Adv. Aviv Klepner
C.C. (Tel Aviv) 23416-03-18 The Phoenix Insurance
Company Ltd. v. Infrassure Ltd.
The Tel Aviv District Court acknowledged jurisdiction over a claim filed by an Israeli Insurer against a Foreign Reinsurer who refused to participate in a settlement agreed by all other Reinsurers. The Court ordered service of the Statement of Claim to the Reinsurer.
The Phoenix Insurance Company Ltd. (hereinafter: the Insurer) issued Shafir Engineering Ltd. (the Assured) an insurance policy for risks involved in a road construction project. The policy was reinsured in a Facultative Reinsurance by several Reinsurers.
Infrassure Ltd. is a company registered in Switzerland, which was one of 8 Reinsurers reinsuring the policy (hereinafter: the Defendant).
The Assured filed a claim for reimbursement under the policy following which the Assured, the Insurer and the other 7 Reinsurers entered into a settlement agreement and paid their relative shares of the insurance benefits. The Defendant denied liability and refused to pay their share (12%) of the insurance benefits. Following the settlement the Insurer filed a claim against the Defendant for payment of its unpaid share in the settlement and request the Court to allow it to serve the claim outside the jurisdiction.
The Israeli Court approved the motion hearing one side only. The Defendant filed a motion requesting cancellation of the leave to serve the claim.
The Court pointed out that there is no dispute that the Reinsurers’ agreement includes an exclusive jurisdiction clause referring to the Israeli Courts. Also, there is no dispute that the Israeli forum is the most appropriate forum for the claim (Forum conveniens).
The Defendant’s argument for absence of cause of action was rejected. The Court decided that the settlement agreement does not prevent the Insurer from filing the claim against the defendant and prima facie, the claim presents “serious arguments” against the Defendant which suffice at this preliminary stage.
The Defendant argued that the Insurers’ claim was time barred since it was filed after the special prescription period of 3 years stipulated in the Insurance Contract Law, 1981.
The Defendant alleged that the said shortened prescription period applies also to the relations between the Insurer and the Reinsurers.
The Court ruled that according to Article 72 of the Insurance Contract Law, the said law does not apply to reinsurance (except for Article 62 which is irrelevant to the dispute). Therefore, the Defendant cannot rely on the special prescription period provided by the Insurance Contract Law. The relevant law in this case is the prescription law according to which the regular prescription period is 7 years.
Accordingly, the permission to serve the claim to the Defendant out of jurisdiction was not cancelled and the Defendants were ordered to file a Statement of Defence with the Israeli Court.