About Luis Felipe Pellon Luis Felipe Pellon has worked on insurance and reinsurance matters for 30 years, covering all its legal and operational aspects. Luis deals with contracts, claims, lawsuits, arbitration, product development, corporate, tax and governmental issues. Based in Rio de Janeiro and serving clients all over the country and abroad, Luis frequently works with industry associations, especially AIDA WORLD, of which he is a member of the Presidential Council. About Pellon & Associados Pellon & Associados has a long and special relationship with the insurance market, as a leading law office in the Brazilian insurance market with over 100 lawyers distributed among its offices in Rio de Janeiro, São Paulo and Vitoria. The firm renders a full range of services to insurers, reinsurers, brokers and agents, from consultation to court litigations and administrative proceedings, in all jurisdictions. Contact Luis Felipe Pellon Founder Pellon & Associados Advocacia Empresarial Rua Desembargador Viriato 16, CEP 20030-090, Altavista Building, Rio de Janeiro, Brazil Tel: +55 21 3824-7800 E: lfpellon@pellon.com.br www.pellon.com.br also have a position contrary to the application of the arbitration clause to resolve a dispute in the absence of an expression of will by one of the parties. The United States District Court of New Jersey, in Association of New Jersey Chiropractors et al v AETNA, Inc. et al, based on the precedent set in CardioNet, Inc. v CignaHealth Corp, thus decided on the understanding that there was no express manifestation of the insurer, accepting the arbitration clause. The Supreme Court of the United Kingdom has also denied the extension of the arbitration clause to a nonsignatory, the government of Pakistan, a beneficiary in a contract between a real estate company (Dallah) and a trust, which was extinct after the change of the Pakistani government. The plaintiff company obtained the conviction of the government of Pakistan in arbitration. This, in turn, prevented the enforcement of the award because in the view of the Supreme Court of the United Kingdom, there was no material evidence that the government of Pakistan was a legitimate party to the arbitration agreement. To give a broad overview, what steps do you take when advising on a subrogation action? Several aspects should be checked before initiating a subrogation action. First, on the side of the insurer, verify the existence of co-insurers, since each one responds independently for its share and, therefore, all have to be represented in the action, under penalty of losing the right. Observe the time bar limitation periods which, in some cases (e.g. general stores) are very short. If necessary, file an interruptive protest of the time bar even if the compensation has not yet been paid, which the law provides to the interested party (CC, art. 203). Also check in the policy if the causative agent is not listed as co-insured or cobeneficiary, and if this makes the action unfeasible. Check the deductibles and other mandatory participations of the insured, as well as if the total loss was greater than the limits of the policy, which should be duly noted in the subrogation action. Check if there is a counter-guarantee agreement; if it complies with the legal requirements, the signatures, grants and the liquidity and enforceability necessary for the execution of the guarantee and recovery of the indemnity against the causative of the damage. Next, the original contract, which is the object of the insurance and which binds the third party to the insured, must also be carefully examined. Check if there are indemnification limits imposed by the contract and if there is an arbitration clause and/ or legal jurisdiction and venue. Also verify if the evidence characterising the liability of the third party causing the damage is consistent, as well as whether its financial capacity (or insurance coverage) is sufficient to support the payment in case of losing the action. THOUGHT LEADER 79 There are several factors stemming from the original contracts taken to insurance which can complicate subrogation.
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