Reinsurance: conflict of laws

It is common for reinsurers to be faced with a claim from a reinsured against whom proceedings on the direct policy have yet to be concluded. Amlin Corporate Member Ltd and Others v Oriental Assurance Corporation (The Princess of the Stars) [2012] EWCA Civ 1341 raises the question whether it is appropriate for reinsurers to seek negative declaratory relief in England as regards the claim under the reinsurance.

The twist in Amlin was that the reinsurance contained a follow the settlements clause, meaning that any judgment against the reinsured would have to be followed by the reinsurers. The Court of Appeal nevertheless held that the English action should be allowed to proceed because it was not clear that the contracts were back-to-back and the reinsurance contract might provide a defence to the reinsurers, Tomlinson LJ alone noting that the position might be different if the cover of the insurance and the reinsurance matched absolutely.