amount claimed to be due. A dispute arose as to a claim submitted under the contract, specifically whether payment should be made to the insolvent claimant or its liquidator. A US District Court has determined that since the resolution of that question requires interpreting provisions of the reinsurance contract, the dispute is arbitrable. Railroad Insurance Underwriters v. Certain Underwriters at Lloyd’s London, Case No. 07-3071 (USDC S.D.N.Y. June 4, 2007).
UK Court of Appeal Grants Injunction to Restrain Proceedings in a United States District Court
On July 20, 2007, this blog reported on a dispute relating to the mass defection of fourteen facultative reinsurance brokers from the U.K. based Marsh Services Limited to Integro, a competitor. A suite was filed in US District Court in New York, which the Court declined to dismiss on jurisdiction grounds. In a parallel suit in the UK, a judge declined to enjoin the prosecution of the US action, but the UK Court of Appeals has allowed an emergency appeal, entering an injunction to restrain the US proceedings. This opinion contains an interesting discussion of the relationships between the UK and US courts, as influenced by an EU regulation relating to employment contracts. Samengo-Turner v. J & H Marsh & McLennan (Services) Limited, [2007] EWCA Civ 723 (July 12, 2007).
UK Court Assesses Costs in Action Deemed Largely Fruitless
The UK Commercial Court, Queen’s Bench Division, has assessed costs in favor of Equitas against broker Horace Holman in an action in which Equitas sought an accounting and other remedies from Horace Holman. The Court found that the action was “largely fruitless,” in part due to the status of Horace Holman’s records, but that Equitas was nevertheless entitled to have its costs paid by Horace Holman. This opinion demonstrates the different approach that UK and US courts take with respect to the assessing of the costs of litigation. Equitas Ltd. v. Horace Holman & Co., [2007] EWHC 903 (Comm) (April 27, 2007).