The United States Court of Appeals for the Second Circuit in the Southern District of New York. (Credit: Ryland West/ALM)
A significant number of states prohibit or restrict the arbitration of disputes between an insurer and its policyholder. The McCarran-Ferguson Act, 15 U.S.C. §§1011-15 (MFA), is a federal statute that generally precludes an Act of Congress from preempting state statutes involving the business of insurance. The New York Convention (the Convention) is a treaty of the United States; its enabling legislation is Chapter 2 of the Federal Arbitration Act (“FAA Ch. 2”).
The federal circuit courts are presently split about whether MFA reverse-preempts the Convention: The U.S. Courts of Appeals for the Second and Eighth Circuits have held that MFA reverse-preempts the Convention, while the U.S. Courts of Appeals for the First, Fourth, Fifth and Ninth Circuits have held otherwise.
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