Washington Federal Court Grants Motion to Compel Arbitration

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Recently, I wrote a reinsurance commentary for IRMI.com on reinsurance issues with captive, pools and other risk-sharing entities. Coincidentally, in January 2023, a Washington federal court had to deal with a risk-sharing pool’s claims of breach of a reinsurance contract and a reinsurer’s motion to compel arbitration.

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A Brief Review of Reinsurance Trends in 2021

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The big headline from 2021 is that the Second Circuit struck the final death blow to Bellefonte. While long expected this decision ends a near forty-year saga of whether the limit of liability in a facultative certificate caps a reinsurer’s indemnity and expense obligations. Courts in 2021 also addressed numerous other reinsurance matters, including those about arbitration, arbitrability, and compelling arbitration in the face of the McCarran-Ferguson Act. 

2021 also brought us more cases concerning disclosure of reinsurance information and whether tortious interference claims belong in reinsurance. Courts also made decisions concerning runoff providers and reinsurance trustees.


Most reinsurance arbitrations fall under the Federal Arbitration Act (“FAA”).  In the reinsurance context, questions of arbitrability and the powers of the arbitrators arise often.  In 2021, courts continued to exercise their authority to compel arbitration and leave many questions of arbitrability to the arbitrators. 

Arbitrability and Motions to Compel Arbitration

Who decides whether an arbitration should go forward is often a controversial issue. Is it the court or is it the arbitration panel? In Alliance Health and Life Insurance Co. v. American National Insurance Co., No. 20-cv-12479 (E.D. Mich. Aug. 31, 2021), the court determined that it was the arbitrators that had to decide whether a limitations provision in a reinsurance contract precluded arbitration.

The case involved a Medical Excess Reinsurance Agreement with a mandatory arbitration clause providing that no arbitration could be commenced more than three years after the effective date of the reinsurance contract. In this case, the arbitration was commenced after three years and the cedent claimed that because of that the arbitration provision no longer applied.

The court dismissed the complaint in part because the cedent did not dispute that it consented to arbitration when it signed the reinsurance contract, which bound the cedent to the arbitration provision. Because time limitations are a matter of procedure under Supreme Court precedent, and because there was no provision in the reinsurance agreement that required the court to determine questions of timeliness, the presumption in favor of arbitration stood and the limitations issue was for the arbitrators to decide. This case continues the trend of deference given by the courts to arbitration, especially where the arbitration provision is broad.

Two cases decided in 2021 brought the judicial trend of granting motions to compel arbitration together with the trend in several federal circuits holding that the McCarran-Ferguson Act does not reverse preempt the Convention on Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”).

In Green Enterprises, LLC. v. Dual Corporate Risks Limited, Civ. No. 20-1243(JAG) (D. PR. Jun. 15, 2021), the insurers moved to compel arbitration based on the New York Convention. The policyholder opposed the motion and sought to preclude arbitration based on the principle of reverse preemption under the McCarran-Ferguson Act and local insurance law precluding arbitration of insurance disputes.

The court granted the insurers’ motion to compel arbitration, holding that the McCarran-Ferguson Act did not enable Puerto Rico’s Insurance Code to reverse-preempt a treaty like the Convention, or the FAA itself, and that the arbitration provision invoked by the insurers was valid and applicable. This decision goes further than other decisions on this side of the circuit split by addressing preemption of the FAA.

In the second case, the Ninth Circuit joined several other circuits in holding that Article II, Section 3 of the New York Convention is self-executing and, therefore, arbitration can be compelled. In CLMS Management Services Limited Partnership v. Amwins Brokerage of Georgia, LLC, No. 20-35428 (9th Cir. Aug. 12, 2021), a policyholder sought to preclude arbitration of a claims dispute arguing that state insurance law (Washington) barred arbitration of disputes under insurance contracts. The non-US insurer sought to compel arbitration under the New York Convention. The district court granted the motion to compel arbitration.

In affirming the order compelling arbitration, the circuit court addressed the circuit split on this issue and, in a concise and well-reasoned decision, explained why McCarran-Ferguson did not apply and how the New York Convention, Art. II, Sec. 3, was self-executing. In summary, while the FAA’s Chapter 2 implemented the New York Convention—which may be reverse preempted by application of McCarran-Ferguson where there is an insurance law provision that bars arbitration of insurance disputes because it is an act of Congress—Article II, Section 3 of the New York Convention is self-executing and, as a Treaty and not an act of Congress, is not reverse preempted by McCarran-Ferguson and takes precedence over state law under the Constitution’s Supremacy Clause. Bottom line, the insurance dispute must be arbitrated.

Challenge to Arbitrator

Challenging the qualifications of an arbitrator is difficult. Most courts reject pre-arbitration challenges and require the objecting party to wait for a final award to raise a challenge. But sometimes the stars align, and the challenge is allowed. In 2021, a California federal court accepted the challenge on cross-motions to compel arbitration and disqualified a party-appointed arbitrator for not being disinterested.

In Public Risk Innovations, Solutions, and Management v. AmTrust Financial Services, Inc., No. 21-cv-035730-EMC (N.D. Calif. July 12, 2021), an objection was made to a party-appointed arbitrator as unqualified because of not being a current or former official of an insurance or reinsurance company and because of he was not disinterested. Both parties agreed that the underlying dispute was arbitrable and both parties agreed that the court should decide this dispute over the arbitrator’s qualifications.

The court rejected the challenge based on whether the arbitrator was qualified as a current or former official of an insurance or reinsurance company. The arbitrator was general counsel to several joint power authorities and self-insured joint power authorities and risk pools. The court held that in the context of the arbitration agreement the joint power authority could be seen as an insurance company, especially as a self-insured pool that essentially acts like an insurer.

Nevertheless, the court held that the arbitrator was not disinterested because he currently worked for entities that were members of the self-insured pool and could feel pressure to favor the pool’s position. Accordingly, the court found that the arbitrator was not qualified under the arbitration agreement.

Powers of the Arbitration Panel and Arbitration Awards

The great deference given to arbitrators and their awards is unquestionable in the US. Under the FAA, there is no appeal of an arbitral award. Parties can only seek to modify, vacate or confirm an arbitration award. The court’s scope of review of an arbitration award is narrow. Where, as in reinsurance arbitrations, arbitrators are given even greater leeway to decide cases—especially where there is an honorable engagement clause—the courts’ scope of review of an arbitration award is restricted even further.

