Lloyd’s issued an insurance policy with an arbitration provision, covering direct physical loss or physical damage caused by windstorm and/or hail. The insured filed suit in state court alleging nonpayment of claims for damages from Hurricane Isaac. Lloyd’s removed to federal court, asserting that the court had original subject matter jurisdiction for the arbitration agreement in the policy pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention. The insured sought remand, arguing that the New York Convention did not apply.
The court denied remand, finding that the Convention applied because the dispute arose out of an insurance policy, a commercial legal relationship, with Lloyd’s, a citizen of the United Kingdom. The court also rejected the insured’s argument that the “Conformity to Statute” clause effectively amended the policy to comply with Louisiana state law, which would result in the arbitration provision being rendered unenforceable. The court held that because the Convention preempts state law, state law is inapplicable and cannot change the policy. The court also rejected the insured’s arguments that the Convention was reverse-preempted by the McCarran-Ferguson act, and that the Convention applies only to instances of enforcement of foreign arbitration awards. The plaintiff has appealed the court’s rulings. Gulledge v. Certain Underwriters at Lloyd’s, London, Case No. 2:18-cv-06657 (USDC E.D. La. Sept. 27, 2018); Notice of Appeal (Oct. 2, 2018).
This post written by Gail Jankowski.
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