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Global Reinsurance Corp. v. Equitas Ltd., No.
53 (NY Ct. App. 2012), addresses the sufficiency and, more
pertinent for our purposes, the extra-territorial reach of
antitrust claims under New York's antitrust statute, the
Donnelly Act (NY Gen Bus. Law sec. 340, et seq.). In doing so, the
High Court interpreted as well federal antitrust jurisprudence on
extra-territoriality, a subject we have posted on as a matter of
signficance to the international practitioner (e.g., here).
Equitas arose from the Reconstruction and Renewal plan by the
Names (the insurance underwriters) at Lloyd's of London in
1996. Its job was to reinsure otherwise uninsurable non-life
obligations that Lloyd's syndicates had taken as
retrocessionary reinsurers. The antitrust claims against Equitas
alleged that Equitas's goal was not to pay just reinsurance
claims but to stall, take a "hard-nosed" approach,
etc.
The Court of Appeals of New York found the operative pleading
against Equitas deficient for failute to allege "any
anticompetitive effect attributable to the posited conspiracy
beyond the Lloyd's marketplace". But the Court went
further and held that, even if the pleading could be amended to
allege market power, "there would remain as an immovable
obstacle to the action's maintenance, the circumstance that the
Donnelly Act cannot be understood to extend to the foreign
conspiracy plaintiff purports to describe".
To arrive at that conclusion, the Court of Appeals was prepared
to extend the reach of the Donnelly Act to nearly the same
lengths as federal antitrust statutes can reach. In describing the
reach of federal antitrust extra-territoriality, the Court cited
the Foreign Trade Antitrust Improvements Act to observe that
"conduct involving [non-import] trade or commerce . . . with
foreign nations" is actionable in the U.S. only where the
conduct has a "direct, substantial, and reasonably forseeable
effect" on domestic commerce. Describing the pleading before
it, the Court of Appeals states:
The complaint alleges, essentially,
that a German reinsurer through its New York branch purchased
retrocessional coverage in a London marketplace and consequently
sustained economic injury when retrocessional claims management
services were by agreement within that London marketplace
consolidated so as to eliminate competition over their delivery.
Injury so inflicted, attributable primarily to foreign, government
approved transactions having no particular New York orientation and
occasioning injury here only by reason of the circumstance that
plaintiff's purchasing branch happens to be situated here, is
not redressable under New York State's antitrust statute. That
this is so, is demonstrable when the Donnelly Act is considered in
the context of federal antitrust law.
The Court was not willing to extend the reach of the Donnelly
Act because the business of insurance was involved. Indeed, it was
not willing to extent the Donnelly Act as far as the federal
antitrust laws, stating instead that:
For a Donnelly Act claim to reach a
purely extra-territorial conspiracy, there would, we think, have to
be a very close nexus between the conspiracy and injury to
competition in this State.
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