In Continental Casualty Co. v. Certain Underwriters at Lloyd’s of London, No. 20-2892 (7th Cir. Aug. 23, 2021), after an arbitration hearing and the issuance of a final arbitration award, an interim arbitration award and a post final award order, the cedent sought to confirm the final award, but to vacate the last two orders. The panel, in its final award and the subsequent orders, decided not only the specific billing methodology question that reinsurers originally had presented, but also what the consequences of its ruling were for the three insured companies it named. And the panel clarified the question that remained after the final order about the applicability of its ruling to future billings relating to asbestos products losses for those three companies. The district court confirmed everything and the cedent appealed.

In affirming, the Seventh Circuit reiterated the limited scope of review given to arbitration awards by the courts. The court explained that an arbitral award must draw its essence from the contract. Accordingly, the scope of the agreement to arbitrate—whether the arbitrators were given a broad or narrow mandate—is critical to the narrow scope of review of an arbitration award. The court found several broadening factors that allowed the arbitration panel great discretion in interpreting the contract and devising a remedy, including the power to resolve the case on general principles, not just legal entitlements. The court held that the arbitration panel acted within the authority conferred by the contract. Because the court concluded that the arbitrators did not stray beyond the boundaries of their authority, the court affirmed the district court’s order confirming of all three awards and orders.

The trend toward upholding arbitration awards was also demonstrated in Adventure Motorsports Reinsurance , Ltd. v. Interstate National Dealer Services, Nos. S21G0008, S21G0015 (Ga. Sup. Ct., Dec. 14, 2021), where the Georgia Supreme Court reversed the court of appeals finding of manifest disregard of the law and remanded the matter.

After an arbitration award was issued, cross-motions were made to vacate and confirm. The trial court confirmed the award and an appeal ensued where the court of appeals vacated the award based on manifest disregard of the law by the arbitrator who the court said explicitly rejected the contract language. On appeal to the Georgia Supreme Court, the court reversed and remanded.

In reversing the court of appeals, the supreme court concluded that the court of appeals erred in reversing the confirmation of the award on the basis that the arbitrator manifestly disregarded the law in rendering the award. The court analyzed the law on manifest disregard and commented that an arbitrator who incorrectly interprets the law has not manifestly disregarded it. The court found that the arbitrator never expressed, during the hearing or in the arbitration award, that the correct law should be ignored rather than followed. Ultimately, the court held that the arbitration award drew its essence from the contracts. The court, however, remanded the decision back to the court of appeals for resolution of the argument that the arbitrator overstepped his authority in making the award and reconsideration of the trial court’s failure to enforce a delayed-payment penalty provided in the arbitration award.

The key point here is that even in state court under state arbitration law, manifest disregard of the law is a very difficult standard to meet when seeking to vacate an arbitration award. Arbitrators have wide discretion and just like in the federal courts, if the award draws its essence from the terms of the disputed contract, the award likely will be confirmed.

When parties participate in an arbitration and obtain a final award, usually that is the end of the dispute. But sometimes there are collateral agreements involved and the losing party may try to bring litigation based on those collateral agreements to obtain a different form of relief.

In White Rock Insurance Co. PCC Limited v. Lloyd’s Syndicate 4242, No. 652867/2020 (N.Y. Sup. Ct., N.Y. Cty May 18, 2021), a protected cell reinsurer sued its cedent seeking a declaration that certain provisions of a trust agreement extinguished its liability to the cedent. The cedent moved to dismiss the litigation based on a prior arbitration proceeding between the parties and the final arbitration award issued by the arbitration panel.

In granting the motion to dismiss and confirming the final arbitration award, the court held that the prior arbitration and the final arbitration award precluded this litigation. The court noted that the arbitration panel’s finding, that the collateral release did not change the reinsurer’s obligation to pay losses as they became due under the reinsurance contract despite the shortfall in the collateral in the trust fund, went to the heart of the issue in this litigation. The court pointed out that the reinsurer specifically argued that the trust fund provisions relieved it of its obligations to the cedent and asked the arbitration panel to rule on the trust fund provisions even though the trust fund did not have an arbitration clause. The court held that the arbitration panel clearly considered the trust fund issues raised in the litigation in reaching its determination.


For decades, reinsurers and the courts relied on the Second Circuit’s holdings in Bellefonte Reinsurance Co. v. Aetna Casualty & Surety Co., 903 F.2d 910 (2d Cir. 1990) and Unigard Security Insurance Co. v. North River Insurance Co., 4 F.3d 1049 (2d Cir. 1993), to cap a reinsurer’s liability under certificates of facultative reinsurance for indemnity and expenses. This reliance was sharply criticized by cedents and others in the industry. In 2021, the Second Circuit made it clear that its decisions in Bellefonte and Unigard are no longer good law.

In Global Reinsurance Corp. of America v. Century Indemnity Co., No. 20-1476 (2d Cir. Dec. 28, 2021), the Second Circuit addressed an appeal from a district court judgment denying the reinsurer’s request for a declaratory judgment that the stated limits in 10 facultative certificates capped the reinsurer’s liability for both indemnity and expenses. In affirming, the court held that the certificates’ policy limits were not inclusive of defense costs and announced that its earlier decisions on this subject were no longer good law.

The court, in affirming and holding that the reinsurer’s obligation to pay its proportionate share of the cedent’s defense costs was not capped by the certificates’ liability limits, concluded as follows:

Because the certificates do not specifically provide that the terms of [the reinsurer’s] reinsurance differ from those of the [cedent’s] policies with respect to the treatment of defense costs, the follow-form clause requires that [the reinsurer’s] payments toward [the cedent’s] defense costs be made in addition to the certificates’ limits. This conclusion follows not only from the unambiguous language of the certificates but also from evidence of custom and usage concerning the central importance of concurrency to the reinsurance market when the certificates were issued.

Notably, concerning Bellefonte and Unigard, the court explained that the New York Court of Appeals’ holding on the Second Circuit’s certified question:

. . . conflicts with our decisions in Bellefonte and Unigard, in which we held that the liability limits contained in the certificates at issue “necessarily cap[ped] all obligations owed by [the] reinsurer[s], such as defense costs, without regard for the specific language employed therein.” . . . Because [the New York Court of Appeals decision] exposed a fundamental conflict between these precedents and “New York law as determined by the New York Court of Appeals,” which we are “bound to apply,” . . . , we are “require[d] to conclude” that Bellefonte and Unigard are “no longer good law.” (citations omitted).

The bottom line: Bellefonte now resides in the scrapheap of wrongly-decided cases.

