Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

ROUND UP OF RECENT ARBITRATION AWARD CHALLENGES

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DMA International, Inc. v. Qwest Communications International, Inc., No. 08-1392 (10th Cir. Nov. 4, 2009) (affirming confirmation, denial of vacatur of arbitration award in fee dispute. No manifest disregard, arbitrator not partial or corrupt, no violation of public policy, arbitrator did not exceed his powers).

United Forming, Inc. v. FaulknerUSA, LP, No. 09-50073 (5th Cir. Oct. 27, 2009) (affirming confirmation, denial of vacatur of arbitration award in construction contract dispute. No conflict of interest or bias on part of arbitrators, rulings not so grossly incorrect as be “misconduct” or “misbehavior” under the FAA).

Oberwager v. McKechnie, Ltd., No. 08-1117 (3d. Cir. Oct. 20, 2009) (affirming summary judgment ruling that motion to vacate was untimely under FAA in stock purchase agreement dispute).

TSYS Acquiring Resolutions, LLC v. Electronic Payment Systems, LLC, No. CV-09-0155 (USDC D. Ariz. Oct. 22, 2009) (no manifest disregard absent demonstration that arbitrator was aware of controlling law).

Ario v. Cologne Reinsurance (Barbados) Ltd., 1-CV-98-0678 (USDC D. Pa. Nov. 13, 2009) (confirming award, no evident partiality, no manifest disregard of law).

The Householder Group v. Caughran, No. 09-40111 (5th Cir. Nov. 20, 2009) (affirming confirmation of NASD panel arbitration award, no evident partiality or bias)

Busch v. Southwest Securities, Inc., No. Civ-09-661-C (USDC W.D. Okla. Nov. 28, 2009) (confirming award in employment dispute, no arbitrator misconduct or refusal to consider material evidence).

Trustmark Ins. Co. v. Clarendon National Ins. Co., No. 09-C-1673 (USDC N.D. Ill. Nov. 20, 2009) (confirming award in reinsurance treaty dispute, refusing to consider post-award dispute as to payment obligations and “set-off” arguments as beyond purview of limited review of award under FAA).

Nat’l Union Fire Ins. Co. of Pittsburgh v. Odyssey America Reinsurance Corp., No. 05-CV-7539 (USDC S.D.N.Y. Nov. 18, 2009) (denying cross petitions for post-arbitration attorneys fees, and to vacate arbitration award of attorneys fees, respectively, relating to arbitration of reinsurance dispute).

This post written by John Pitblado.

DISTRICT COURT FINDS THAT SERVICE OF SUIT CLAUSE WAIVES RIGHT OF REMOVAL

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In his capacity as Liquidator of Midland Insurance Company, the Superintendent of Insurance of the State of New York brought suit in New York Supreme Court against Dunav Re, a Serbian reinsurance company, seeking reinsurance monies owed. Dunav Re removed the action to federal court based on diversity jurisdiction, and the Superintendent subsequently moved to remand based on the ground that Dunav Re had consented to the jurisdiction of any competent court pursuant to the service of suit clause in the reinsurance agreements. Dunav Re argued that removal was proper because the service of suit clause’s language was ambiguous and the waiver of the right to removal had to be clear and unequivocal. The court found no ambiguity, citing a New York Court of Appeals decision stating the reinsurance industry has known since a 1949 decision that a service of suit clause waived removal, and granted the motion to remand. Dinallo v. Dunav Ins. Co., Case No. 09-5575 (USDC S.D.N.Y. Nov. 19, 2009).

This post written by Dan Crisp.

SPECIAL FOCUS: NEW YORK CONVENTION TRUMPS STATE LAW

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We previously reported on the en banc decision of the United States Court of Appeals for the Fifth Circuit holding that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention), prevailed over a state law that prohibited arbitration provisions in insurance policies. The Second and Fifth Circuits are now in conflict on this important arbitration issue. We offer a Special Focus view of this decision.

This post written by Rollie Goss.

WELCOME TO THE REVISED REINSURANCE FOCUS

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Welcome to the new format Reinsurance Focus. We have moved some of the sidebar content to tabs across the top of the page for easier navigation and viewing, and added additional content in the tabs. Our blog search function now features advanced Boolean search capabilities and highlighted hits. We have also added an area with additional content with password only access for subscribers. All readers can see the type of content available in the Subscriber Only area, but will need the subscriber password to see the actual content.

This post written by Rollie Goss.

SECOND CIRCUIT REMANDS AXA v. AIG FOLLOWING $40 MILLION DOLLAR JUDGMENT

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Following the entry of a $40 million judgment against them at a jury trial on claims of fraudulent inducement with respect to two reinsurance facilities, the AIG defendants appealed to the Second Circuit, arguing in part that that the claims brought by AXA should have been arbitrated because they sound in contract. AXA, while not disputing that contract claims would be subject to arbitration, asserted that their claims sound in fraud and were properly litigated in the District Court. The Second Circuit concluded that the record was not clear as to whether the District Court properly considered whether AXA’s fraudulent inducement claims sounded in contract or fraud or whether AIG had waived its right to arbitration. The Court opined that in this case, it was of paramount importance to weigh the first and third waiver factors (time elapsed and prejudice) to determine whether AIG had indeed waived arbitration. The case was remanded to the District Court. AXA Versicherung AG v. New Hampshire Ins. Co., Case No. 08-2521 (2d Cir. Nov. 6, 2009).

This post written by John Black.