Lexington Insurance Company & Ors v Multinacional De Seguros SA (Rev 1)

Lexington Insurance Company & Ors v Multinacional De Seguros SA (Rev 1)

Multinacional breached the Claims Settlement Clause by waiving the time bar defence in its letter of 3rd April 2002, without consulting reinsurers and contrary to agreed strategy. This breach precludes liability of reinsurers under the reinsurance contracts. The waiver was authorised by Multinacional's President and...

Source-derived case information.

Parties
Claimant: Lexington Insurance Company & Others; Defendant: Multinacional de Seguros S. A.
Jurisdiction
England and Wales
Judgment Date
23 May 2008
Procedural Posture
Commercial Insurance/reinsurance Dispute / Judgment on Preliminary Issues
Outcome
Declaration that reinsurers are discharged from liability due to breach of Claims Settlement Clause by Multinacional.
Legal Topics
Reinsurance Contracts, Claims Settlement Clause, Waiver of Time Bar, Authority of Agents, Cooperation Obligations
Insurance Law Commercial Law Contract Law Reinsurance Contracts Claims Settlement Clause Waiver of Time Bar Authority of Agents Cooperation Obligations

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Summary, issues, holding and outcome

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Parties

Lexington Insurance Company & Others

Claimant

Multinacional de Seguros S. A.

Defendant

Procedural Posture

Commercial Insurance/reinsurance Dispute / Judgment on Preliminary Issues

Legal Issues

  1. 1 Whether Multinacional breached the Claims Settlement Clause by waiving the time bar defence
  2. 2 Whether such breach precludes liability of reinsurers
  3. 3 Whether reinsurers waived the breach by election or conduct

Ratio Decidendi

Multinacional breached the Claims Settlement Clause by waiving the time bar defence in its letter of 3rd April 2002, without consulting reinsurers and contrary to agreed strategy. This breach precludes liability of reinsurers under the reinsurance contracts. The waiver was authorised by Multinacional's President and Legal Advisor, and Mr Espinoza had sufficient authority under Venezuelan law. Reinsurers did not waive the breach by election or conduct.

Court Disposition

Declaration that reinsurers are discharged from liability due to breach of Claims Settlement Clause by Multinacional.

Orders

  • Reinsurers are not liable to indemnify Multinacional in respect of the Venalum claim.
  • Multinacional breached the Claims Settlement Clause by waiving the time bar defence.