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UK Commercial Court Rules that Arbitration Panel’s Decision in Which it Did Not Reference The Period Clause Is Not Flawed and Will Be Enforced

QUEEN BENCH DIVISION, COMMERCIAL COURT
IRB BRASIL RESSEGUROS V. CX REINSURANCE CO.
(2010 EWHC 974 (COMM) MAY 7, 2010)

In this action, the reinsurer, IRB Brasil Reseguros (“IRB”) participated in an excess of loss reinsurance program. The goal of the program was to protect CX Reinsurance Co.’s (“CX”) casualty book of business from 1976 to 1983. During the period in which the program was in effect, CX was one of a number of insurers that settled claims occurring in the United States. CX submitted the claim for reimbursement to IBR pursuant to the program in question but IRB refused to pay the claim. Specifically, IRB questions whether certain claims were within the scope of the reinsurance program’s cover. The issue went to arbitration in which CX was awarded $665,055.51. IRB appealed the decision claiming that the arbitration panel applied the incorrect law. IRB further argued that the panel made no reference regarding the scope of cover and, therefore, the decision is flawed

The court determined that based on the facts presented in this action, the arbitration panel applied proper calculations in issuing its determination. The court noted that specific references regarding the period clause or the well-known legal principles are not needed and clearly not a basis to set aside the arbitration award.

IMPACT (REINSURANCE): This is not a surprising decision by the UK Commercial Court. More often than not, arbitration awards are not reasoned awards and therefore any justifications and/or the legal principles behind the awards are sometimes unknown. Such is the case with referencing various clauses within the reinsurance contract, including the period of cover.

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Jeffrey L. Kingsley, Goldberg Segalla, Insurance attorney
Partner

Jeffrey Kingsley maintains an international practice that focuses on matters involving insurance and reinsurance coverage, commercial and regulatory issues, and extra-contractual liability arbitration and litigation. As a leader in Goldberg Segalla’s reinsurance practice he has extensive experience handling and consulting clients on complex reinsurance allocation issues, regulatory issues, arbitrations, transactional issues, and disputes involving the follow-the-fortunes doctrine.

Jeff provides comprehensive legal representation for Fortune 500 companies, insurers,...

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Thomas F. Segalla, Insurance Attorney, Goldberg Segalla Law Firm

Thomas F. Segalla, is the co-author of the renowned insurance law treatise Couch on Insurance 3d and is one of the founding partners of the firm.  Mr. Segalla is a nationally recognized reinsurance and insurance expert who has been retained by numerous insurance carriers and policyholders.  His active practice focuses on the defense and insurance coverage aspects of matters involving bad faith; construction site personal injury accidents (Labor Law §§ 200, 240(1) and 241(6)); and toxic tort and environmental issues. As a member of the Defense Research Institute (DRI), he is the Past Chair of the Insurance Law Committee and served on the Board of Directors and is the past Chair of the Law Institute. In addition, as a member of the Federation of Defense and Corporate Counsel, he is integrally involved in the relationship between the Insurance Industry and defense counsel. He has published and lectured extensively for many professional organizations.  Mr. Segalla possesses an AV rating from Martindale-Hubbell and has been named to the Top 50 of the New York Super Lawyers.

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