(Article from Insurance Law Alert, March 2026)
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Holding
The English Court of Appeal unanimously upheld the Commercial Court’s decision on conflicting dispute resolution clauses in London-market Master Reinsurance Contracts (MRCs) and Market Uniform Reinsurance Agreement Certificates (Facultative Certificates) that covered the same reinsurance. The court ruled that the English law and exclusive jurisdiction clause in the MRCs prevailed over the New York arbitration clause in the Facultative Certificates, because the Facultative Certificates contained a “Confusion Clause” providing that the relevant MRC was to take precedence over the Facultative Certificate “in case of confusion.” Tyson International Insurance Company Ltd v GIC Re [2026] EWCA Civ 40.
Background
The substantive dispute arose from losses sustained by Tyson Foods, Inc after a major fire occurred at a poultry processing plant facility in Alabama. Tyson’s Bermudan captive insurer, Tyson International Insurance Company Ltd, accepted coverage for the losses under the captive policy and notified its reinsurers, including GIC Re, India, Corporate Member Ltd (GIC) of the loss. GIC underwrote separate reinsurance of two layers within Tyson International’s property reinsurance program (each covered by an MRC and corresponding Facultative Certificate). However, after the fire, GIC purported to rescind its reinsurance coverage, alleging that the stated values of the processing plant facility had been misrepresented and significantly understated. Tyson brought proceedings against GIC in the English Commercial Court, which gave rise to a dispute as to the correct forum.
The reinsurance coverage had been placed on June 30, 2021 by means of two MRCs, which were subsequently followed by the issuance of two corresponding Facultative Certificates on July 9, 2021. The MRCs contained an English choice of law and exclusive jurisdiction clause, whereas the Facultative Certificates included a New York arbitration clause. The Facultative Certificates contained an amendment stating that the “RI slip to take precedence over reinsurance certificate in case of confusion.” It was common ground between the parties that the “RI slip” referred to the relevant MRC.
The question was whether the substantive dispute was to be referred to New York arbitration, per the Facultative Certificates, or to the English courts, per the MRCs.
Decision
The English Court of Appeal, in a unanimous judgment, upheld the Commercial Court’s decision that the English jurisdiction clause in the MRCs prevailed over the New York arbitration clause in the Facultative Certificates and dismissed GIC’s two grounds of appeal.
GIC’s first ground of appeal was that the Confusion Clause should have only applied in circumstances where there was ambiguity or confusion between two provisions in the same Facultative Certificate, rather than confusion as between provisions in the Facultative Certificate and MRC. The Court of Appeal firmly rejected this argument, finding that the Confusion Clause could only be interpreted as intending to resolve conflicts between the MRC and the Facultative Certificate. The court reasoned that if the Confusion Clause had simply said the MRC “takes precedence,” this would plainly be a hierarchy clause. The addition of the words “in case of confusion” was “merely intended to confirm that the MRC was to prevail where there was a confusing difference between the two documents.” The court relied on both the ordinary and natural language and commercial common sense.
GIC’s second ground of appeal was that the two jurisdiction clauses in the MRCs and Facultative Certificates could be reconciled by giving priority to the later arbitration agreement in the Facultative Certificates and reading the English jurisdiction clause in the MRCs as giving the English court supervisory jurisdiction over the New York arbitration. The court rejected this argument, emphasizing that the jurisdiction clauses in the MRC and the Facultative Certificate are “flatly inconsistent” and that, where parties have expressly agreed to a hierarchy or inconsistency clause as between two distinct documents, it is impermissible to interpret the subordinate document in a way that fundamentally changes the meaning of the primary document.
Comments
This case provides a reminder to be mindful of the consequences of entering into contractual arrangements containing multiple and/or conflicting dispute resolution clauses. Comparatively, in a prior case that involved a similar dispute between Tyson and one of its other excess insurers arising out of the same substantive events, the Court of Appeal held that the New York arbitration agreement in the later in time Facultative Certificate superseded the jurisdiction clause in the earlier MRC, as there was no provision specifying that the terms of the MRC prevailed. Tyson International Company Ltd v Partner Reinsurance Europe SE [2024] EWCA Civ 363.