The UK Commercial Court has approved an arbitrator's decision to permit the substitution of one Claimant for another to reflect what in effect was a corporate reorganization. It also permitted the Claimant to use a pending arbitration to seek an award of all balances that would come due under the treaty during the pendency of the arbitration, instead of requiring a filing of separate arbitrations for amounts that became due after the commencement of the pending arbitration. Harper Versicherungs AG v. Indemnity Marine Assurance Co., [2006] EWHC 1500 (QB) (June 23, 2006).
Court finds pleading insufficiencies in Insurance Brokerage Antitrust litigation
In the massive MDL proceeding relating to alleged bid rigging and kickbacks in the insurance brokerage area, the Court has ruled on a motion to dismiss, holding as follows: (1) the McCarran-Ferguson Act exemption does not apply: (2) the antitrust claims are inadequately pled; (3) the RICO claims are inadequately pled; (4) the ERISA claims state a cause of action (although the Court found the facts to be sparse); and (5) the Court reserved ruling as to state law claims, until it decided which federal claims survived motion practice. The Court directed the plaintiffs to file more particular statements as to the antitrust and RICO claims, instead of requiring a further amended pleading. In re Insurance Brokerage Antitrust Litigation, Case No. MDL 1663 (D. N.J. Oct. 3, 2006).
UK Court affirms avoidance of insurance based upon nondisclosure of fraud allegations
The UK Court of Appeal has upheld the avoidance of insurance on a vessel based upon the failure to disclose, during the placement of the insurance, that third parties had made allegations of fraudulent conduct by the prospective insured. North Star Shipping Ltd. v. Sphere Drake Insurance, [2006] EWCA Civ 378 (April 7, 2006). Even though the allegations turned out to be lacking in merit, the Court found that they would have been material to an underwriter considering the placement of the insurance.
State court rules that Liquidation Act does not force payment of IBNR claims or avoid arbitration agreements
A New Jersey Appellate Court has agreed with arguments made by the Reinsurance Association of America, holding that a court could not, under the authority of New Jersey's Insurer Liquidation Act, adopt a plan that forced reinsurers to pay claims based upon IBNR estimates, and could not abrogate arbitration provisions contained in reinsurance agreements to force that disputes be litigated in the liquidation court. In re Liquidation of Integrity Insurance Company, Case No., C-7022-86, 2006 WL 2795343 (N.J. Super. A.D. Oct. 2, 2006).
Default judgment against Bermuda subsidiary not binding on US parent
A District Court has held that a $1.5 million default judgment entered against a Bermuda insurance company that had been placed in liquidation in Bermuda was not enforceable against its Arizona-domiciled parent company. Significant factual background to the ruling may be found in a motion for summary judgment. Employers Reinsurance Corp. v. Guaranteed Financial Corp., Case No. 04-884 (D. Az. Sept. 26, 2006). A major basis for the ruling was the fact that the Bermuda authorities had siezed control of the Bermuda-domiciled company, and that the parent therefore had lost any ability to control the litigation in which the default had been entered.