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UNITED STATES 1062
United States District Court, Eastern District of Louisiana, 17 January 2023, 2:22-cv-01013-NJB-MBN
(Kronlage Family Limited Partnership v. Certain Underwriters at Lloyd’s and other Insurers Subscribing to Binding ... Read more
United States District Court, Eastern District of Louisiana, 17 January 2023, 2:22-cv-01013-NJB-MBN
(Kronlage Family Limited Partnership v. Certain Underwriters at Lloyd’s and other Insurers Subscribing to Binding Authority Number B604510568622021, and Independent Specialty Insurance Co. (ISIC))
UNITED STATES 1062
The District Court compelled arbitration of an action in respect of an insurance policy, finding that all the conditions for referral to arbitration under the New York Convention and the Federal Arbitration Act were met, and that the plaintiff’s argument that the arbitration clause was null and void was without merit. The plaintiff claimed that it had not agreed to arbitration because, upon receiving the insurance policy, it had asked its insurance agent to have the arbitration clause therein removed. The agent, however, had failed to do so. The Court explained that while mistake is indeed one of the standard breach-of-contract defenses encompassed by the null-and-void defense, under the applicable Louisiana law a mistake vitiates consent only when it concerns a cause without which the obligation would not have been incurred, and that was known or should have been known to the other party. This was not the case here.
The court discusses the meaning and effect of the referral of the resolution of disputes to arbitration, including: who can ask for referral and when, whether a party has waived its right to request arbitration, the defense that there was no contract at all; whether there was a condition precedent to the commencement of arbitration (e.g. mediation), stay of proceedings v. compelling arbitration, and national procedural specificities such as remand and removal (US), effect of class action. etc.
The court discusses how to interpret the Convention’s requirement that the agreement is not null and void etc., as well as specific cases of invalidity: e.g., lack of consent (misrepresentation, duress, or fraud), vague wording of the arbitral clause; other terms of the contract contradict the intention to arbitrate, etc.
The court discusses which law – lex fori, lex contractus, law of the State where the award will be made – applies specifically to determining whether an agreement to arbitrate is “null and void etc.“, and, by extension, which law applies to determining the validity of arbitration agreements.
Multi-party disputes: The court discusses under which conditions non-signatories are covered by an arbitration agreement entered into by another party.