MID-CONTINENT CASUALTY CO. V. GENERAL REINSURANCE CO.
(CIVIL ACTION NO.: 07-5050 – MAY 22, 2009)
Appellant-reinsurer appealed a decision from the district court of Oklahoma in which it denied its motion to stay the action and compel arbitration pursuant to the reinsurance agreement entered into by the parties. Appellant-reinsurer argued that Section 1 of the Federal Arbitration Act (FAA) was controlling and thus arbitration, not federal court, was the proper venue to resolve any dispute. The lower court concluded that Oklahoma law, not the FAA, controlled the interpretation of the reinsurance contract and, under Oklahoma law, the arbitration provision of the reinsurance agreement was unenforceable.
The circuit court agreed with the district court’s interpretation that the Oklahoma Uniform Arbitration Act in 1978, not the FAA, was controlling in determining whether the arbitration agreement was enforceable. The purpose of the Act is have courts throughout Oklahoma honor “valid enforceable and irrevocable” arbitration agreements between the parties. The Act did, however, specifically exclude “contract between insurance companies.”
Prior to the lawsuit being filed, Oklahoma amended the Act to remove the exclusion language from that section. The Court interpreted the revised Act to apply retroactively. As such, the tenth circuit reversed the district court’s ruling and found that the arbitration provision was enforceable and valid.
By Daniel Gerber and Jeffrey Kingsley
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