International Arbitration: How Substantial Is the Presumption In Favor of It?

In Safety National Casualty Corp. v. Certain Underwriters at Lloyd’s, London, the United States Court of Appeals for the Fifth Circuit held that Louisiana law does not trump the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”). Louisiana law expressly bars enforcement of arbitration clauses in insurance contracts in order to protect policyholder consumers from being railroaded. Surprisingly, this clear state law was not enough for the Fifth Circuit. In reaching this holding, the Fifth Circuit took issue with a contrary decision by the Second Circuit. Both cases involved attempts by foreign corporations to enforce arbitral agreements against
American parties.