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Follow the Settlements and Follow the Fortunes – AIDA Rome 2014. Danish, Swedish & Norwegian Law. Niels Schiersing, FCIArb , HORTEN. Reinsurance not governed by the Insurance Acts in DK, N and S
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Danish, Swedish & NorwegianLaw
Niels Schiersing, FCIArb, HORTEN
Some principles mayapply by analogy (not the provisions whicharedimplemented to protect the insured)
The permissibleextent of construction by analogy is not welldefined (to say the least)
No case law in DK and S but in N:
Gjensidige v Continental Insurance and others (unpublished): ”This indicatesthat a literalconstructionbeappliedalso under Norwegianlaw …”
ND-1995-447: ”The insurance policy is developed by brokers at the insurancemarket in London … Norwegianpractice must beconsidered to comply with English practice in thisregard” (Direct insurance)
”Follow the Fortunes” clauses (US)
”Follow the Settlements” clauses (UK)
U1996.906 SC & U 1999.429 SC (Co-assurance)
Case concerningdefective windturbines:
The leadcoulddecide and the otherinsurersobliged to follow (1996)
The principle did not apply to payments made to owners of non-insured windturbines (1999)
Not Ex Gratiapayments …
By implication, the retrocessionaireobliged to follow the decisions by the reinsurer …
The retrocedantwasconsidered to have acted ”prudently and in the interest of all involvedinsurers/reinsurers must, accordingly, bebound by this decision …”
Business Efficacy and Good Faith? RelationalContracts?
Cedant: The principle of ”Follow the Fortunes” appliesReinsurer: An implied obligation to ”follow the fortunes” apply in treatyreinsurance
AC: ”The claimant (cedant) has not establishedthat the respondent (reinsurers) as facultativereinsurers has committeditself to let the cedants decision on the matter of insurancecoverage vis-a-vis the insuredbe binding on (the reinsurer)”
SC: Did not opine on the matter
E contrario: Business Efficacy and Good Faith in Treaty Reinsurance?
Good Faith, Business Efficacy and RelationalContracts …