Even before Global Reinsurance Corp. of America was decided, an earlier 2021 decision by the Second Circuit foreshadowed the renewed focus on contract wording. In Utica Mutual Insurance Co. v. Munich Reinsurance America, Inc., Nos. 19-1241; 19-4335 (2d Cir. Jul. 29, 2021), the Second Circuit was faced with two appeals of two district court judgments that went in opposite directions. The cases primarily concerned whether the reinsurers must reimburse the cedent for defense costs in addition to limits of the cedent’s umbrella policies. In one case, the court, after a bench trial, held that the reinsurer did not have to reimburse defense costs in addition to the limits. In the other case, after a jury trial, the court held that the cedent was entitled to reimbursement for defense costs in addition to the limits. Obviously, the opposite results could not stand.

The circuit court affirmed the bench trial judgment (no reimbursement on a costs-in-addition basis – victory to the reinsurer) and reversed and remanded, in part, the jury trial judgment. In making its decision, the court addressed whether an amendment to the umbrella policy changed the policy from cost-inclusive to cost-in-addition. The court found that the amendment only affected the drop-down coverage, not the excess coverage, and changed the how expenses would be reimbursed only for the drop-down coverage. Accordingly, the cedent was not entitled to reimbursement for expenses in addition to the limit.

Nevertheless, the cedent argued that the follow-the-settlements doctrine required the reinsurer to pay the settlement anyway. The court rejected this argument.  Because the underlying settlement treated the umbrella policy as cost-inclusive, it contradicted the cedent’s position that the reinsurer must pay on a cost-in-addition basis.

Additionally, the court found that the follow-form facultative certificates linked the reinsurer’s liability to that of the cedent and under the umbrella policies, expenses were cost-inclusive. As the court noted, a follow-the-settlements clause does not alter the terms or override the language of the reinsurance contracts. Accordingly, the court held that the underlying settlement agreement did not independently require the reinsurers to pay defense costs in addition to the limits.

Discovery and Sealing

              Production of Reinsurance Information

Reinsurance information is now regularly requested by plaintiff’s lawyers in underlying coverage disputes.  Courts tend to allow this discovery, although it is sometimes limited to just the reinsurance contracts. 

In U.S. Tobacco Cooperative, Inc. v. Certain Underwriters at Lloyd’s, No. 19-cv-430-BO (E.D.N.C. Apr. 9, 2021), the court addressed the policyholder’s second motion to compel discovery against the insurers. The court ordered broad production of reinsurance materials based on the automatic disclosures required under Rule 26(a)(1)(A), which required the insurers to identify and produce any relevant reinsurance agreements if the reinsurers may be liable for paying part of a judgment against the insurers.

The court also addressed the insurers’ claim that the reinsurance materials were protected by the attorney-client or attorney work-product privileges. The court analyzed the parameters of the privileges and instructed the insurers to only withhold documents if they had a good faith belief that the communications related to the provision of legal services.

On the production of reinsurance materials, the court noted that the cases conflict on the issue. The court rejected the insurers’ argument that the policyholders had not shown the reinsurance information to be relevant because the burden is on the insurers to show a lack of relevance. The court found that the insurers presented no evidence showing that the reinsurance documents should be immune from discovery. No affidavits or other evidence were presented, just unsworn statements in the briefs.

Additionally, the court found that the insurers had waived the privileges because there had been both deposition testimony and some document production of reinsurance information. Accordingly, the court ordered production of the requested reinsurance documents.

There are many approaches used to resist production of reinsurance information. In 2021, one case involved the insurer invoked the “insurer-insured privilege.” In Gibson v. Chubb National Insurance Co., No. 20-CV-1069 (N.D. Ill. Sep. 27, 2021), a coverage dispute arose concerning a fire loss. During the litigation, the policyholder filed a motion to compel production of documents, including, among other things, reinsurance information. The insurer claimed insurer-insured privilege.

In granting the motion to compel, the court found that the insurer was not entitled to withhold communications with its reinsurer about the policyholder’s claim. The insurer attempted to bring the communications within an offshoot of the attorney-client privilege that related to the duty to defend the underlying claim. Illinois courts have held that communications between an insured and an insurer where the insurer has a duty to defend is privileged and that has been extended to agents of the insurer. The court rejected the argument that communications between the insurer and the reinsurer fell within the privilege. Here, the reinsurer had no duty to defend, and the court directed the insurer to produce the communications.

What happens to reinsurance-related evidence when it comes to trial? In 2021, a court answered that question. In Fluor Corp. v. Zurich American Insurance Co., No. 4:16CV00429 ERW (E.D. Miss. Jul. 16, 2021), the parties made a variety of motions in limine in advance of trial in an insurance coverage dispute. One of the insurer’s motion was to exclude evidence of reinsurance, including communications with its reinsurers concerning the underlying claims. The policyholder argued that many trial exhibits mentioned reinsurance and that it was not practical or justified to redact all those exhibits.

The court granted the motion based on Rule 411 of the Federal Rules of Evidence and cited a series of 8th Circuit cases on the prejudicial nature of allowing evidence of insurance or reinsurance. The court held that the evidence of reinsurance posed a high risk of prejudice to the insurer.


Reinsurance arbitrations are typically confidential and generally proceed with a confidentiality agreement in place protecting all arbitration information, including the final award, from disclosure. This contrasts with legal proceedings, including proceedings collateral to arbitrations, where generally the public’s right to judicial documents outweighs the parties’ privacy. In recent years, when parties to reinsurance arbitrations have gone into court to confirm, enforce, modify or vacate arbitration awards, courts have been reluctant to keep the final awards under seal. In fact, some parties have used this trend as a litigation strategy to “unseal” confidential final arbitration awards by going to court to confirm an award where there was no indication that the losing party would not comply with the award.

Bucking that trend in 2021, a New York federal court allowed the final arbitration award to remain sealed. In West Coast Life Insurance Co. v. Swiss Re Life & Health America, Inc., No. 21 Civ. 5317 (VB) (S.D.N.Y. Jun. 28, 2021), a final arbitration award was issued and both parties filed the award with the federal court under seal and moved to confirm the award.

Of course, the court confirmed the award as there was no objection and both parties agreed to confirmation and both parties requested that the final award be sealed in the first instance and remain sealed. The court noted that generally arbitration awards filed with a petition to confirm that award are considered “judicial documents that directly affect [] the Court’s adjudication of that petition,” and therefore sealing of the award requires that the movant demonstrate that “sealing is necessary to preserve higher values.” (Citation omitted).

