International Arbitration

5 Tips to Keep London Arbitration from Being a Foreign Experience

American policyholders often find international arbitration a confusing process, necessitating strategies that differ from those used before an American jury. However, policyholders can navigate these waters and beat the insurance companies—who are repeat players in London arbitrations—at their own game.

1. Who's on my side? Arbitration provisions are written by insurance companies for the benefit of insurance companies. It is not surprising then that such provisions “stack the deck” in favor of insurers and make it hard for policyholders to collect the money owed them. Insurers advance fallacious defenses behind the walls of “confidentiality” and, as repeat players, know and exchange information on favorable arbitrators. Policyholders need an experienced advocate to balance the scales.
2. Pack your passport—we're headed to Bermuda and London by way of New York. Today, Bermuda is one of the largest markets for commercial property and casualty insurance in the world. Bermuda Form policies provide for arbitration of disputes in London under the substantive law of New York and the procedural law of England in the belief, unsurprisingly, that this tends to favor insurance companies.
3. Do I need an English arbtirtaor for an English panel? A traditional English viewpoint is that policyholders should select a well-respected English barrister, called a Queen’s Counsel or Q.C., because the other two arbitrators on the panel will also be members of this select “club.” Although this view holds great currency, we recommend policyholders consider “de-Anglicizing” the arbitration panel by selecting an American arbitrator. A retired judge or respected American law professor or lawyer with expertise in New York law can provide the other arbitrators with important insight on the issues of New York substantive law and the American tort law system, which can balance the tribunal’s insurer-side perspective.
4. Be first to the starting line. Initiating the arbitration and naming your arbitrator in the arbitration demand will expedite proceedings and your recovery payment. It can help assure the insurer of the seriousness of your dispute and will activate the insurance company’s obligation to name its party-appointed arbitrator within 30 days, as stated in the arbitration clause. Your case should be well prepared before pulling the trigger because pleadings in London arbitrations require much greater specificity than in American courts.
5. Lawyer, barrister and solicitator: English lawyers are not all the same. In the British system, lawyers have been traditionally either solicitors or barristers. Solicitors prepare the case for trial, while barristers act as trial lawyers. However, a U.S. lawyer can act as the solicitor instructing a barrister or Q.C. at the final trial, or “hearing.” This allows for more knowledgeable and efficient claim and trial preparation and keeps costs in check. Additionally, the English lawyer can advise a policyholder’s trial team on the differences between American and English practices, as they do differ.

So What Now?

Bermuda Form insurance policies are increasingly common given the high excess limits they provide. However, a coverage dispute is almost guaranteed if your claim is large enough. The Bermuda insurers will rely on the “advantages” baked into the policy form’s arbitration clause when negotiating the value of a policyholder’s claim.

Did Your Lawyer Write The Book On Bermuda Form Arbitration? Ours Did.

Lorie Masters, a partner in Perkins Coie’s Insurance Recovery practice in Washington, D.C., is the author of Liability Insurance in International Arbitration: The Bermuda Form (Hart Publishing), which the Court of Appeal of England and Wales has called "the standard work on the topic." It won the 2012 British Insurance Law Association Book Prize for outstanding contributions to the literature on insurance law. Like other Perkins Coie coverage lawyers, Lorie has extensive experience navigating the foreign waters of the Bermuda Form.

Have Your Lawyers Arbitrated Under The Bermuda Form …And Won Big? Ours Have..

Tennessee Valley Authority (TVA)

Perkins Coie partners Vivek Chopra, Mary Rose Hughes and Karin Aldama secured more than $335 million for TVA from its liability and property insurers for the loss incurred by TVA due to the largest fly ash spill in U.S. history. First, TVA reached a highly favorable (near limits) settlement with Arch Bermuda, one of the three Bermuda excess liability insurers. Next, after a month-long arbitration, Perkins Coie won full limits, attorney’s fees and interest in excess of $170 million from another Bermuda excess liability insurer. This win is reported to be the largest judgment ever secured against a Bermuda insurer at trial. In December 2014, TVA obtained an award of $50 million—full policy limits—after a four-week trial - against the last remaining insurer. We overcame the insurer’s 17 defenses, which included challenges to the legitimacy and scope of federal and state clean-up orders and representations made in TVA’s insurance application. In December 2015, Perkins Coie completed the matter by winning nearly $20 million in interest and costs from this last insurer.

Perkins Coie’s representation of TVA received extensive media coverage in domestic, Bermudian and insurance trade publications.

In re Arbitration of Ticona ( formerly Hoechst Celanese Corp.) v. XL Ins. Co., Ltd.

Perkins Coie partner Lorie Masters acted as lead trial counsel for the policyholder in this arbitration. A three-member arbitration panel, comprised of a retired chief judge of the United States Court of Appeals for the Third Circuit, a member of the House of Lords, and a distinguished Queen’s Counsel, awarded the policyholder client the full policy limit of $75 million, plus $20 million in pre- and post-judgment interest for mass-tort liabilities covered under the policyholder’s excess liability Bermuda Form policy. Follow-on arbitrations with other insurers settled favorably before trial.