Download PDF - Goodmans

of disputes; (ii) if a contract involving interstate commerce contains an
arbitration clause, it is enforceable under the FAA regardless of contrary state
laws; and (iii) the McCarran‐Ferguson Act is no bar to the enforceability of
arbitration clauses. The Court ordered a stay of all judicial proceedings
pending completion of the arbitration process by the receiver and the
reinsurer.
Nebraska
State ex. rel. Wagner v. Kay, 15 Neb. App. 85, 722 N.W.2d 348 (2006). The
director of insurance, as liquidator of the insurance company, filed suit against
the former directors and officers of the company for breach of certain fiduciary
obligations. One of the former directors and officers brought a motion to
compel arbitration pursuant to arbitration clauses in employment and
separation agreements. The Court of Appeals of Nebraska found that when a
liquidator is appointed by a court order, such a liquidator is not automatically
bound by the reappointment contractual obligations of the insurer, such as
agreements to arbitrate. Nebraska law grants the liquidator broad statutory
powers. Accordingly, the liquidator was not seeking to enforce the two
agreements, but instead disavowing them pursuant to his express powers.
Thus, the Court of Appeals held that the arbitration clauses in insurer’s
severance and separation agreements with former officer were not binding on
the liquidator.
New York Corcoran v. AIG Multi‐Line Syndicate, Inc., 143 Misc. 2d 62, 539 N.Y.S.2d 630
(Supreme Court, New York County 1989), rev'd, 167 A.D.2d 332, 562 N.Y.S.2d
933 (1990). On appeal to the Appellate Division, First Department, the Court
unanimously reversed the holding of the lower court, basing its decision on
Corcoran v. Ardra Ins. Co., 156 A.D.2d 70, 553 N.Y.S.2d 695 (1st Dep't 1990). The
Court below had held that because the McCarran‐Ferguson Act vests the
states with the power to regulate the business of insurance, the Federal
Arbitration Act ("FAA") has no effect in cases where the liquidation provisions
of the state Insurance Law are implicated. However, the Appellate Division
reversed the finding of the Court below that the Liquidator was compelled to
arbitrate under the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards.
Corcoran v. AIG, Multi‐Line Syndicate, Inc., No. 4835‐85 (N.Y. Sup. Ct. Mar. 6,
1989) (LEXIS, Insrlw library, NY file). The court held that the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, which became
effective on December 29, 1970, is the "supreme law of the land" and thus
would take precedence over the New York statutory scheme concerning the
liquidation of insurance companies and vesting exclusive jurisdiction of a
liquidation proceeding in the New York Supreme Court. Consequently, the
reinsurance dispute satisfies the requirements of the Convention and is
arbitrable. The court, however, indicated that as supervisor of the liquidation
proceedings it would retain jurisdiction with respect to the award rendered in
the arbitration.
Corcoran v. Ardra Ins. Co. Ltd., 77 N.Y.2d 225, 566 N.Y.S.2d 575, 567 N.E.2d 969
(1990), cert. denied, 111 S. Ct. 2260 (1991). The Liquidator of Nassau Insurance
Company was not required to arbitrate claims against a foreign insurer arising
out of three international reinsurance agreements, even though the
agreements contained arbitration clauses. Ardra argued that the Convention
on the Recognition and Enforcement of Arbitral Awards preempted the
McCarran‐Ferguson Act and state insurance law and required the Liquidator to
arbitrate its dispute with Ardra. The Court, noting that the Convention's
requirement of arbitration is subject to exception where it is "inoperative or