Here, however, the court decided otherwise. The court’s rationale for keeping the award sealed is set forth below:

[B]ecause the parties jointly request that the Court confirm the final award, the final award itself does not “directly affect the Court’s adjudication of that petition.” Thus, the final award is not a “judicial document” subject to a presumption of access. Moreover, the Court is persuaded by the parties’ assertion that the final award should be sealed because it is subject to a confidentially agreement and contains confidential, sensitive, and proprietary information that could potentially prejudice the outcomes of related legal disputes not before the Court as well as prejudice the parties in future competitive business negotiations.

Obviously, those who wish to keep reinsurance arbitration awards confidential are overjoyed with this decision given the many other cases that have gone the other way. This outcome, however, likely will not hold up where there is a dispute about the award or where one party is opposing confirmation.

Direct Right of Action

Policyholders typically cannot sue reinsurers directly because of a lack of contractual privity. While there are exceptions in the law, those exceptions are few. But sometimes a reinsurance deal gets structured in such a way that the policyholder may be able to bring a direct action.

In Casa Besilu LLC v. Federal Insurance Co., No. 20-24776-Civ-Scola (S.D. Fla. Apr. 23, 2021), a policyholder claimed that to obtain property insurance for its property in the Bahamas it approached the reinsurers for assistance. The complaint alleged that the reinsurers engaged local brokers to obtain the insurance from a Bahamian insurer and the reinsurers provided the reinsurance. The complaint further alleged that the policyholder never dealt with the local brokers and that they filled out an insurance application given to the reinsurers requesting comprehensive liability and property insurance at specific limits, including flood insurance.

According to the complaint, flood insurance was never obtained and when a hurricane caused damage to the property, the Bahamian insurer refused to pay for any of the damages caused by storm surge. There are more facts alleged, including that the reinsurers interfered in the process and caused the Bahamian insurer to calculate water damage separate from wind damage.

Naturally, the reinsurers moved to dismiss the complaint, which contained claims of tortious interference, breach of fiduciary duty and other claims. They argued, among other things, that there was no privity of contract and, therefore, not direct right of action. The policyholder countered that they were not suing under the reinsurance contract, but for the reinsurers’ tortious interference with the policyholder’s direct insurance contract.

The court denied the motion to dismiss. Basically, the court found that the complaint had sufficient allegations to survive the motion to dismiss and the court would not convert the motion to one for summary judgment (both sides submitted evidentiary affidavits that the court would not consider).

This is an unusual case because of the relationships between a policyholder and an insurance group that typically writes direct insurance and the insurance group’s alleged involvement with placing insurance in the Bahamas and then reinsuring that insurance. Whether the policyholder will be successful in the end will require a much more detailed inquiry into the facts.

A direct right of action may arise if there is a cut-through clause in the reinsurance contract. Cut-through clauses, however, must be express. In Wells Fargo Bank, N.A. v. Lloyd’s Syndicate AGM 2488, No. 13956 (N.Y. App. Div. 1st Dep’t Jun. 1, 2021), the motion court granted facultative reinsurers’ motion to dismiss the policyholder’s claims against them and the appellate court affirmed finding that “[n]one of the reinsurance contracts at issue, including the January 4, 2010 Underwriters Reinsurance Policy (URP), issued by Lloyds contain a “cut through” provision allowing the original insured [ . . . ] to bring suit directly against the reinsurers.” The court also ruled that the policyholder’s interpretation of the reinsurance contract would lead to an absurd result and was contrary to the parties’ reasonable expectations.

Tort of Bad Faith

Can tort claims be brought against reinsurers for bad faith? In Alabama Municipal Insurance Corp. v. Munich Reinsurance America, Inc., No. 2:20cv300-MHT, 2021 WL 981495 (M.D. Al. Mar. 16, 2021), a federal court had to decide whether, under Alabama law, the tort of bad faith is recognized in the reinsurance context. In dismissing the bad faith claims, the court performed a detailed analysis of Alabama law and articulated how narrowly Alabama interpreted the tort of bad faith. Essentially, Alabama had narrowed the tort down to the consumer-based insurance relationship and refused to apply the tort to general commercial contracts.

The court distinguished the difference in motivation and sophistication between a reinsurance transaction and a standard insurance transaction in concluding that the Alabama Supreme Court would not extend the tort of bad faith to a reinsurance dispute.

In a later decision, Alabama Municipal Insurance Corp. v. Munich Reinsurance America, Inc., No. 20 cv 300-MHT (M.D. Ala. Apr. 12, 2021), the cedent moved the federal court to certify to the Alabama Supreme Court the question of whether Alabama recognizes the tort of bad faith in the reinsurance context. The court rejected the motion holding that certification would be neither necessary nor appropriate.

Runoff Managers

The proliferation of runoff providers for books of reinsurance has generated disputes involving runoff managers. For example, in Stonegate Insurance Co. v. Fletcher Reinsurance Co., No. 21 C 3523 (N.D. Ill. Dec. 6, 2021), the cedent sued a reinsurer that had been acquired by a runoff entity and two affiliated service providers for breach of contract, tortious interference with contract, and bad faith refusal to pay claims over reinsurance agreements between the cedent and the reinsurer’s predecessor. The reinsurer defendant moved to compel arbitration under the reinsurance agreements and the service provider defendants moved to dismiss the complaint for lack of personal jurisdiction and failure to state a claim for relief.

The district court granted the reinsurer’s motion to compel arbitration, which the cedent did not oppose. On the service providers’ motion to dismiss, the court rejected the personal jurisdiction argument, but ultimately found that the complaint did not state a claim against the service providers. The court found that the service providers were agents of the reinsurer and, therefore, they were conditionally privileged against a claim that they intentionally interfered in the contractual relationship of their principal. The court held that the allegations in the complaint did not rise to the level of malicious or unjustified conduct, which would have negated the conditional privilege.

In another case, a court addressed claims brought by cedents against the reinsurer’s runoff manager for intentional interference with contractual relations and inducing breach of contract when the claims stopped being paid. In California Capital Insurance Co. v. Enstar Holdings US LLC, No. 20-cv-7806-ODW (C.D. Calif. Apr. 14, 2021), a group of cedents brought suit against the runoff manager of its reinsurer for intentional interference with contractual relations and inducing breach of contract. The cedents alleged that after the reinsurer’s business was transferred to the runoff entity, the claims process changed, and the manager directed the reinsurer to breach its reinsurance obligations. Additionally, the cedents alleged that the reinsurer stopped paying certain losses and demanded the return of reinsurance proceeds already paid under certain categories of  taxi and limousine livery, trucking, and habitability claims.

