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Nationality Claims

Libya Claims: Nationality in 2013 (Continuation)

United States views on international law [1] in relation to Libya Claims: Nationality: As they did before the Proposed Decision, claimants continue to argue that their own nationality is irrelevant and that the only relevant nationalities for purpose of this claim are those of Pan Am and the American victims of the Lockerbie Disaster. The Commission's Proposed Decision addressed this argument in detail. See PD at 15-16. For all the reasons stated there, the Commission again rejects claimants' argument. Quite simply, for purposes of the continuous nationality requirement, and as noted in numerous prior international law decisions, an insurer bringing a claim as a subrogee does not adopt the nationality of its insured, the subroger. Instead, the insurer must independently—and in addition to the insured—meet the continuous nationality requirement.

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The claimants reiterate their argument that continuous nationality should at least not be required of reinsurers. On objection, claimants point out—rightly—that none of the authorities cited in the Proposed Decision involved a claim that was denied solely because the reinsurer was not a U.S. national. This factual distinction, however, simply does not matter. The Commission decisions cited in the Proposed Decision consistently require U.S. nationality for all of the relevant parties in the chain of insurance: the party that suffered the loss, the insurance company that directly insured the loss, and the reinsurer that paid the insurer. The claimants rely on nine Commission decisions in which, as claimants put it, “the Commission considered the claims of insurance companies without apparently ever considering whether those insurers had ceded a portion of their coverage to a reinsurer.” However, there is no indication in any of the cited decisions that (a) the losses were further insured by reinsurers or (b) if confronted with a chain of reinsurance, the Commission would not have applied the continuous nationality requirement all the way through the full chain of ownership.

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The Commission's jurisprudence on this score is consistent with international law. Claimants have not brought to the Commission's attention any international-law jurisprudence for the proposition that a tribunal can ignore the nationality of reinsurers. Instead, when international law has explicitly considered reinsurers, it has consistently found that their nationality has mattered. For example, when U.S. insurance companies filed claims before the Mixed Claims Commission (United States and Germany), the State Department required them to deduct the amount they received from reinsurance if the reinsurance company was not a U.S. national:

As the basis of settlement, the actual net out of pocket payments of the American underwriters, including the Veterans Bureau [,] have been established after deducting all sums, if any, received by such underwriters under policies of re-insurance written by corporations, other than those under the laws of the United States or any State or possessions thereof, and partnerships and/or individuals other than such as owe permanent allegiance to the United States.

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Hackworth, Digest of International Law, Vol. V, pages 809-810. Professor Bederman has likewise noted that international law as a rule requires continuous nationality in insurance claims because insurance subrogees are considered successors in interest based on the idea that the rights of an insurer vest when payment is made to the insured, and not (by virtue of the insurance contract or the relation-back doctrine) at the time the loss occurs and the claim arises. Bederman, Beneficial Ownership of International Claims, in this world legal Encyclopedia, at 942-943. As such, each payment of insurance, and each payment of reinsurance, is a separate step, transferring the ownership of the claim, step-by-step, from one successor in interest to the next during the relevant time period. See also Eagle Star and British Dominions Insurance Company and Excess Insurance Company (Great Britain v. Mexico) (1931), 5 U.N.R.I.A.A. 139 at 142 (“the decision on the nationality of the claim from its inception until now does not depend solely upon the nationality of the Insurer claiming, but would also require an investigation of the reinsurance contracts subdividing the profits and losses from the original insurance.”); Theodor Meron, The Insurer and the Insured Under International Claims Law, 68 Am. J. Int'l Law 628, 642 (1974) (“An international tribunal seized of such a case would have to consider the extremely complicated questions of fact involved in disentangling the web of insurance and reinsurance contracts and determining the losses and their classification according to the nationalities of the insurers (or reinsurers).”).

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The claimants also argue on objection that the Proposed Decision fails to take sufficient account of the fact that the U.S. facilitated the final settlement payments to all of the Pan Am 103 victims, both U.S. and non-U.S. citizens, and that this fact demonstrates that the U.S. was espousing all claims relating to Pan Am 103, regardless of nationality. However, as the Commission noted in its Proposed Decision, this limited payment to non-U.S. nationals was specifically contemplated by the parties. See PD at 19 n.15. Congress in the LCRA affirmed that the CSA delineated two classes of claims, the first specifically encompassing only the persons included in the Pan Am 103 and LaBelle Discotheque private settlements with Libya, and only with respect to a final tranche of payments due from Libya under these private settlements, and the second encompassing all “nationals of the United States who have terrorism-related claims against Libya.” See LCRA §§3 and 5. The Pan Am Subrogees were not directly part of the LaBelle or Pan Am 103 private settlements and therefore must be “nationals of the United States.”

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Notes

  1. Libya Claims: Nationality in the Digest of United States Practice in International Law

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