In Union Electric Company v. AEGIS Energy Syndicate 1225, No. 12-3546 (8th Cir. April 19, 2013), the Eighth Circuit held that a forum selection clause in an insurance policy could supplant an arbitration clause in that same policy. The main body of the policy in question contained a standard mandatory arbitration clause, but an endorsement required any dispute to be resolved in Missouri, under Missouri law. Missouri law prohibits mandatory arbitration provisions in insurance contracts, and the McCarran-Ferguson Act allows state insurance laws to “reverse-preempt” the Federal Arbitration Act.
The Eighth Circuit held that the forum selection clause and arbitration clause could not be read in harmony and, because Missouri law holds that a provision in an endorsement supplants a conflicting provision in the main body of a contract, the Eighth Circuit read the arbitration clause out of the policy. This ruling could impact enforcement of arbitration clauses in other jurisdictions that are hostile to arbitration.