The runoff manager moved to dismiss the complaint. The court granted the unopposed portion of the motion dismissing the case against the runoff manager’s holding company but denied the motion as to the rest of the runoff manager’s entities. The court found that the complaint provided sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively, even though the cedents did not allege exactly how the runoff manager directed the reinsurer to breach the treaty. The court refused to grant the motion to dismiss because the complaint was sufficient under pleading standards to withstand the motion.

Reinsurance Trustees

Reinsurance agreements with non-US off-shore reinsurers usually involve a reinsurance trust with a bank acting as trustee. These trust agreements typically absolve the trustee from nearly all liability because of their ministerial role in the reinsurance transaction. This is very common in off-shore life, annuity and long-term care reinsurance agreements.

In the last several years, however, trustees have come under scrutiny because some off-shore reinsurers were not quite on the up-and-up and the assets placed in the trust accounts and managed by the reinsurers’ affiliated investment managers have been substandard. This, of course, has caused the reinsurance arrangement to collapse, regulatory issues and often the total loss of the assets meant to secure the cedent’s losses. Because these reinsurers typically do not have assets on shore, some of their cedents have gone after the trustees seeking damages.

In Bankers Conseco Life Insurance Co. v. Wilmington Trust, National Association, No. 13185 (N.Y. App. Div. 1st Dep’t Apr. 20, 2021), a long-term care reinsurance deal resulted in serious problems for the cedent when the regulator declared that many of the assets in the trust account were not eligible assets. Not only were the assets not eligible, but they were non-negotiable. The cedent was forced to recapture the business and terminate the reinsurance agreements while taking a substantial loss. The reinsurer, which was not involved in this lawsuit, was the alter ego of a private equity fund that devised a scheme to defraud insurance companies.

While the trust agreement limited the trustee’s liability and responsibility—it was not responsible to determine whether the assets were eligible under state law to be placed into a reinsurance trust account—the agreement did have certain provisions that the court found important:

However, the agreements did provide that [the trustee] was not to accept into the trusts any “non-negotiable” assets, meaning assets that were not capable of being liquidated at a moment’s notice without the need to clear any administrative hurdles. Further, the agreements provided that [the trustee] would “only be liable for its own negligence, willful misconduct, or lack of good faith in connection with its performance” and that “in no event shall [the trustee] be liable under or in connection with this . . . Trust Agreement for indirect, special, incidental, punitive or consequential losses or damages of any kind whatsoever.”

In reversing the motion court and reinstating the causes of action for breach of contract and breach of fiduciary duty against the trustee, the court agreed with the cedent that the breach of contract claim was prematurely dismissed prior to factual and expert discovery. On the breach of fiduciary duty claim, the court held that the trustee’s designation raised the question of whether the trustee owed a fiduciary duty to the cedent as beneficiaries of the trust separate from the trustee’s contractual duties under the trust agreement.

Cases like these are important to financial institutions that serve as reinsurance trustees but are more important lessons to cedents who are attracted to off-shore deals that may be too good to be true. Keeping a watchful eye on the character and quality of the assets in any trust agreement or funds withheld account where the reinsurer is managing the investments through a related affiliate is crucial to avoiding what happened to the ceding company in this (and related) cases.

Parties’ Choice of Law Prevails: Arbitration Compelled

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Arbitration provisions in insurance agreements often come under attack when one of the parties to a dispute invokes a state law anti-arbitration provision to oppose a motion to compel arbitration. In many of these disputes, the court has to determine what state law governs the dispute. In a recent case, a federal magistrate judge recommended that the insurer’s motion to compel arbitration be denied because of a state’s anti-arbitration law but the federal district court disagreed.

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Puerto Rico Federal Court Compels Arbitration Under the New York Convention

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I recently posted about the Ninth Circuit’s decision compelling arbitration under the New York Convention after holding that the McCarran-Ferguson Act did not reverse preempt the Convention. Two months earlier, the federal district court in Puerto Rico reached the same conclusion.

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Ninth Circuit Compels Arbitration Holding Art. II, Sec. 3 of New York Convention Self-Executing

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The Ninth Circuit has weighed in on the controversy over whether state anti-arbitration provisions in insurance codes reverse preempt the arbitration provisions of The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) because of the McCarran-Ferguson Act. The court joined several other circuits in holding that Article II, Section 3 of the New York Convention is self-executing and, therefore, arbitration can be compelled.

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A Brief Review of Reinsurance Trends in 2020

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Annually for several decades, with the first edition of each year’s reinsurance newsletter published by my various prior firms, we would present a brief review of reinsurance case law trends from the prior year. Because I am no longer with a firm, I now use this Blog to post my comments on reinsurance cases as they catch my eye. Accordingly, I offer you my review of reinsurance cases from 2020 in this space. I hope you find it worthy of your time.

In 2020, the courts addressed numerous arbitration issues, mostly about arbitrability and whether arbitration should be compelled, but also made clear, at least in one federal circuit, that an arbitration summons to a third-party is enforceable.  The courts also addressed questions about interim and final awards, upholding final awards as valid, but recognizing the validity of earlier awards for the issues finally determined.   

2020 also brought us an important follow-the-settlements decision, which focused on the conflict between a follow-the-fortunes provision and a following form provision in a reinsurance contract.  Additionally, the reinsurance information discovery trend continued in 2020, with courts routinely allowing discovery of reinsurance information. 

The split among the federal circuits continued in 2020 on whether state anti-arbitration laws reverse preempt the Federal Arbitration Act under the McCarran-Ferguson Act.  So did the requirement of privity for seeking relief from a reinsurer.


Most reinsurance arbitrations fall under the Federal Arbitration Act (“FAA”).  In the reinsurance context, questions of arbitrability and the powers of the arbitrators arise often.  In 2020, courts continued to emphasize their authority to compel arbitration and to leave many questions of arbitrability to the arbitrators.  Additionally, courts continued to confirm reinsurance arbitration awards, even those with attorney fees.

Arbitrability and Motions to Compel Arbitration

With the proliferation of insurance groups with multiple subsidiaries and affiliates, periodically arbitration demands are made by certain members of an insurance group, even though some of the losses in dispute arose from policies issued by another affiliate.  In these cases, the question arises whether the dispute over the non-demanding affiliate’s losses that fell within the reinsurance treaties is arbitrable. In TIG Insurance Co. v. American Home Assurance Co., No. 18-cv-10183 (VSB), 2020 U.S. Dist. LEXIS 22639 (S.D.N.Y. Feb. 7, 2020), the reinsurer sued the demanding cedents and the affiliated policy issuing company challenging the arbitrability of the losses arising from the policies issued by the non-demanding affiliate.

