GLOBAL CORP. v. EQUITAS LTD.
18 N.Y.3d 722 (2012)
2012 NY Slip Op 2251
GLOBAL REINSURANCE CORPORATION-U.S. BRANCH, Formerly Known as GERLING GLOBAL REINSURANCE CORPORATION-U.S. BRANCH, Respondent,
EQUITAS LTD. et al., Appellants.
Court of Appeals of New York.
Argued February 15, 2012.
Decided March 27, 2012.
Judges CIPARICK, GRAFFEO, READ and JONES concur with Chief Judge LIPPMAN; Judge SMITH concurs in a separate opinion, except insofar as Chief Judge LIPPMAN's opinion discusses whether the allegations of the complaint would state a claim under the federal antitrust laws, in which Judge PIGOTT concurs.
OPINION OF THE COURT
Chief Judge LIPPMAN.
At issue is the sufficiency and extraterritorial reach of plaintiff's claim under New York State's antitrust statute, commonly known as the Donnelly Act (General Business Law § 340 et seq.).
Plaintiff is a New York branch of a German reinsurance corporation. Defendants (hereinafter collectively referred to as Equitas) are London, England based entities engaged in the business of providing retrocessionary reinsurance. Retrocessionary reinsurers, or retrocessionaires as they are known, write coverage for risks ceded to them by reinsurers, in this transactional context referred to as "cedents."
According to the complaint, this action arises from practices employed in connection with the handling of claims made under retrocessional reinsurance treaties providing what is known as "non-life" coverage. Among the risks insured under this heading are those of environmental, catastrophic and asbestos related origin. Liabilities under policies insuring such risks typically are of the "long tail" variety; they may surface long after the policy period and it is clear in retrospect that underwriters did not accurately appreciate the magnitude of "non-life" risks or the unusual persistence of the liability they would engender.
Over the years, Lloyd's of London, an insurance marketplace composed of numerous competing insurance syndicates, themselves composed of individual underwriting participants (natural persons referred to as Names), issued, through its syndicates substantial non-life retrocessional coverage. By the early 1990s, it became evident that the liabilities arising under this coverage were mounting at an alarming rate and would soon outstrip the syndicates' reserves.
The syndicates individually proved unable to respond to this impending crisis, in significant part because in competing with each other for prospective business it was their practice to pay retrocessionary claims without haggling and without imposing onerous administrative burdens on their cedents. It was thus proposed that, since individual action by the syndicates to limit
liability by more closely scrutinizing claims would be commercially unviable, the Names should agree to repose decision making with respect to the handling of certain liabilities arising under pre-1993 Lloyd's non-life retrocessionary coverage, in a newly created entity—a reinsurer that would, because it would be in perpetual "run-off" (i.e., merely concluding obligations under existing coverage and not soliciting new business), be free to adopt a more aggressive approach to the handling of claims. This proposal, as set forth by the governing body of Lloyd's in a "Reconstruction and Renewal Plan" (R&R plan), was approved by the Names and subsequently reviewed and found unobjectionable by United Kingdom and European Union antitrust regulatory authorities, i.e., the United Kingdom Department of Trade and Industry and the European Commission.1