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Posts Tagged ‘Contract Interpretation’

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Reinsurance Nuts & Bolts: A Potpourri of Reinsurance Issues Courtesy of Gulf Ins. Co. v Transatlantic Reins. Co. (Part I of a Two-Part Post)

November 17th, 2009 Appellate Practice, Contract Interpretation, New York State Courts, Nuts & Bolts, Nuts & Bolts: Reinsurance, Rescission and Reformation 1 Comment »

Introduction

Today we look at a reinsurance case recently decided by the New York Supreme Court, Appellate Division, First Department, New York’s intermediate appellate court for cases originating in New York County (Manhattan) and certain other counties in the New York metropolitan area.  We would not characterize Gulf Ins. Co. v Transatlantic Reins. Co., ___ A.D.3d ___,  2009 NY Slip Op. 06788 (1st Dep’t Oct. 1, 2009) (copy here), as a ground-breaker, but it involves a number of interesting  issues, including the interpretation and construction of a quota share treaty, course of performance, reformation and rescission. 

Substantive reinsurance cases are a relatively rare breed to begin with (especially in recent years), and cases that discuss a broad range of issues in some depth are rarer still.  That makes Gulf/Transatlantic worthy of some attention, especially to those interested in learning a few reinsurance law basics.  Hat tip to my friend and former colleague James P. Tenney for bringing the case to our attention.

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ReliaStar Life Insurance Co. v. EMC National Life Co.: Critical Analysis of an Important Reinsurance Arbitration Decision

April 28th, 2009 Arbitrability, Authority of Arbitrators, Awards, Life Reinsurance, New York Court of Appeals, United States Court of Appeals for the Second Circuit 3 Comments »

Introduction

We recently reported on ReliaStar Life Ins. Co. v. EMC National Life Co., ___ F.3d ___, ___ (2009) (Raggi, J.) (blogged here), in which the United States Court of Appeals for the Second Circuit held that an arbitration panel was authorized to award under the bad faith exception to the American Rule attorney and arbitrator fees to a ceding company in a case where the parties had agreed that “[e]ach party shall bear the expense of its own arbitrator.  .  .  and related outside attorneys’ fees, and shall jointly and equally bear with the other party the expenses of the third arbitrator.”  This post takes a critical look at ReliaStar.  

The Second Circuit is one of the most influential and respected  Circuit Courts of Appeal in the United States, yet on occasion even this prestigious court renders a decision that is open to question.  ReliaStar is one of those decisions.  The majority opinion lost sight of what the parties agreed about the arbitrators’ power to award attorney fees.  Rather than adhere to the plain meaning of the parties’ agreement as required by New York  law, the Court construed an unambiguous limitation on arbitral authority to mean something other than what it said. 

No doubt that the Court believed that its decision would encourage resort to arbitration by construing arbitral authority broadly.  But the Court would have done a far better job encouraging resort to arbitration had it simply enforced the parties’ agreement as written.  One of the most attractive features of arbitration is that parties get to dictate how they want their dispute decided, including, among other things, how best to allocate the costs, fees and expenses of deciding it.   But that feature falls by the wayside if courts cannot be relied upon to enforce arbitration agreements as written.  Continue Reading »

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