In reinsurance disputes where one party is insolvent or has
financial difficulties, the other side often demands
security. Where a non-domiciliary is involved, some states
have pre-answer security requirements, which have been held to
apply in reinsurance arbitrations. In a procedurally
complicated case, where an arbitration panel issued a security
award and then stayed the arbitration pending litigation, a federal
court was faced with its own motion for security after the
arbitrator’s interim order for security was confirmed and
reduced to a judgment.
In In re Platinum-Beechwood Litigation, 18-cv-6658 and
18-cv-1208 (JSR), 2019 U.S. Dist. LEXIS 114645 (S.D.N.Y. Jul. 10,
2019), cross-claims were brought by cedents against its insolvent
reinsurer for breach of contract within a case by investors
claiming wrongdoing against the reinsurer, the cedents and
others. The cedents sought an order compelling the reinsurer
to post security for the cross-claims or striking
