EU introduces Regulation for law applicable to torts 

On Sunday, the EU introduced an entirely new approach to the way in which courts within the EU will determine what law applies to non-contractual obligations (torts and similar claims). Sunday was the date on which the Rome II Regulation (Rome II) came into force.

Rome II is designed to harmonise conflicts of law, and thus facilitate mutual recognition of court judgments between EU states. It is relevant to all businesses which trade anywhere outside England, and which may face tort claims, such as product liability, personal injury or unfair competition.

NAIC approves changes to collateral requirements in the US

On 8 December 2008, the National Association of Insurance Commissioners ("NAIC") adopted the Reinsurance Regulatory Modernization Framework Proposal (the "Proposal"). The Proposal amends the rules under which non-US reinsurers active in the US market have to provide collaterals of 100% of their liabilities to US cedants.

December 2008

Misrepresentation

Limit No. 2 Limited v Axa Versicherung 

The Court of Appeal decided that a misrepresentation in a broker's presentation had not been a continuing one and, therefore, it was not part of a subsequent presentation to underwriters.

The case involved two fac/oblig energy reinsurance treaties covering construction and operating risks for oil rigs. Lloyd’s syndicates were the reassured and the reinsurer was Albingia, which was acquired by Axa.

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Implications for the UK insurance / reinsurance market

Durham v BAI (Run off) Limited (In Scheme of Arrangement) and 5 other lead cases [2008] EWHC (QB) [2692]

By now, most people in the market will have read about the judgment handed down on 21 November 2008 relating to the so called "trigger litigation". The litigation concerned six test cases specifically selected so that the Court could clarify whether Employers' Liability ("EL") policies are triggered when the victim first inhales asbestos fibres, or when the disease manifests itself years later. The judge, Burton J, held that policies are triggered when asbestos fibres are inhaled, in line with what had been market practice in the UK for years. This decision, if it is not appealed, will have significant consequences for the UK insurance and reinsurance market.

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Basic Principles of English Law

In summary, under the English Litigation Act, a claim is time barred if it is not collected within 6 years.

Therefore, if a reinsured has suffered a loss and fails to collect from the reinsurer within 6 years of suffering that loss, the reinsurer may not be liable for the debt.

In reinsurance disputes the date of loss triggering the 6 year period is deemed to be:

• the date on which the reinsured agreed the inwards claim (not from the date on which it paid claim); or
• the date on which there was a judgment or award against the reinsured in respect of an amount which was recoverable from the reinsurer.

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December 2008

Letter from America takes an in-depth look at legal issues in the United States that may have an impact on your business here in Europe.

In this issue, DLA Piper focus on:

• New DOJ Guidelines: Fig Leaf to Avoid Legislation?; and
• Increased and Varied FCPA Enforcement Involving the Energy Sector.

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