The court, in granting the ceding companies’ motion to compel arbitration, disagreed with the reinsurer that the issue of whether the non-demanding affiliate’s losses fell within the treaties was not arbitrable. The court stated that the “arbitration clauses are broad enough to encompass the disputes at issue, and the arguments raised by [reinsurer] relate to the interpretation of the underlying contract and must await arbitration.” The court held that, with a broad arbitration clause, there is a presumption that the parties have agreed to submit all disputes to arbitration, “including the present disputes.” As the court put it, the question of whether the cedent’s claims made in the arbitration demands are covered by the treaties, “is one of contract interpretation, not of arbitrability.” The specific question of whether the claims under the policies issued by the non-demanding affiliate came within the treaties was also “one of contract interpretation for the arbitrator to decide.” The dispute about whether the affiliate’s policies fell outside the scope of the treaties was, according to the court, a contractual one that the reinsurer could make to the arbitrators.

Many reinsurance contracts have “Run-off Reinsurer” clauses, which often exempt disputes with run-off reinsurers from the contract’s arbitration clause.  Who determines whether a reinsurer is a run-off reinsurer?  The court or an arbitration panel.  In Builders Insurance v. Maiden Reinsurance N.A., Inc., No. 1:19-cv-02762- SDG, 2020 U.S. Dist. LEXIS 34722 (N.D. Ga. Feb. 26, 2020), the reinsurer moved to compel arbitration. The cedent opposed the motion claiming that arbitration was no longer available to the reinsurer because it was a run-off reinsurer as defined in the reinsurance contracts.  The court first determined that it and not the arbitrators would decide whether the reinsurer was a run-off reinsurer. The evidence, found the court, indicated that the parties did not intend to delegate arbitrability questions concerning the run-off reinsurer article.  After concluding that the parties did not delegate to the arbitrators the issue of whether the reinsurer became a run-off reinsurer, the court held that the reinsurer was not a run-off reinsurer. The court accepted evidence from the reinsurer that it had not ceased underwriting operations, had not transferred its claim-paying authority to an unaffiliated entity, and had not assigned its interests or delegated its obligations to an unaffiliated entity. The court found that the reinsurance contracts did not void the arbitration provisions when a reinsurer is in run-off in the ordinary sense. The court concluded that whether the reinsurer continued to accept new risks was beside the point. The reinsurer had not ceased reinsurance underwriting operations according to the evidence accepted by the court. 

A question that often arises in reinsurance disputes is whether a dispute over assets in a reinsurance trust account comes within the arbitration clause of the reinsurance agreement.  In PB Life & Annuity Co., Ltd. v. Universal Life Insurance Co., No. 20- cv-2284 (LJL) (S.D.N.Y. May 12, 2020), a dispute arose over whether the assets the reinsurer placed in the trust agreement qualified under Puerto Rico law. The cedent moved to compel arbitration and the reinsurer sought an injunction precluding arbitration. In granting the motion to compel and denying the injunction request, the court determined that the reinsurance agreement’s arbitration clause was broad enough to leave to the arbitrators the question of whether disputes under the trust agreement came within the arbitration clause of the reinsurance agreement. The court found that the reinsurance agreement, which contained the binding arbitration clause, remained in effect and that the trust agreement did not amend or replace the reinsurance agreement.  The court also determined that the question of arbitrability should be left to the arbitrators.

In insurance insolvency proceedings, whether a reinsurance dispute may proceed to arbitration often depends on the jurisdiction where the dispute is being held.  In Integrand Assurance. Co. v. Everest Reinsurance Co., No. 19-1111 (DRD), 2020 U.S. Dist. LEXIS 77407 (D.P.R. May 1, 2020), a Puerto Rico federal court denied a cedent’s motion to alter or amend a judgment ordering the parties to proceed to arbitration. In explaining its ruling, the court found that, as a matter of law, a liquidation order issued by the state receivership court could not divest the federal district court of jurisdiction. Second, the McCarran-Ferguson Act did not reverse-preempt the FAA, and, therefore, the court was entitled to enforce the valid arbitration clause included in the reinsurance contracts.

Another question that often arises after an arbitration award is issued is who decides the preclusive effect of the original arbitration award on subsequent proceedings over new reinsurance billings.  In Certain Underwriters at Lloyd’s, London v. Century Indemnity Co., Nos. 18-cv-12041, 19-cv-11056, 2020 U.S. Dist. LEXIS 39242 (D. Mass. Mar. 6, 2020), the cedent demanded arbitration and moved to compel arbitration after a new reinsurance billing was not paid by the reinsurer following an earlier arbitration over a prior billing arising from the same reinsurance contract. The reinsurer moved to enforce the judgment, to enjoin the second arbitration demand, and to dismiss the petition to compel arbitration.

The court found that the preclusive effect of a prior arbitration on a subsequent arbitration is an arbitrable dispute. Here, said the court, the cedent was seeking to determine whether the preclusive scope of the prior arbitration decision encompassed the rebilling that was done without allocating the loss payments under the terms of the settlement agreement. Thus, the court found that the issue was not whether the ceding company was attacking the first arbitration, but whether the original arbitration award precluded arbitration of the rebilling. The court found that nothing in the arbitration award indicated that it was intended to have a prospective effect over new billings or that it foreclosed submitting the reinsurance billings in a new format. 

Powers of the Arbitration Panel and Arbitration Awards

It is the goal of every reinsurance disputes counsel to obtain an award of attorney fees against the opposing party.  The goal is rarely achieved.  But when it is achieved, courts are likely to confirm the award, even if the award of attorney fees is non-contractual.  In Catalina Holdings (Bermuda) Ltd. v. Muriel, No. 18-cv-05642, 2020 U.S. Dist. LEXIS 59812 (N.D. Ill. Apr. 6, 2020), the court stated that courts will enforce an arbitration award so long as it draws its essence from the contract, even if the court believes the arbitrator misconstrued the contract.  The court construed the contractual provision allowing the panel to award costs, but not exemplary damages, as consistent with the arbitrators’ award of attorney fees.  The court noted that the issue of attorney fees was presented to the panel by both parties. Interestingly, the court cited the honorable engagement language as one of the contractual features supporting the interpretation of the word “costs” to include attorney fees.

