Reinsurance Focus

A federal district court in New Hampshire has held that a service of suit clause contained in reinsurance contracts waives the reinsurers’ rights to remove a litigation brought against them in state court by the Insurance Commissioner of the State of New Hampshire, in his capacity as liquidator for the Home Insurance Company. The liquidator had filed the action in state court to collect reinsurance under the contracts. The reinsurers removed the case to federal court and the liquidator moved to remand, citing the reinsurance contracts’ service of suit clause which states that the reinsurer “will submit to the jurisdiction of any court of competent jurisdiction within the United States” and will “abide by the final decision of any such Court.”

The liquidator argued the clause was a mandatory forum selection clause requiring litigation in the forum chosen by the insured, and thereby constituted a waiver by the reinsurers of their right to remove. The reinsurers contended that the clause was a permissive forum selection clause which constituted merely a consent to jurisdiction and did not mandate litigation in any particular forum. The court agreed with the liquidator and granted the motion to remand, finding the clause mandated exclusive jurisdiction in the New Hampshire state court. The court denied, however, the liquidator’s request for costs and expenses, finding the removal was “not objectively unreasonable.” Sevigny v. British Aviation Insurance Co., Case No. 15-cv-127 (USDC D.N.H. June 16, 2015).

This post written by Renee Schimkat.

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