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A Tale of Two Contracts: Reinsurance Dispute Ends in a New York State of Mind

In a battle of conflicting contracts, Tyson found itself on the losing end of a reinsurance dispute with Partner Re when the English Court of Appeal ruled[1] that a reinsurance contract on a Market Uniform Reinsurance Agreement (MURA) form superseded a prior contract on a Market Reform Contract (MRC) form, giving effect to the New York arbitration clause in the MURA.

The Duelling Documents

The saga began when Tyson International Company Limited (Tyson), captive insurer of poultry-giant Tyson Foods and the reinsured, and Partner Reinsurance Europe SE (Partner Re), a reinsurer, entered into a reinsurance contract on the MRC form, governed by English law and with an exclusive jurisdiction provision in favour of the English court. However, eight days later, at Tyson’s request, Partner Re issued another reinsurance contract on the MURA form, governed by New York law and containing a dispute resolution clause providing for arbitration in New York.

Flames and Feathers Fly

Following a fire at a poultry rendering facility in Alabama, Tyson sought to claim under the reinsurance. Partner Re purported to avoid the contract, citing misrepresentations in relation to the value of the insured properties. A dispute arose.

Tyson commenced proceedings in England,

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D&O Insurances and Acting Board Members have the Same Burden of Proof in Direct Proceedings with the Injured Company

In a recent decision, the Higher Regional Court of Cologne dealt with the extremely topical issue of the distribution of the burden of proof in a direct lawsuit brought by a company against its D&O insurer.

The Decision of the Higher Regional Court of Cologne

In the case decided by the Higher Regional Court of Cologne, a limited liability company (GmbH) insured its managing director with a D&O insurance policy. After an event occurred which was presumed by the GmbH to be covered by insurance (involving inadequate fire insurance taken out by the managing director), the company did not take action against its managing director itself but had the claim of the insured managing director against the D&O insurance assigned to it and instead made a claim against the insurance on the basis of the assigned right.

The Higher Regional Court of Cologne now had to deal with the question of whether the same burden of presentation and burden of proof applies to the suing GmbH and the defending D&O insurance, compared to the imagined case that the injured GmbH would have initially made in a claim against its managing director.

In the latter case, the burden of proof would

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