Under prior law (Law No. 17418, Article 162), Argentina treated reinsurance as an international undertaking and permitted the ceding company and the reinsurer to choose the appropriate law and jurisdiction in their contract. Recent Resolution 33.320/2008, however, provides that all new reinsurance contracts involving local insurers, whether treaty or facultative, must stipulate that the contract is subject to Argentinean law and jurisdiction. Inclusion of such a choice of law and jurisdiction clause, now mandatory, likely means that any dispute under a reinsurance contract regarding an Argentinean risk will have to be resolved in an Argentinean court or arbitral forum.
In issuing the resolution, the local regulator stated the following principles underlying its position:
- A reinsurance contract is the equivalent of liability insurance to cover a ceding insurer’s risk of debt or damages resulting from its assumed liability under the conditions of an insurance contract;
- The location of the reinsurer’s risk is the reinsured’s place of business because it is the center of the economic activities that may cause damages;
- The judge appointed to oversee any disputes arising between the insurer and the reinsurer should be from the same jurisdiction as the ceding insurer because he will have jurisdiction where the contract was executed and will know the customs and usages of the relevant market;
- The insurer’s business headquarters for these purposes is where payment for credits under the contract are verified, premiums are paid and indemnities are received.
Although the policies underlying the Resolution would seem to equally apply, it should be noted that the Resolution is not clear as to whether it applies to renewals of already-existing reinsurance contracts.