Arbitration Agreements In Foreign Insurer's Surplus Line Policies

Due to the significant volume of homeowner's insurance lawsuits filed in the aftermath of Hurricane Ida, a critical legal issue has surfaced in Louisiana federal district courts and the U.S. Fifth Circuit Court of Appeals. The question is whether these homeowners' lawsuits must be subject to mandatory arbitration pursuant to the arbitration agreements in homeowner's surplus line insurance policies issued by foreign insurers. This requirement is grounded in federal law, particularly the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention").

This has been a highly litigated issue in the Louisiana federal district courts. Two recent U.S. Fifth Circuit decisions have provided guidance on how the arbitration agreements should be interpreted and applied. Most insureds in these cases argue that La. R.S. 22:868 renders the arbitration clause unenforceable. Further, two New York Southern District Court cases applying Louisiana law