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court ruled that proceedings under 11 U.S.C. § 304 are not violative of the
McCarran‐Ferguson Act because New York case law (G.C. Murphy Company
v. Reserve Insurance Company, 54 N.Y. 2d 69, 444 N.Y.S. 2d 592, 429 N.E. 2d
111 (1981)) and the Uniform Insurers Liquidation Act, adopted by New York,
require claimants against foreign insolvent insurers to pursue their claims
through foreign liquidation proceedings. The court observed that the
purpose of a filing under 11 U.S.C. § 304 is to prevent piecemeal distribution
of assets in the United States by means of proceedings commenced in U.S.
courts by local creditors and found that enjoining further actions against the
trust would prevent the proverbial “race to the courthouse” and would
preserve the trust pending a pro rata distribution of its assets to the
American policyholders of Israel Re. The court concluded its analysis by
finding that the principles of Israeli bankruptcy law are not dissimilar to the
U.S. Bankruptcy Code. Accordingly, the court stated that “there is a distinct
judicial preference for deferring to the foreign tribunal litigation respecting
the validity or the amount of the claims against the foreign debtor.
Integrity’s attachment of the trust was vacated and the injunction sought by
the petitioners was granted.
In the Matter of the Application of the People of New York for an Order re the
Second Russian Ins. Co., 256 N.Y. 177, 176 N.E. 133 (1931). The claim was based
on a contract entered into in St. Petersburg, Russia, between a Russian
insurance corporation and a partnership composed of German citizens. Under
the terms of the agreement, the Germans were entitled to commissions. The
court held that this was a foreign claim, and unless protected by a lien or an
equity in the nature of a lien, it was not entitled to share in the distribution
made by the insurance commissioner.
Moscow Fire Ins. Co. v. Bank of New York & Trust Co., 161 Misc. 903, 294 N.Y.S.
648 (1937). The situs of assets of a dissolved Russian insurance company was
New York, where the assets were held in a depository in the state with either
trust companies or with a bank by court order. Therefore, the New York state
courts had jurisdiction and dominion over the funds deposited with the
insurance commissioner by the Russian insurance company, which were assets
also claimed by the United States as an assignee of amounts due from the
Soviet government to American nationals which were confiscated by the
Soviet government. The United States was required to follow the municipal
law regarding physical control over the assets because ownership depended
on the law of the place where the securities were located.
Moscow Fire Ins. Co. v. Bank of New York & Trust Co., 280 N.Y. 286, 20 N.E.2d
758 (1939), reargument denied, 280 N.Y. 848, 21 N.E.2d 890, motion denied,
293 N.Y. 749, 56 N.E.2d 745. The state courts could treat the U.S. branch of a
Soviet insurance company as a separate organization and proceed with its
liquidation. The courts were bound to give effect to Soviet decrees
terminating the insurance company in Russia.
Ohio Benjamin v. KPMG Barbados, 2005 Ohio 1959 (Ohio Ct. App. 2005). The
liquidator of two insolvent insurers sued the foreign auditors for negligence
regarding their audits of the offshore reinsurers of two Ohio insurers. The
liquidator argued that the auditors’ negligent audits contributed to the insurers’
insolvency. The appellate court affirmed the dismissal, stating that it is
unreasonable to subject a foreign auditor to the jurisdiction of courts in a state
in which it solicits no business, is not licensed to perform professional
accounting services, maintains no assets or property, and has not been retained
to perform professional accounting service, simply because the foreign
reinsurance company that it audited reinsured the risks of an insurance
company domiciled in Ohio.