Federal District Court Upholds Foreign Reinsurer’s Right To Remove Action To Federal Court

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The Court for the Middle District of Louisiana upheld a magistrate’s ruling denying a motion to remand filed by the Louisiana Commerce and Trade Association of Self Insurer’s Fund (“LCTA”), holding that the defendant foreign reinsurers (“Reinsurers”) properly removed the state court action under the Convention of the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) which Congress implemented under the Convention Act, 9 U.S.C. §§201-208. In so holding, the Court first found it had subject matter jurisdiction under the Convention Act and rejected LTCA’s argument that, because the issue of arbitrability was not raised below, the state court action did not “relate to” an arbitration as required by the New York Convention. Noting the extraordinary breadth of the New York Convention, the Court found that because LTCA’s claim against the Reinsurers arose under the Reinsurance Contract which included an arbitration clause, the state court action thus related to the arbitration clause. The Court also noted that a party is not required to first move to compel arbitration before it is permitted to remove the action and, in any case, the Reinsurers in this case had advised the state court that they intended to remove the action.

The Court then turned to LTCA’s contractual argument that the Reinsurers waived their right to remove under the Service-of-Suit Clause in the Reinsurance Contract. In this case, the Service-of-Suit clause provided that the Reinsurers agreed to submit to the jurisdiction of a court of competent jurisdiction within the United States in the event they failed to pay any amount claimed under the Reinsurance Contract. The Service-of-Suit Clause, however, further provided that nothing contained in that provision constituted a waiver of the Reinsurer’s right to remove the action to a United States District Court. The Court found that this provision was not an explicit, clear, and unequivocal waiver of the right to remove, as required under applicable law, and further found it expressly and sufficiently reserved the Reinsurer’s right to removal. Louisiana Commerce and Trade Association Self-Insurers Fund v. Certain Underwriters at Lloyd’s London Subscribing to Contract Number A1430B600/A2430B600, No 13-700-JJB-RLB (M.D. La. July 15, 2014), affirming and adopting Magistrate Judge’s Report and Recommendations dated May 6, 2014.

 

Topics:  Arbitration, Popular, Reinsurance, Subject Matter Jurisdiction

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Procedure Updates, General Business Updates, Insurance Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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