Endurance Specialty Insurance Limited v. Horseshoe Re Limited

CourtDistrict Court, S.D. New York
DecidedJuly 5, 2023
Docket1:23-cv-01831
StatusUnknown

This text of Endurance Specialty Insurance Limited v. Horseshoe Re Limited (Endurance Specialty Insurance Limited v. Horseshoe Re Limited) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Endurance Specialty Insurance Limited v. Horseshoe Re Limited, (S.D.N.Y. 2023).

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ──────────────────────────────────── ENDURANCE SPECIALITY INSURANCE LIMITED, No. 23-cv-1831 (JGK) Petitioner, OPINION AND ORDER - against -

HORSESHOE RE LIMITED, on behalf of and for the benefit of its Separate Accounts HS0083 and HS0084,

Respondent. ──────────────────────────────────── JOHN G. KOELTL, District Judge:

The petitioner, Endurance Specialty Insurance Limited (“Endurance”) brought this action in the New York State Supreme Court, New York County, against respondent Horseshoe Re Limited, which acts on behalf of and for the benefit of Separate Accounts HS0083 and HS0084 (“Horseshoe”). Endurance petitioned the state court to remove the presiding arbitrator in Endurance’s ongoing arbitration proceedings with Horseshoe in Bermuda. Endurance alleged that the arbitrator was biased. Horseshoe removed the case to this Court, asserting federal subject-matter jurisdiction and removal authority pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38 (the “New York Convention” or “Convention”), as incorporated into the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 201-208. Two motions are now before the Court: the petitioner’s motion to remand the action to New York State Supreme Court, ECF No. 18; and the respondent’s motion to dismiss the petition for

failure to state a claim, ECF No. 20. For the following reasons, the petitioner’s motion to remand is denied and the respondent’s motion to dismiss is granted. I. A. Petitioner Endurance is an insurance company organized under the laws of Bermuda, with its principal place of business in Bermuda. See Resp.’s Memo. on Dismissal, ECF No. 21, at 2; Pet. ¶ 1, Notice of Removal, Ex. A, ECF No. 6-1 (“Ex. A”) at 2.1 Respondent Horseshoe is comprised of collateralized Separate Accounts HS0083 and HS0084, organized under the laws of Bermuda and belonging to a Bermuda limited liability company with its

principal place of business in Bermuda. See Resp.’s Memo. on Dismissal at 2; Pet. ¶ 2, Ex. A at 2. In 2022, the parties initiated arbitration proceedings in Bermuda regarding a dispute subject to their materially identical reinsurance contracts,

1 Unless otherwise noted, this Memorandum Opinion and Order omits all alterations, omissions, emphasis, quotation marks, and citations in quoted text. Exhibit A to the Notice of Removal, ECF No. 6-1, contains many of the underlying documents relevant to this case. All citations to Exhibit A refer first to the title and internal pagination of the specific document cited, and then to the relevant PDF page number of Exhibit A. which contain identical arbitration provisions. See Resp.’s Memo. on Dismissal at 2-3; Pet. ¶¶ 8-10, Ex. A at 4. The arbitration clauses require disputes to be arbitrated

in Hamilton, Bermuda, pursuant to Bermuda procedural law, namely the Bermuda Arbitration Act 1986 (“Bermuda Arbitration Act”), and pursuant to New York substantive law. In particular, the contracts state: The seat of the arbitration shall be in Hamilton, Bermuda and the arbitration tribunal shall apply the laws of the state of New York as the proper law of th[e] Reinsurance Contract.

The arbitration shall be conducted under, and the arbitration tribunal shall be governed by, the provisions of the Bermuda Arbitration Act 1986 and/or any statutory modifications or amendments thereto for the time being in force.

Contract No. XA200910M at 22, Ex. A at 39; Contract No. XA200911M at 21, Ex. A at 64. The arbitration clauses also call for each party to appoint an arbitrator and for the party-appointed arbitrators to agree upon an Umpire. If the party-appointed arbitrators cannot agree on an Umpire, the parties may ask the Secretary General of the Court of Arbitration of the International Chamber of Commerce (“ICC Court”) to appoint one. The clauses specify that all arbitrators must “be completely impartial and disinterested in their respective appointing parties and in the result of the arbitration.” Contract No. XA200910M at 22, Ex. A at 39; Contract No. XA200911M at 21, Ex. A at 64. After the party-appointed arbitrators failed to agree on an

Umpire in the Bermuda arbitration proceeding at issue in this case, Horseshoe applied to the ICC Court for an appointment. Resp.’s Memo. on Dismissal at 3. On October 6, 2022, the ICC Court appointed Sir Bernard Eder as presiding arbitrator. See ICC Appointment Ltr. at 2, Ex. A at 104. Endurance challenged the appointment of Sir Bernard before the ICC Court, alleging that Sir Bernard is biased because the ICC Court provided him with correspondence in which Endurance “aggressively opposed” the appointment of an Umpire with his precise background and because of his treatment of Endurance’s counsel in a recent unrelated arbitration. ICC Decision ¶¶ 2-4, Ex. A at 116. On February 9, 2023, the ICC Court released a written opinion

rejecting Endurance’s challenge on the merits. Id. ¶ 21, Ex. A at 119. B. On February 13, 2023, Endurance petitioned the New York State Supreme Court to remove and replace Sir Bernard because of his alleged lack of impartiality.2 Pet. Prayer for Relief ¶¶ 2-3,

2 Endurance also petitioned the state court to stay the arbitration. See Pet. Prayer for Relief ¶ 1, Ex. A at 8. Because the Bermuda arbitration tribunal has stayed the arbitration pending the resolution of these motions, that request is moot. Ex. A at 9. Horseshoe then removed the case to this Court pursuant to 9 U.S.C. § 205 and 28 U.S.C. § 1441(a), asserting that original jurisdiction existed under 28 U.S.C. § 1331 and 9

U.S.C. § 203. Notice of Removal, ECF No. 6, at 1. The second jurisdictional provision, 9 U.S.C. § 203, is part of Chapter 2 of the FAA, which incorporated the New York Convention into U.S. law. See 9 U.S.C. §§ 201, 203. Section 203 of the FAA grants district courts original jurisdiction over any action or proceeding falling under the New York Convention. Id. § 203. On April 11, 2023, Endurance moved to remand the case back to the New York State Supreme Court for lack of federal subject- matter jurisdiction. ECF No. 18. On the same day, Horseshoe moved to dismiss Endurance’s petition for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). ECF No. 20. The Bermuda arbitral tribunal, which initially stayed

the underlying arbitration proceedings pending the resolution of Endurance’s challenge before the ICC Court, has since continued the stay until this Court resolves the parties’ motions. See ECF No. 31; ECF No. 31-1. II. On a motion to remand for lack of federal subject-matter jurisdiction, the removing party (in this case, Horseshoe) bears the burden of establishing the propriety of removal. Cal. Pub. Emps.’ Ret. Sys. v. WorldCom, Inc., 368 F.3d 86, 100 (2d Cir. 2004). In evaluating the motion, this Court must assume the truth of non-jurisdictional facts alleged in the petition, but may consider materials outside the petition, such as documents

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Endurance Specialty Insurance Limited v. Horseshoe Re Limited, Counsel Stack Legal Research, https://law.counselstack.com/opinion/endurance-specialty-insurance-limited-v-horseshoe-re-limited-nysd-2023.