Arbitration panels sometimes issue interim final awards and then final awards.  Does the issuance of an interim final award render the panel functus officio (without further power)?  In Allstate Insurance Co. v. Amerisure Mutual Insurance Co., Nos. 19 C 4341, 19 C 7080, 2020 U.S. Dist. LEXIS 53923 (N.D. Ill. Mar. 25, 2020), the arbitration panel issued an “Interim Final Award,” which denied the cedent’s claims for defense costs in addition to the umbrella policy limits on only one specific facultative certificate.  The panel then issued a “Final Award,” which allowed the cedent to cede defense costs to the reinsurer, but for 5 of the 6 certificates.  A battle over which award should be confirmed as the final award ensued, with the court siding with the “Final Award.” 

In granting the cedent’s petition and denying the reinsurer’s petition, the court held that the Final Award was the final award, not the Interim Final Award, and that the Final Award, although terse, only decided the issues that had not been decided under the Interim Final Award. The court rejected the reinsurer’s argument that the arbitration panel was functus officio after it issued the Interim Final Award. The court stated that it was not reasonable to interpret the panel’s interim award to mean that the panel denied the cedent’s claims to any defense costs, regardless of whether they were within or without the underlying policy limits. The court concluded, that “it is clear that in the Interim Final Award the arbitration panel intended to address only whether [the cedent] could properly seek payment from [the reinsurer] of defense costs in addition to its policy limits, and it was only [the cedent’s] claims to such payments that were denied.”

In a similar vein, parties sometimes claim that the second award supersedes the first award.  In Standard Security Life Insurance Co. of New York v. FCE Benefit Administrators, Inc., No. 19-2336 (7th Cir. Jul. 28, 2020), the district court originally rejected the request to confirm a first award on damages, holding that the request was premature because not all the issues before the arbitration panel had been decided. After the second award was issued, the district court confirmed both awards. On appeal, the losing party argued that the second award superseded the first award and therefore, the damages award was no longer effective.  The court rejected the contention that the phase II award “erased” the phase I award because the phase II award contained the typical phrase: “all other claims for relief by the parties are denied.” The court found that the “all other claims for relief by the parties are denied” phrase only made sense if it referred to the claims that were asserted in phase II, which were termed by the arbitration panel in the phase II award as “newly asserted claims in Phase II of this arbitration.” 

Summons and Subpoena

Whether an arbitration summons is enforceable, was decided by the Second Circuit Court of Appeals in 2020.  In Washington National Insurance Co. v. Obex Group LLC, 958 F. 3d 126 (2d Cir. 2020), the circuit court affirmed the district court’s denial of a motion to dismiss the petition to enforce the summonses and to quash. On the validity of the summons issue, the court noted that the properly issued summons is not rendered invalid by an offer or agreement to produce documents without a hearing. The court also noted that Section 7 of the FAA contains no limit on the number of documents that may be deemed material.  As to venue, an issue that has become controversial in the past, the court found that for purposes of these summonses, the arbitrators were sitting in the Southern District of New York and it did not matter that that arbitrators once sat in the Eastern District of Pennsylvania concerning another summons.  Under this ruling, in the Second Circuit the summons will be enforced if the summons is issued for a hearing in the district where the arbitrators are sitting for purposes of the summons. 


For some time, cedents have had the upper hand in follow-the-settlements disputes.  More recently, however, reinsurers have had success especially where a follow form clause required consideration of the underlying policy terms.  In Utica Mutual Insurance Co. v. Fireman’s Fund Insurance Co., 957 F. 3d 337 (2d Cir. 2020), the court found as a matter of law that the reinsurer was not obligated to the cedent because the losses did not exceed the attachment points for the underlying reinsured umbrella policies.

The dispute involved facultative certificates of reinsurance, which provided that the reinsurer’s liability followed that of the cedent consistent with the terms of the umbrella policies. The umbrella policies provided that the cedent was “liable only for the ultimate net loss resulting from any one occurrence in excess of . . . the amounts of the applicable limits of liability of the underlying insurance as stated in the Schedule of Underlying Insurance Policies.” The schedules included separate provisions for bodily injury claims and property damage claims. Aggregate limits were only provided for the property damage claims. The facultative certificates each had a follow form clause and a follow-the-settlements provision. 

The case came down to whether the umbrella policies contained aggregate limits because without aggregate limits, the individual bodily injury claims were too small to reach the umbrella policies (and therefore the certificates). The circuit court reversed a judgment after a jury trial, concluding that the reinsurer was liable only if the losses exceeded the limits as stated in the schedules. The court rejected the cedent’s argument that the follow-the-settlements provision bound the reinsurer to the cedent’s claims determination. The court noted that the follow-the-settlements doctrine does not alter the terms or override the language of the reinsurance contract and that the reinsurer cannot be held accountable for an allocation that is contrary to the express language of the reinsurance contract. The court found that the cedent’s reading would essentially render the follow form clause in the certificates and the definition of loss in the umbrella policies meaningless, and “would be contrary to the parties’ express agreement (citation omitted).” The court supported its ruling as consistent with the long line of follow-the-settlements cases that hold “to trigger deference under the follow-the-settlements doctrine, the settlement decision in question must be reasonable and in good faith but must also be within the terms of the reinsured policy” (citations omitted). 

In another follow-the-settlements case involving facultative certificates of reinsurance and underlying umbrella polices, the court granted summary judgment to the cedent based on English law that governed the certificates.  In The Insurance Co. of the State of Pennsylvania v. Equitas Insurance Ltd., No. 17 CV 6850-LTS-SLC (S.D.N.Y. Jul. 16, 2020), the court noted that English law provides a strong presumption of back-to-back coverage.  In other words, a reinsurer’s liability under a proportional facultative certificate generally is co-extensive with the reinsured policy.  Here the issue was whether the “all-sums” approach under Hawaii law (the law of the underlying policies) flowed through to the facultative certificates or whether an exception to the back-to-back presumption under English law applied.  The court rejected the reinsurer’s argument finding, instead, that English law did not require an exception to the back-to-back presumption and that the reinsurer had to pay under the reinsurance contract.

