A Tale of Two Contracts: Reinsurance Dispute Ends in a New York State of Mind

By on 2024-04-22

In a battle of conflicting contracts, Tyson found itself on the losing end of a reinsurance dispute with Partner Re when the English Court of Appeal ruled[1] that a reinsurance contract on a Market Uniform Reinsurance Agreement (MURA) form superseded a prior contract on a Market Reform Contract (MRC) form, giving effect to the New York arbitration clause in the MURA.

The Duelling Documents

The saga began when Tyson International Company Limited (Tyson), captive insurer of poultry-giant Tyson Foods and the reinsured, and Partner Reinsurance Europe SE (Partner Re), a reinsurer, entered into a reinsurance contract on the MRC form, governed by English law and with an exclusive jurisdiction provision in favour of the English court. However, eight days later, at Tyson’s request, Partner Re issued another reinsurance contract on the MURA form, governed by New York law and containing a dispute resolution clause providing for arbitration in New York.

Flames and Feathers Fly

Following a fire at a poultry rendering facility in Alabama, Tyson sought to claim under the reinsurance. Partner Re purported to avoid the contract, citing misrepresentations in relation to the value of the insured properties. A dispute arose.

Tyson commenced proceedings in England, and the following day Partner Re commenced arbitration in New York. Partner Re issued an application for a stay of the English proceedings under s9 of the Arbitration Act 1996. Almost six months later, Tyson applied for a permanent injunction to restrain Partner Re from pursuing the arbitration in New York.[2] The applications were heard together.

It was common ground that both the MRC form agreement and the MURA form agreement, taken in isolation, were legally binding and complete reinsurance contracts. The key question was which agreement took precedence and governed the relationship. The forum mattered, as material differences between English and New York law would likely bear on the outcome.

Stephen Houseman KC (sitting as a Judge of the High Court) sided with Partner Re,[3] agreeing that the parties had effectively replaced an English jurisdiction clause in one agreement (the MRC) with an arbitration agreement in another (the MURA), despite the mere week-long gap between the two. The Judge ordered that the proceedings brought by Tyson in England be stayed.[4] Tyson appealed.

Denouement: The Duck Test Decides

The key question on appeal was whether the MURA was a contract intended to vary or supersede the MRC. Unmoved by Tyson’s arguments, the Court of Appeal agreed with the High Court and affirmed the stay of the English action in favour of New York arbitration.

The Court of Appeal noted that it was “fairly clear from the evidence” that Tyson’s intention and subjective understanding was that the MRC would continue to govern the parties’ relationship, while Partner Re’s intention and understanding was that the MRC would be superseded by the MURA. But subjective intention is irrelevant.

Writing for the Court, Males LJ found that, viewed objectively, the parties’ intention was for the MURA to supersede the MRC as the operative agreement rather than a document issued for mere administrative purposes.

Several factors tipped the scales in Partner Re’s favour: the MURA’s negotiation process, the parties’ familiarity with the MURA and its use as a document by which to record the terms of a contract governed by New York law and subject to arbitration in New York, an entire agreement clause, the conspicuous absence of an endorsement subjecting the MURA to the MRC (as had existed in the parties’ prior agreements), and express provision for service of process on a law firm in New York.

It was of no import that it ran contrary to business common sense for the parties to have entered into an agreement only to replace it eight days later. Nor did the parties’ description of the MURA as a ‘certificate’ matter: having the trappings of a contract, the MURA, said Males LJ, was the “proverbial duck”.

The Moral of the Story

The ruling serves as a cautionary tale for parties signing agreements with competing jurisdiction clauses. English courts will enforce clearly worded arbitration agreements even if they contradict a prior agreement between the same parties. To avoid an unwanted trip across the pond, parties must specify which terms control and carefully document any amendments. In the battle of the contracts, attention to detail could be the deciding weapon.

[1] Tyson International Company Ltd v Partner Reinsurance Europe SE [2024] EWCA Civ 363.

[2] Tyson had earlier requested the arbitral tribunal to stay the proceedings, which request was denied on the basis that the jurisdictional objection that underpinned the request was without merit.

[3] Tyson International Company Ltd v Partner Reinsurance Europe SE [2023] EWHC 3243 (Comm).

[4] Tyson’s hopes for an anti-arbitration injunction, even if victorious on the merits, were also dashed. The High Court observed Tyson’s six-month delay in seeking a stay after Partner Re initiated arbitration, noting that such delay would militate against the grant of an injunction. The Court of Appeal declined to endorse this obiter conclusion, and Males LJ indicated that he would have granted the injunction had the issue arisen, citing factors the High Court had failed to consider.

Campbell Herbert
Campbell Herbert focuses his practice on complex, multi-jurisdictional disputes. Campbell has experience advising on disputes under the UNCITRAL, LCIA, ICC, SIAC, HKIAC and ICSID Rules, as well as in national courts. Campbell’s work spans a broad range of industry sectors, jurisdictions, and applicable laws.




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