Missouri Court Upholds Arbitration Despite Anti-Arbitration Statute When Foreign Insurers Are Involved | Property Insurance Coverage Law Blog

Policyholders should concentrate on arbitration clauses present in property insurance coverage insurance policies. Even if a state has an anti-arbitration legislation, most courts ship the disputes to arbitration and probably apply one other state’s legal guidelines if the insurers usually are not based mostly within the United States. For instance, yesterday, a federal court docket dominated:¹  

An rising majority of district and circuit courts have concluded that state anti-arbitration statutes don’t reverse-preempt the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Though rationales diverge, the Supreme Court seems to endorse the top outcome. The Court is thus compelled to affix the bulk view that the MUAA doesn’t reverse-preempt the Convention. Consequently, Plaintiff should arbitrate its claims in opposition to the Arbitration Defendants pursuant to their respective agreements.

The federal court docket made this ruling regardless of Missouri’s longstanding public coverage stopping insurance coverage disputes from being topic to arbitration:

The MUAA acknowledges the validity and enforceability of arbitration agreements besides in contracts of insurance coverage and adhesion. Mo. Rev. Stat. § 435.350. Missouri appellate precedent is obvious that arbitration clauses in insurance coverage contracts are voidable as in opposition to public coverage however alternative of legislation provisions within the contract. Sturgeon v. Allied Professionals Ins. Co., 344 S.W.3d 205, 210 (Mo. App. E.D. 2011) (holding that Missouri’s public coverage overrode California alternative of legislation). Accord, Milburn v. Zurich Am. Ins. Co., 478 F. Supp. 3d 789, 792 (E.D. Mo. 2020) (‘[P]ublic policy is a matter above and beyond a choice-of-law analysis and can act to override it entirely.’).

I’ve beforehand warned about arbitration clauses, as famous in Check For Arbitration Provisions—Especially When Dealing With Foreign Insurers. Insurance brokers ought to fastidiously verify for these clauses when promoting surplus strains insurance policies and warn their shoppers earlier than promoting them a coverage that usually requires arbitration in a far-away jurisdiction and with unfavorable legislation.  

An Afternoon Quote

Domestic coverage can solely defeat us; overseas coverage can kill us.

—John F. Kennedy

¹ Foresight Energy v. Ace American Ins. Co., No 4:22-cv-00887 (E.D. Mo. Mar. 21, 2023).