Arbitration provisions in insurance or reinsurance contracts periodically are challenged based on state anti-arbitration statutes. Often, when non-US insurers or reinsurers are involved, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention“) is raised as a basis to enforce the arbitration provisions in federal court. The counterpoint to that argument is reverse preemption under the McCarran-Ferguson Act. This is a heady academic subject that has real world consequences when a party is trying to enforce an arbitration provision in an insurance or reinsurance contract.
In a recent case, a Missouri federal court was faced with the question of whether it had subject matter jurisdiction under chapter 2 of the Federal Arbitration Act (“FAA”) to hear a dispute over whether arbitration could be compelled on a series of insurance policies. Foresight Energy, LLC. v. Certain London Market Ins. Cos., No. 17-CV-2266 CAS, 2018 U.S. Dist. LEXIS 69423 (E.D. Mo. Apr. 25, 2018). The insurance policies required disputes to be arbitrated in London. The policies, however, were governed by Missouri law and Missouri has an anti-arbitration statute that precludes arbitrations between insurers and policyholders. Mo. Rev. Stat. sec. 435.350...
