Republic Ins. Co. v. Banco De Seguros Del Estado, No. 10 C. 5039, 2013 U.S. Dist. LEXIS 110842 (N.D. Ill. Jul. 26, 2013).
An Illinois federal court addressed competing summary judgment motions in a long-standing retrocessional dispute arising out of the old Pan Atlantic syndicate. The retrocedent was seeking long overdue reinsurance recoverables. The retrocessionaires were seeking rescission for breach of a retention warranty.
In dismissing the counterclaims based on the retention warranty, the court analyzed the parties’ relationships and the relevant contract wording. It found that the warranty language applied to the syndicate as a whole and not to the retrocedent, which acted as the fronting company for the syndicate in addition to its own syndicate participation.
The court also rejected the retrocedent’s open account theory to avoid the retrocessionaire’s statute of limitations argument. The parties disagreed over what law applied and after performing an analysis using Illinois choice-of-law principles, the court held that English law applied. Based on English law, the court rejected the account stated theory and found that claims made on billings before a certain date were barred by the applicable six-year limitations period.