Disputes often arise in the allocation of a settlement to a tower of excess insurance contracts.  On the reinsurance side, facultative reinsurers of upper layer excess policies will challenge a reinsurance cession where they believe that the underlying policies have not been exhausted.  In Fireman’s Fund Insurance Co. v. OneBeacon Insurance Co., No. 14 Civ. 4718 (PGG) (S.D.N.Y. Oct. 19, 2020), the court granted summary judgment to the cedent and directed the reinsurer to pay its share of the settlement. The case came down to what the term “exhaustion” meant in the excess policy and whether the reinsurer was required to follow the cedent’s settlement allocation.  The court held that the term “exhaustion” was ambiguous and that nothing in the policy, including the amendatory endorsement, clearly established that exhaustion required an actual payment up to the underlying policy’s limit of liability. The court concluded that the cedent’s interpretation of the term “exhaustion” was reasonable.  While the court agreed with the reinsurer that the follow-the-settlements doctrine cannot override the language of the underlying policy or the reinsurance contract, because the excess contract was ambiguous as to the meaning of “exhaustion” that principle was irrelevant to the court’s decision. The court nevertheless applied the follow-the-settlements doctrine and held that the reinsurer was bound to accept the cedent’s settlement and allocation.


              Production of Reinsurance Information

Reinsurance information is now regularly requested by plaintiff’s lawyers in underlying coverage disputes.  Courts tend to allow this discovery, although it is sometimes limited to just the reinsurance contracts.  In one case, the court held that insurer was required to produce its reinsurance agreements as part of its initial disclosures.  Lamar Adver. Co. v. Zurich Am. Ins. Co., No. 18-1060, 2020 U.S. Dist. LEXIS 13891 (D. La. Jan. 28, 2020).  The court also ordered production of communication between the insurer and its reinsurers regarding the policyholder’s claims because those communications would contain information relevant to whether the insurer acted in good faith in explaining its reason or granting or denying portions of the claims or otherwise described or explained its handling of the claims.

Similarly, in Mid-State Auto, Inc. v. Harco National Insurance Co., No. 2:19-cv00407, 2020 U.S. Dist. LEXIS 51727 (S.D. W. Va., Mar. 25, 2020), the court ordered the production of reinsurance information reasoning that reinsurance information is relevant where it sheds lights on the insurer’s state of mind in handling claims.  Depositions revealed reports to reinsurers, which the court presumed contained the insurer’s assessment of its claims handling.  Accordingly, the court held that this type of reinsurance information was relevant to establishing whether the insurer acted unreasonably in denying coverage and should be produced.

But in another case, the court held that information beyond the reinsurance contracts were too far removed from the case to order production.  Idahoan Foods, LLC v. Allied World Assur. Co. (US), Inc., No, 4:18-cv-00273-DCN, 2020 U.S. Dist. LEXIS 7243 (D. Id. Apr. 22, 2020).  There is little reason, the court held, “to involve another party [the reinsurer] that had essentially an ‘arms-length’ transaction with [the insurer].”


While reinsurance arbitrations are confidential, using the courts to confirm or vacate an arbitration award has in many cases led to the arbitration award—and sometimes other arbitration information—being unsealed and made public.  This trend continued in 2020.  In Pennsylvania National Casualty Insurance Group v. New England Reinsurance Corp., Nos. 20-1635 and 20-1872 (3rd Cir. Dec. 24, 2020) (Not Precedential), the circuit court affirmed a district court order unsealing a reinsurance arbitration award. In this case, the cedent withdrew its petition to confirm the award after the parties settled, but another reinsurer intervened and sought access to the award. Initially, the district court denied the intervenor’s application to unseal the award, but the Third Circuit reversed and remanded the case back to the district court to consider whether the award should be unsealed under a common-law-right-of-access analysis. Pennsylvania Nat’l Mut. Cas. Ins. Co. v. New England Reinsurance Corp., 794 F. App’x 213, 215–16 (3d Cir. Dec. 6, 2019). On remand, the district court unsealed the award based on the common-law-right-of-access analysis and the circuit court affirmed.  The court found that if the award (or any document) finds its way into the court clerk’s office, it becomes a judicial record and is subject to public access.  Neither the district court nor the circuit court was convinced of a specific harm or clearly defined injury to the cedent by the unsealing of the award, which would have allowed the award to remain sealed.


The federal circuits are split on whether a state anti-arbitration law can reverse preempt the FAA and preclude arbitration even if the reinsurance contract has an arbitration clause.  That split became further evident in 2020. 

In Washington Cities Insurance Authority v. Ironshore Indemnity, Inc., No. 2:19-cv-0054-RAJ, 2020 U.S. Dist. LEXIS 39633 (W.D. Wash. Mar. 6, 2020), the court denied a motion to compel arbitration because of Washington’s anti-arbitration statute, RCW § 48.18.200.  The court concluded that RCW § 48.18.200 reverse preempted Chapter I of the FAA under the McCarran-Ferguson Act and that reinsurance came within the definition of insurance.

But in another case, the court granted the motion to compel arbitration and ruled that the Arkansas anti-arbitration law did not reverse preempt the New York Convention or Chapter II of the FAA.  J.B. Hunt Trans. Inc. v. Steadfast Ins. Co., No. 5:20-CV-5049 (W.D. Ark. Jul. 1, 2020).  The court ultimately found more convincing the arguments that McCarran-Ferguson does not apply to the New York Convention or Chapter II of the FAA.  The court agreed with the 4th Circuit that Congress did not intend McCarran-Ferguson to permit state law to vitiate international agreements entered by the US. The court also agreed with those other courts that found Article II, Section 3 of the New York Convention to be self-executing. This same issue is before the Ninth Circuit and ultimately will need to be resolved by the US Supreme Court.


It is very rare that an action by a policyholder or claimant against a reinsurer is sustained.  That is because neither are in privity of contract with the reinsurer.  The cases in 2020 were consistent with this trend.  In City of Florida City, vs. Public Risk Management of Florida, Nos. 3D18-2175 & 3D19-0983, 2020 Fla. App. LEXIS 10391 (Fla. App. 3rd Dist. Jul. 22, 2020), a Florida appeals court affirmed summary judgment in favor of a reinsurer and dismissed the reinsurer from the lawsuit for lack of privity. The court found that summary judgment in favor of the reinsurer was “soundly substantiated in both fact and law.” The court cited case law and statutory language under Florida’s Insurance Code to support the concept of contractual privity. See 624.610(9), Fla. Stat. (“No person, other than the ceding insurer, has any rights against the reinsurer which are not specifically set forth in the contract of reinsurance or in a specific written, signed agreement between the reinsurer and the person”).

No Reverse Preemption Leads to Arbitration Under the New York Convention

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The continuing controversy between national and international support and enforcement of arbitration provisions in commercial contracts, including insurance contracts, and US state anti-arbitration statutes that preclude enforcement of arbitration provisions in insurance policies has a new case that falls into the pro-enforcement camp.

Continue reading “No Reverse Preemption Leads to Arbitration Under the New York Convention”