General Reinsurance Corporation (“Gen Re”) reinsured certain commercial excess liability policies issued by Mid-Continent Casualty Company (“Mid-Continent”). See Mid-Continent Cas. Co. v. General Reins. Corp., No. 07-5050 (10th Cir. May 22, 2009). After a dispute arose between the parties, Mid-Continent filed a lawsuit against Gen Re in federal district court in Oklahoma, and Gen Re sought to compel arbitration under the Federal Arbitration Act (“FAA”). The reinsurance contracts at issue contained arbitration clauses that required the parties to submit “any unresolved difference of opinion” to a three-person arbitration panel.
The district court denied Gen Re’s motion, finding (1) that Oklahoma law controlled because the FAA was reverse preempted by the McCarran-Ferguson Act, 15 U.S.C. § 1012 and (2) the arbitration clauses were unenforceable under the Oklahoma Uniform Arbitration Act (“OUAA”) which, among other things, invalidated arbitration clauses in “contracts between insurance companies” (e.g., reinsurance contracts). The section of the McCarran-Ferguson Act relied upon by the district court states, in pertinent part, that "no act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any state for the purpose of regulating the business of insurance. . .unless such act specifically relates to the business of insurance." The district court found that since the OUAA regulates the business of insurance, the McCarran-Ferguson Act empowered the court to invalidate arbitration clauses contained in the reinsurance contracts. Gen Re appealed to the U.S. Court of Appeals for the Tenth Circuit. The Reinsurance Association of America also filed an amicus curiae brief.
In May 2008, after oral argument in the appeal, the legislature amended section 1855(D) of the OUAA excluding reinsurance contracts from the type of agreement in which arbitration clauses were deemed invalid by that statute. The amendment went into effect on November 1, 2008, although the relevant legislation did not specify whether the amendment would apply retroactively to contracts executed before November 1, 2008. Nonetheless, the Tenth Circuit held that under the language of the OUAA and Oklahoma law, the OUAA applied to contracts entered into prior to the revised statute’s effective date. Accordingly, the arbitration clauses in the reinsurance contracts at issue were valid and enforceable.