Arbitration Provision Enforced Against Non-Signatory Insurer

Carlton Fields
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The court confirmed an award in favor of two affiliated power supplier companies (“Alstom”), against the subrogated insurer of one of their corporate customers damaged in an accident involving Alstom’s equipment. Alstom and the customer had entered into a mutual compromise and release agreement absolving each other of any liability for the accident. But the customer then made a claim with its insurer, Mitsui, which paid the customer in excess of $24 million for damages sustained in the accident. When Mitsui sought to recover this insurance payment from Alstom in court in Brazil, Alstom invoked the arbitration agreement in its supply contract with Mitsui’s insured (the customer), to which Mitsui was not a party. Alstom then compelled arbitration in New York, and prevailed both on the issue of the proper jurisdiction, and on the merits of the dispute. And the court here has confirmed the award, holding that Mitsui “stands in the shoes” of its insured, and is bound to the arbitration agreement reached with Alstom. Alstom Brasil Energia E Transporte Ltda et al. v. Mitsui Sumitomo Seguros S.A., No. 1:15-cv-08221 (USDC S.D.N.Y. June 20, 2016).

 

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