Magellan Reins. Co. Ltd. v New Hampshire Ins. Co.
Annotate this CaseDecided on March 15, 2005
Supreme Court, New York County
Magellan Reinsurance Company Ltd., Petitioner,
against
New Hampshire Insurance Company, Respondent.
1017890/05
Nicholas Figueroa, J.
Petitioner seeks, pursuant to CPLR §7503(a) to enjoin a foreign proceeding commenced by respondent in the Supreme Court of Turks and Caicos Islands (the foreign court) and to compel respondent to arbitrate in New York pursuant to an arbitration agreement.
Petitioner was incorporated under the laws of Turks and Caicos. Respondent is apparently a New York Corporation. The court is unaware of what, if any, contacts petitioner has with New York.
The arbitration agreement in question on this proceeding is contained in the reinsurance agreement's Article XIV. The provision states that: "A.All disputes or differences arising out of the interpretation of this Agreement shall be submitted to the decision of two arbitrators, one to be chosen by each party... B.The arbitration proceeding shall take place in New York, New York."
Paragraph 12 of the trust agreement states that "This Agreement shall be governed by the laws of the State of New York".
In opposing the motion, respondent argues that the arbitration provision is limited in scope. The only dispute subject to arbitration is one involving the interpretation of the reinsurance agreement. The dispute, according to respondent, involves petitioner's failure to deposit funds into a trust account, a requirement under the reinsurance agreement. That provision, Article VIII, reads, that, "The Reinsurer [petitioner] will provide the company [respondent] with a Trust Agreement acceptable to the Company and its regulatory authorities. The Reinsurer shall be required to deposit an amount equal to 100% of the total unearned premium reserve plus the outstanding loss reserves as determined by the company at end of each calendar quarter."
Respondent notes that petitioner has, at various times, disputed the question of whether it [*2]is indebted to it, but that the question of indebtedness is a factual question for the foreign court to determine, as petitioner is a Turks and Caicos domiciliary.
Moreover, respondent points out that the foreign court, on March 2, 2002, denied petitioner's application for a stay, based on the arbitration clause and a temporary restraining order this court signed on March 1, 2005. The foreign court rejected the argument, made here, that the dispute is one of contract interpretation that must be arbitrated.
Petitioner submits an affidavit from Phillip Apgar, its Chief Operating and Financial Officer, in support of the petition. Apgar does not articulate the nature of the dispute purportedly to be arbitrated. The affidavit merely annexes copies of three documents: a reinsurance agreement between the parties dated January 17, 1997; a trust agreement between the parties dated April 11, 1997; the petition and supporting papers respondent filed in the foreign action alleging that $1,440,459.45 was due and owing to it from the petitioner, and that because the petitioner is apparently insolvent, it ought to be dissolved under Turks and Caicos law.
Counsel for respondent, during oral argument, informed the court that the foreign court has ruled on the merits, and drafted an order dissolving petitioner; however, we do not know whether the foreign judge has actually signed the order.
In reply, petitioner contends that it disputes the debt. It argues that because respondent has not provided access to the financial records petitioner allegedly demanded, it cannot assess the debt's validity. Again, without specifically articulating the nature of the issue it claims must be interpreted under the reinsurance agreement, petitioner merely refers to various letters from respondent, which it attaches to its reply papers, and states "A review of the correspondence conclusively shows that the dispute centers around the interpretation of the Reinsurance Agreement as it relates to its calculations of amounts due pursuant to the Trust agreement as well as document reporting requirements."
Petitioner has not met its burden of proving that there was "a clear and unequivocal" agreement to arbitrate (see Matter of Siegel v. 141 Bowery Corp., 51 AD2d 209, 212). Petitioner, in a vague, conclusory statement, merely asserts, without further elaboration, that the dispute is one of interpretation. This does not satisfy the burden of proving the existence of an arbitrable dispute under the agreement.
Because the arbitration provision in this case is narrowly worded, it applies only to questions regarding interpretation of this agreement, and does not extend "to any controversy arising [under the contract]..." (Gerling Global Reinsurance Corporation v. Home Insurance Company, 302 AD2d 118, 124). The question of whether petitioner owes money is not an interpretation of the reinsurance contract; rather, it is a factual controversy concerning respondent's calculation of the amount in dispute (id. at 123). Consequently, this is a dispute on the merits of the question of whether petitioner owes money, rendering it insolvent. As such, it is a matter that is subject to judicial determination, not arbitration. Therefore, the foreign court is the appropriate forum to resolve the controversy between the parties, particularly because petitioner is domiciled in that forum.
As noted, the foreign court has already ruled on the question of whether the arbitration provision barred a judicial determination. That court had jurisdiction over petitioner, and allowed it the opportunity to be heard. There has been no showing that petitioner was deprived of any rights it may have had in a New York court (see Society of Lloyd's v. Grace, 278 AD2d [*3]169). This court, under the facts and circumstances before it, must extend comity to the foreign tribunal. The fact that there is a limited choice of forum clause and a choice of law clause in the parties' agreement does not bar this court from extending comity to the foreign court's order (see Allstate Insurance Company v. Linter Group, Ltd., 994 F.2d 996, 1000).
In its motion, petitioner omits that it asked the foreign court for the same relief it seeks in this court. This court recognizes the power of the latter court to decide the question of whether a corporation domiciled in its territorial jurisdiction may continue to exist. Petitioner, by seeking the identical relief here, is simply forum shopping.
Accordingly, it is
ORDERED that the petition is denied and the proceeding dismissed.
This constitutes the decision and order of the court.
Dated:March 15, 2005
E N T E R
_______________
J.S.C.
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