District Court Compels Arbitration Citing Insurance Policy’s “Service-of-Suit” Provision

The plaintiff’s property sustained fire damage, for which the plaintiff sought coverage under an insurance policy issued by the defendants. After a dispute arose, the plaintiff sued the defendants in Mississippi state court. The defendants, foreign insurance companies, removed the action to Mississippi federal court pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The defendants then moved to compel arbitration based on an arbitration clause in the insurance policy, which stated that the parties would arbitrate any dispute if they failed to agree on any aspect of the policy. The plaintiff opposed and moved to remand the case to state court, citing language in the policy’s cover note conferring U.S. courts with “exclusive jurisdiction” over any dispute under the policy. The sole issue was whether the plaintiff’s claim was arbitrable.

Applying a four-factor test used in the Fifth Circuit to analyze arbitrability under the Convention, the court found the first factor – whether there is a written agreement to arbitration – to be decisive here. The court rejected the plaintiff’s argument that the policy’s arbitration and exclusive jurisdiction clauses conflicted, finding that any such conflict was resolved by the policy’s “service-of-suit” provision. That provision addressed service of process in the event of litigation but also expressly provided that it “will not be read to conflict with or override the obligations of the parties to arbitrate their disputes as provided for in any Arbitration clause within this Policy” and that it is solely “intended as an aid to compelling arbitration or enforcing such arbitral award, not as an alternative to such Arbitration clause for resolving disputes arising out of this contract of insurance.” Finding that this language clearly demonstrated the parties’ intent to arbitrate, and that the three other factors in the four-factor test were undisputed, the court granted the defendants’ motion to compel arbitration and denied the plaintiff’s motion to remand.

First United Methodist Church of Corinth, Inc. v. Certain Underwriters at Lloyds Subscribing to Policy No. PG197716, No. 1:19-cv-00120 (N.D. Miss. Sept. 4, 2019).