Federal Court Requires Review of Forum Selection or Choice of Law Provisions to Determine Appropriate Venue for Reinsurance Dispute.

R&Q REINSURANCE CO. v. SENTRY INS. A MUTUAL CO. (No. 12 C 9788, December 12, 2012)

R&Q Reinsurance Company (R&Q) filed suit in federal court in Illinois against Sentry Insurance (Sentry) over reinsurance disputes. R&Q is incorporated in Pennsylvania and has its principal place of business in Massachusetts, while Sentry is a citizen of Wisconsin. Although the court agreed that R&Q properly invoked federal subject matter jurisdiction based on the parties’ diverse citizenship, the court, on its own, determined that it needed to review the parties’ reinsurance certificates to determine if a forum selection or choice of law clause allowed the action to be venued in Illinois.

R&Q’s complaint references two reinsurance certificates that were negotiated and drafted in Illinois, with the parties contemplating that performance would be conducted in an office located in Chicago. In the court’s experience, such certificates usually contain a forumselection or choice-of-law clause or both, yet neither certificate was attached as an exhibit to the complaint. Accordingly, the court ordered R&Q’s counsel to deliver the two certificates referenced in the Complaint as well as any other pertinent documents between the parties that contain a forumselection or choice-of-law provision.

IMPACT – REINSURANCE: Reinsurance treaties and certificates frequently contain clauses that govern the appropriate venue for a dispute. These provisions should be brought to a court’s attention at the outset of an action for an early and proper determination on the propriety of venue.