Reinsurance Law Blog : Oklahoma Insurance Lawyer & Attorney : Stauffer & Nathan Law Firm

In Newmont USA vs. Insurance Co. of North America, the Tenth Circuit affirmed an order requiring arbitration of a reinsurance disagreement. “The arbitration provision in the Reinsurance Agreements encompasses the parties’ dispute concerning the BHP Litigation and neither the Reinsurance Agreements’ expiration nor the Settlement Agreements extinguish arbitrability. Accordingly, the district court did not err in compelling arbitration.” The trial court erred, however, in not applying the postjudgment interest rate in the reinsurance agreement, rather than the federal postjudgment interest rate.

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Federal Judge Vacates Reinsurance Award for Evident Partiality

A federal judge has vacated a reinsurance arbitration award on grounds of evident partiality, ruling that the failure of two arbitrators to disclose their involvement in a second arbitration involving affiliates of the parties in the first arbitration and a common witness constituted a material conflict of interest.

The rest of the story is here

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In a case which has involved the interpretation of Oklahoma's arbitration statutes and the amendments to those statutes, a federal judge has ruled that an arbitration agreement between an insurer and its reinsurer is broad enough to require that any bad faith claim the insurer may have should be arbitrated as well.

The case was filed in the Northern District of Oklahoma by MidContinent against GenRe  (Case No. 06-cv-00475)  The order prohibits MidContinent from amending its complaint to add a bad faith claim but notes that MidContinent could include such a claim in the arbitration.

This case was undoubtably complicated by the recent flurry of amendments to the Oklahoma arbitration statutes.  Those statutes have always prohibited arbitration of insurance matters unless permitted by statute.  But there was always an exception to that prohibition for agreements between insurance companies -- at least  until the statutes were amended in 2005 and the legislature omitted the exception.  The 2005 amendments were retroactive; and then, in 2008 the "between insurance companies" exception was put back in.  The 10th Circuit has ruled that the 2008 amendment was also retroactive, so would apply to the dispute.

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The Oklahoma legislature has not embraced arbitration.  In fact, it seems somewhat hostile towards it.  Thus, there has been some tinkering with Oklahoma’s arbitration act by the legislature.  First, it said that the only types of insurance agreements that could be arbitrated were those between insurers, which would, of course, include reinsurance agreements.  But then the statute changed to delete the exception which permitted arbitration between insurance companies.  Then, it changed again to permit it.  It was during these changes that Mid-Continent sued GenRe for failure to pay under the reinsurance contracts. 

The trial court said that the arbitration clause was unenforceable, and that therefore, the suit could proceed.  GenRe appealed, claiming that the arbitration clause was enforceable.  It was after the trial court’s ruling and before the Tenth Circuit’s ruling that the law changed again to permit arbitration between insurance companies.  The Tenth Circuit found the arbitration clause was enforceable, and that the change applied retroactively, since it was a procedural and not a substantive change. 

Read the opinion:
Mid-Continent Casualty Co. v. General Reinsurance Corporation, Case No. 07-5050

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