In a decision that may reverberate beyond the antitrust context, New York’s highest court — the Court of Appeals — held that the state’s antitrust statute lacks the extraterritorial scope to reach a purely foreign alleged antitrust conspiracy. The decision could have broad implications for substantive claims brought under New York state law and could even affect how judgments are enforced under New York law.
The Global Re Decision
In Global Reinsurance Corp. US Branch v. Equitas Ltd., the New York branch of a German reinsurance company (“Global Re”) alleged that a group of UK entities (collectively known as Equitas) violated New York’s Donnelly Act, the state analogue to the federal Sherman Act, by conspiring to restrain trade in the global reinsurance market. The Equitas entities were formed by Lloyd’s of London (“Lloyd’s”) in 1996 for the purpose of handling certain pre-1993 non-life reinsurance-related liabilities — for example, claims for environmental or other catastrophic damages that may surface long after an insurance policy is signed. The creation of Equitas was approved by the United Kingdom Department of Trade and Industry, and by the European Commission. Nonetheless, Global Re alleged in New York state court that the centralization of decision making in Equitas suppressed competition because, unlike the individual Lloyd’s syndicates that had competed with each other for so-called retrocessionary reinsurance customers prior to 1996, Equitas had no incentive to attract prospective business or offer customer-oriented claims management.
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