PartiesThe defendant, in this case, was TIG insurance company, a firm that provides casualty insurance covers to individuals and organizations. The plaintiff was ExxonMobil Oil Corporation, one of the largest and most popular international Gas and Oil Company. It is a firm with its principal operating point in Texas and organized under the laws of New York.
TIG insurance company is an insurance company based in the U.S that provides insurance covers to companies such as ExxonMobil Oil Corp. ExxonMobil sued on the basis that the $25 million policy had already been spent from MTBE (Methyl Tertiary-Butyl Ether) ground water contamination (Salvatore, 2016). The firm has also alerted the insurer of the claims of the contamination of groundwater made by other plaintiffs as early as 1999. The company was indicted for being uncooperative in the proceedings leading to the payment of a policy to ExxonMobil that was in effect from January 1998 to November 1999. TIG was accused of refusing to abide by the policy as late as November 3 even after promising ExxonMobil an engagement in further discussions. TIG then filed a declaratory judgment to completely avoid coverage in New York state court (Salvatore, 2016). In reaction, ExxonMobil invoked the ADR endorsement formally requesting that they resolve the dispute using the indicated ADR procedures. The appeal was to compel TIG Insurance to settle the conflict using arbitration.
ExxonMobil Oil Corporation approached TIG Insurance formally demanding coverage as agreed in the policy agreement. The insurer agreed to further discussions but later bailed filing a declaratory argument to avoid payment in the New York Supreme Court. The plaintiff sued the defendant claiming payment as they had been alerted of the underlying claims before the elapsing of the policy but offered to settle the matter using arbitration. The defendant refused. ExxonMobil then appealed to courts to compel TIG Insurance to resolve the dispute through arbitration as stated in the policy. In the petition, the plaintiff also asked that the defendant be denied all other forms of conflict resolution other than arbitration.
The principal issue, in this court case, was whether the respondent was bound to pay the plaintiff and under what conditions the dispute was going to be dissolved. ExxonMobil sought to resolve the coverage issue under arbitration while TIG Insurance did not want this option. The Supreme Court liased with the plaintiff that the clause stated in the policy was binding denying the request by TIG Insurance to dismiss the claims.
The laws that applied in the proceedings of the hearing were the binding arbitration clause in the contract between ExxonMobil and TIG Insurance in accordance with the Judicial Arbitration and Mediation Services (J.A.M.S.), (Kubasek, Brennan & Browne, 2017, p.76). This law had to be applied as an easier and cheaper alternative form of settlement compared to litigation as it was already in the contract between the two companies. Another law was the Federal Arbitration Act (FAA) to compel TIG insurance into arbitration.
The court dismissed the defendants claim to reject the claims. There lacked a clarification of intent. The motion by ExxonMobil to compel TIG to settle the matter through arbitration was therefore granted. The argument by the courts was that the arbitration clause in the policy was legally binding and that the plaintiff was correct in invoking it. ExxonMobil therefore won, and the matter was arbitrated.
The judged ruled that there lacked a clarification of intent and that the request by TIG was delayed. The ruling was that the $25m dispute between the two companies be settled through arbitration as petitioned by ExxonMobil Oil Corporation.
- Kubasek, N. K., Brennan, B. A. & Browne, M. N. (2017). The legal environment of business: A critical thinking approach (7th ed.). Boston: Pearson.
- Salvatore, C. (2016). ExxonMobil wants to arbitrate $25m MTBE coverage spat. New York: Law360.