Finding Montana law was inapplicable to the subject insurance policy under both federal maritime choice-of-law principles and the policy language, the Ninth Circuit Court of Appeals determined that an arbitration clause was not unenforceable, and remanded the matter to the Montana District Court with instructions to grant a motion to compel arbitration in its entirety.
As the insurance policy at issue concerned marine insurance, and the FAA specifically applies to “maritime transactions,” Montana state law did not govern the validity of the agreement’s arbitration provision. Nor was federal maritime law precluded by Montana law under the McCarran-Ferguson Act, as Montana’s insurance law is not invalidated, impaired or superseded by the application of federal maritime law. The same result was reached by applying maritime choice-of-law principles to the policy’s choice-of-law provisions.
Lastly, looking at the policy’s arbitration provision, in which the parties agreed “that any and all disputes arising under [the] policy shall be resolved exclusively by binding arbitration … conducted pursuant to the Rules” of the AAA, the Court found the parties “clearly and unmistakably indicated their intent to submit arbitrability questions to an arbitrator.” The AAA rules provide that “[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.”
Galilea, LLC v. AGCS Marine Ins. Co., No. 16-35474 (9th Cir. Jan. 16, 2018).
This post written by Nora A. Valenza-Frost.
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