courts (unless you want to have such an ability, in which case ask the extent to which you wish to be bound by settlements entered
yourself whether you would not rather that disputes be decided by a into by your reinsured (with or without your consent) and by
court rather than an arbitral tribunal in the first place). For example, decisions of the US courts finding the reinsured liable. Consider
if Bermuda is chosen as the seat of the arbitration, the UNCITRAL also the effect that insolvency of the reinsured may have on your
Model Law would apply and there would be minimal interference obligations under the reinsurance contract and in particular on the
from the courts in the arbitral process. effectiveness of any dispute resolution clause.
Also, remember that there is no such thing as a standard arbitration (12) If intermediaries are involved, consider who they are and where
clause. You are free to choose the number of arbitrators, the manner they are, and the law that may apply to them, for example whose
of their selection, their qualifications and the procedure that will agent they may be deemed to be by reference to the applicable law.
govern the arbitration (including the adoption of rules of an arbitral In England, premium paid to a broker is not deemed to have been
institution such as the ICC, the LCIA or ARIAS (UK)). You are also paid to the reinsurer. In other countries, the rule is the reverse. In
free to provide that the arbitrators are not bound by strict rules Bermuda an insurer is deemed to have received the premium where
of law and are not required to give reasons for their decisions, but it has been received by “an insurance broker, agent or salesman
consider the possible consequences carefully before you do so. having apparent authority to act for the insurer in that respect ...”
(Insurance Act 1978, s. 29). But that does not affect the general rule
(10) If you are placing contracts of retrocession with a number of
that a reinsurance broker is the agent of the reinsured. Consider the
retrocessionaires and you chose arbitration, consider whether the
effect that insolvency of the intermediary may have upon premium
retrocessionaires should not all be bound by an arbitration award
and claims moneys held in bank accounts in the intermediary’s name
against one (the leader) or at least provide that all retrocessionaires
under the applicable law.
constitute one party and are represented by only one law firm.

Otherwise, you will face the prospect of arbitrating any disputes

separately or facing a bank of lawyers arguing separately for each

retrocessionaire.
(11) Consider the impact of the law governing the underlying
contract of insurance (presumably the law of a particular US State)
Jan Woloniecki is a partner in Bermuda law firm Attride-Stirling &
on the choice of law for the reinsurance contract. Consider carefully
Woloniecki. His e-mail address is: jww@aswlaw.com
BermudaReinsurance . October 2005 49
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