Foreign Insurers Face Uncertainty Over State Arbitration Laws

Litigation Partner Brian Briz was quoted in a Law360 article about the ongoing question of whether state laws barring arbitration of insurance disputes can negate international insurance contracts with arbitration clauses. Insurance contracts signed by foreign insurers often include these clauses to avoid the expense and perceived uncertainty of litigating disputes with policy holders and to ease enforcement across international borders. However, some states have enacted laws that bar the arbitration of insurance disputes, raising the question of whether such clauses are enforceable in these states. The answer requires a highly technical analysis of the relationships among state laws, a federal statute related to insurance and the New York Convention, an international treaty. U.S. circuit courts have split on the issue, and the U.S. Supreme Court has provided little guidance. With the issue currently before the Ninth Circuit, Mr. Briz commented on the dilemma's significance for insurers.

"It's a big deal for insurance companies, because they've entered into contracts that contain arbitration clauses and it's uncertain whether or not those clauses are enforceable," he said.

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