Tyson International Company Limited -v- GIC Re [2025] EWHC 77 (Comm)
If you have an appetite for decisions about whether a facultative reinsurance certificate (“fac cert”) can trump a Market Reform Contract (“MRC”), we now have a fourth serving from the English court.
Like the previous three helpings, this arises from the fire at Tyson Foods’ poultry rendering plant at Hanceville, Alabama on 30 July 2021 and the efforts of Tyson Foods’ captive insurer, Tyson International Company Limited (“Tyson”), to recover from its reinsurers.
Unsurprisingly, the facts are strikingly similar to those in Tyson v Partner Re, (you can read our article on that case, which went to the Court of Appeal, and on fac certs generally, here).
For the 2021/22 policy year, Tyson and GIC entered two reinsurance agreements protecting Tyson’s property all risks cover (for 10% of USD 25m xs USD 175m and 10% of USD 75m xs USD 225m respectively).
These agreements were evidenced by MRCs which GIC scratched on 30 June 2021. They were expressly subject to English law and the exclusive jurisdiction of the English court. On 9 July 2021 GIC also agreed fac certs for the same risks on the standard “MURA” form, which provided for arbitration under New York law.
After the fire, GIC alleged that Tyson had misrepresented the value of the rendering plant at placement and commenced a New York arbitration under the MURA terms. Tyson, however, wanted the matter dealt with in the English court and secured an interim anti-suit injunction against the New York arbitration.
So far, so similar to Tyson v Partner Re. The signal difference in Tyson v GIC was that the two fac certs, at GIC’s request, included the following clause: “2) RI slip to take precedence over reinsurance certificate in case of confusion”.
Tyson argued that this so-called “confusion clause” gave the MRC clauses primacy, so the MRC choice of law and jurisdiction trumped the very different MURA fac cert provisions.
GIC, on the other hand, argued that the clause meant only that the MRC could be used as an aid to construction if there were fac cert clauses that were unclear. The MRC did not ‘trump’ the fac cert just because a clause in the two documents was inconsistent.
Christopher Hancock KC had already looked at this issue back on 6 December 2023 (see Tyson v GIC [2024] EWHC 236 (Comm)) and found for Tyson. He had declined, however, to make the anti-suit injunction against New York arbitration permanent, which is why the matter came before the court again. This time, Nigel Cooper KC has gone the extra yard: Tyson’s application to make the anti-suit injunction permanent succeeded.
So Partner Re’s New York arbitration has been confirmed – because, unlike in their prior year covering Tyson, there was no precedence (or “confusion”) clause applicable to their fac cert – while GIC remain in London court proceedings rather than New York arbitration because there was such a clause in their fac certs.
The takeaway? A fac cert entered after an MRC will trump the MRC unless there is a clause that expressly deals with which contract takes precedence. Reinsurers and cedants take note.
If you would like to discuss any of this further, please get in touch.
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