A Guided Tour Of London And Bermuda Arbitrations

American companies that require large limits of first-party property and liability insurance coverage often find themselves looking overseas to London or Bermuda-based insurance companies to fill their needs.

Some of those insurers are loathe to be dragged into the U.S. courts, or even a U.S.-based arbitration, out of a fear that they will be subjected to pro-policyholder rules of policy interpretation. So, their policies contain clauses which mandate that all disputes be resolved under arbitration rules and acts of their own jurisdictions. For good measure, those clauses often contain substantive choice-of-law and policy interpretation provisions that are unfavorable to policyholders.

Seemingly making things worse, the overseas arbitration proceedings can differ dramatically from arbitrations in the U.S. American companies need a good roadmap to navigate their way through the various minefields presented by such arbitrations — but policyholders who are properly prepared can get a fair hearing, and should not capitulate to unreasonable settlement demands simply because they fear that they will be at a disadvantage in a foreign arbitration.