Global Reinsurance Corp. v. Equitas Ltd. (N.Y. March 27, 2012)
In a suit by a New York branch of a German reinsurance corporation against U.K.-based entities engaged in the business of providing retrocessionary reinsurance, asserting a claim under New York State’s antitrust statute, the Donnelly Act, the Appellate Division’s ruling in favor of the plaintiff on a CPLR 3211 motion to dismiss was reversed by the New York Court of Appeals.
The retrocessionaires, or retrocessionary reinsurers, wrote coverage for risks ceded to them by reinsurers. The complaining German reinsurer, through its New York branch, purchased retrocessional coverage in a London marketplace and consequently sustained economic injury when retrocessional claims management services were by agreement within that London marketplace consolidated so as to eliminate competition over their delivery. In the reinsurer’s second amended complaint, although a worldwide market was nominally alleged, there was no allegation of any anticompetitive effect attributable to the alleged conspiracy beyond the London marketplace.
While there was no dispute as to the relevant market, the complaint failed to allege the requisite power within the relevant worldwide market on the part of the claimed conspirators. The extraterritorial reach of the Donnelly Act did not reach a competitive restraint imposed by participants in a British marketplace that only incidentally affected commerce in the United States by the circumstance that the reinsurer’s purchasing branch happened to be situated in New York. Accordingly, the Court of Appeal held that any injury was not redressable under the Donnelly Act.
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