Legacy reinsurance liabilities against certain non-US reinsurers that have gone into insolvency or have been absorbed by non-US governments remain an issue for many US ceding companies. Some US ceding companies have fought long and hard to win arbitrations, enter judgments and then try to enforce those judgments against the non-US reinsurers or their governments. Success in doing this has been up and down. A recent case goes into great detail in addressing one cedent’s journey to enforce judgments against Argentina.
In TIG Insurance Co. v. Republic of Argentina, No. 18-mc-00129 (DLF) (D. D.C. Aug. 23, 2022), the cedent moved for a writ of attachment against a building in Washington, D.C. owned by Argentina in an effort to enforce two judgments. The first was against the now defunct Caja Nacional deAhorro y Segurro, a state-owned reinsurer in Argentina. The second judgment was against Argentina directly. Both were default judgments. Obviously, Argentina objected and sought to preclude the writ of attachment.
The opinion goes through the entire history of the reinsurance relationship and how the judgments were obtained. It also outlines efforts to enforce the judgments and the prior court decisions on issues like sovereign immunity.
In this case, the court addressed two questions, again technical federal procedural and legal issues: whether Argentina impliedly waived its sovereign immunity such that the Northern District of Illinois had subject matter jurisdiction to enter the 2018 judgment against it and whether the cedent can use the 2001 judgment against Caja to attach property owned by Argentina. For those interested in these legal issues, please read the opinion linked above.
In deciding in favor of Argentina, the court ultimately concluded that Argentina did not waive sovereign immunity and vacated the judgment against Argentina because the issuing court did not have jurisdiction to enter the judgment. The court noted that “[s]imply agreeing to handle Caja’s claims and litigation, witheut any indication of how, provided no guidance on Argentina’s subjective intent to subject itself to arbitration or to U.S. law.” This is important because if a foreign government that has taken over a reinsurance company agrees to be bound by the arbitration clause in a US-based reinsurance agreement, then it will likely have waived its sovereign immunity and a judgment like the cedent had in this case could be enforced (assuming there is something in the US to enforce it against).
On the judgment against the original defunct reinsurer, because it had not been amended to include Argentina it could not be used to enforce the judgment against the property of Argentina.