Lousiana Safety Ass’n
of Timbermen v. Certain Underwriters at Lloyd’s, London
(U.S. May 17,
2010)
The Supreme Court recently invited the Solicitor General to
file a brief expressing the views of the United States in Louisiana Safety Ass’n v. Certain Underwriters at Lloyd’s, London,
a case centering on whether the Federal Arbitration Act preempts the
McCarran-Ferguson Act, which grants states the authority to regulate insurance.
In Louisiana Safety,
the Fifth Circuit held that the McCarran-Ferguson Act does not authorize state
law to reverse-preempt international treaties, including the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards. The McCarran-Ferguson
act allows Congress to pass laws that regulate the “business of insurance.”
It also provides that federal acts
that do not expressly purport to regulate the “business of insurance” will not
preempt state laws or regulations that regulate the “business of insurance.” Federal courts
have consistently backed state prohibitions on arbitration agreements in
insurance contracts as laws that regulate the “business of insurance” under the
McCarran-Ferguson Act and, therefore, are protected from preemption. Courts
have applied this rule to reinsurance agreements as well.
The Fifth Circuit,
however, split with other federal courts in finding that the McCarran-Ferguson
Act does not reverse-preempt the international arbitration convention.
The Fifth
Circuit’s decision created a circuit split because the Second Circuit
previously held that a state law can reverse preempt the Convention Act under
the McCarran-Ferguson Act. While the Supreme Court has not decided whether to
hear the dispute, it appears that the Solicitor General’s brief on the subject
may persuade the justices whether to consider it. Given the recent nomination
of Solicitor General Elena Kagan to the Supreme Court, it is unclear when the
Solicitor General’s office will file a brief.
For a copy of the decision, click here
Carrie Appler and Dan Gerber
https://www.goldbergsegalla.com/attorneys/Gerber.html
https://www.goldbergsegalla.com/attorneys/Appler.html
Case provided courtesy of Lexis