Article by Clive O'Connell
Alternative Risk Transfer deals are, almost by definition, both novel and complex. Such deals offer a new approach to the transfer of risk, combining elements of insurance risk transfer with credit or banking risk transfer. Many deals are unique and all are individually tailored.
These elements alone create a very fertile ground in which disputes can develop. New concepts must be expressed in new words. Often these new words fail to reflect clearly the intentions of both parties. Many clauses and phrases are untried and untested before the courts. What one party understands by a phrase is the opposite of the other’s understanding.
Disputes are already arising in relation to ART deals. These disputes are typically of high value and are legally and evidentially complicated. A good number of disputes, in whole or in part, arise from differences of interpretation of particular clauses; differences which have arisen because the wordings have not expressed
