In In re Westbank Holdings, LLC v. Interstate Fire & Cas. Co., No: 22-10082ADV & NO. 23-1010, 2024 WL 670755 (Bankr. E.D. La. Feb. 17, 2024), the insurers under a commercial insurance policy filed a motion for arbitration of the insurance claims at issue in a bankruptcy, or alternatively, to dismiss them. The claims had been filed in State Court initially. "The Insurers removed the case to the United States District Court for the Eastern District of Louisiana pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. §§ 201–208 (the “Convention”)." In re Westbank Holdings, 2024 WL 670755, at *2. Some of the insurers on the risk were part of a Lloyd's of London Syndicate in the U.K.
The insurance claims against them resulted from damage caused by Hurricane Ida and included claims for insurer bad faith. "The parties here agree that the arbitration clause in the Policy is enforceable under the Convention because Westbank Holdings and the Foreign Insurers reside in different countries (the United States and England and Wales) which are signatories to the Convention." In re Westbank Holdings, 2024 WL 670755, at *5.
The Bankruptcy Judge in Louisiana granted the motion and compelled arbitration of the insurance claims.
A Professional Reminder: In a forthcoming article in New Appleman on Insurance: Current Critical Issues in Insurance Law, the author examines significant potential, external legal constraints to arbitration of insurance bad faith claims. Whether you represent insurance carriers or policyholders, be on the lookout for the article and for significant potential constraints that might be raised to insurance arbitration.
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