PLAINTIFFS ORDERED TO SUBMIT FRAUD CLAIMS TO ARBITRATION IN BERMUDA
In October, 2007, Alternative Re Holdings Ltd. (“ARH”) commenced separate arbitrations in Bermuda against each of the plaintiffs seeking funds pursuant to Shareholder Agreements. In December, 2008, the plaintiffs brought suit in the Southern District of New York alleging that a 2005 Settlement Agreement was fraudulently induced in that the plaintiffs’ liability for reinsurance more than doubled. Arch Insurance Co. subsequently moved to stay the litigation pending arbitration. ARH and Alternative Re Ltd. also moved to stay, and to compel the plaintiffs to submit their fraud claims to arbitration pursuant to an arbitration clause in the Shareholder Agreements requiring “all disputes” between the parties to be submitted to arbitration in Bermuda. The plaintiffs opposed, arguing that their complaint fell within the parameters of the Settlement Agreement, which specified that the U.S. District Court for the Southern District of New York was the exclusive forum and venue for dispute resolution. The district court summarily granted the defendants’ motions, staying the lawsuit and ordering that arbitration proceed in Bermuda. TPG Group v. Alternative Re Holdings Ltd., Case No. 08-11244 (USDC S.D.N.Y. Sept. 22, 2009).
This post written by Dan Crisp.
