Arbitration Clause (Reinsurance)
The arbitration clause obliges the cedent and reinsurer to resolve disputes arising from the treaty through private arbitration rather than before state courts.
- Clause type
- Condition
- Origin/Market
- Reinsurance market
- Favours
- Neutral
- Negotiability
- Market standard
Purpose
Reinsurance treaties are often cross-border, technically complex and based on market customs that state courts do not always understand. The arbitration clause refers disputes to an arbitral tribunal with industry-experienced arbitrators, often under the rules of bodies such as ARIAS or the ICC, instead of the ordinary courts.
Effect and limits
Arbitration offers confidentiality, neutrality between international parties and the ability to appoint arbitrators with technical expertise. The award is generally final and subject only to limited judicial review. The clause largely excludes recourse to the ordinary courts for the disputes it covers; exceptions usually relate to interim relief or enforcement.
Negotiation and practice
Key negotiation points are the seat and procedural law of the tribunal, the number and qualification of arbitrators (often industry experts rather than lawyers), and the interplay with the treaty’s jurisdiction and choice-of-law clause. For international programmes, consistency with the dispute resolution clauses of the original policy should be checked.