East & Concord Partners recently represented a leading Chinese property insurer in a foreign-related reinsurance contract arbitration administered by the China International Economic and Trade Arbitration Commission (CIETAC), securing a favorable arbitral award for the client.

The case arose from cross-border reinsurance arrangements involving global aviation, aerospace and energy risks. The transaction structure reflected typical features of international specialty-risk reinsurance. The business sector involved was highly specialized. The key issues in dispute included the applicable limitation period for reinsurance contracts, the overall settlement of consecutive annual reinsurance treaties, the evidentiary and settlement effect of Snapshot account statements in international reinsurance practice, and the distinction between direct insurance logic and reinsurance logic. The arbitral tribunal carefully examined these issues and ultimately rendered an award supporting the claimant’s principal claims.

1. Case Background: Cross-border Comprehensive Risks Reinsurance Arrangements

The dispute arose from an international specialty-risk insurance programme operated by a Dubai-based Managing General Agent (MGA). Relying on its underwriting expertise and global distribution channels, the MGA underwrote high-technology and high-risk business in the international market, including aerospace, aviation and energy risks, on behalf of insurance capacity providers. Programmes of this kind usually require participating insurers to have strong international credit ratings and involve multi-layered insurance and reinsurance arrangements to diversify risk.

The claimant, a leading Chinese insurer with an international rating, participated in the programme and provided fronting and reinsurance arrangements for other Chinese insurers. From 2013 to 2015, the claimant and the respondent entered into several consecutive quota share reinsurance treaties. As reinsurer, the respondent participated in the allocation of underwriting results arising from the relevant aviation, aerospace and energy risks.
This type of business is characterised by global underwriting, cross-border reinsurance, rolling settlements and netting-off arrangements. Because aviation, aerospace and energy risks often span multiple underwriting years, multiple risk pools, long policy periods and ongoing claims adjustments, final settlement is not a simple policy-by-policy calculation. Instead, it commonly relies on Snapshot reports, bordereaux and accumulated netting calculations issued periodically by the MGA.

2. Key Issues: Application of Reinsurance Rules

As the programme progressed, a dispute arose between the parties over the final balance after years of settlement. The case mainly involved four key issues.

First, whether settlement claims under the reinsurance contracts should be subject to the special limitation period under Article 26 of the PRC Insurance Law, or the ordinary limitation rules applicable to general civil and commercial claims.

Second, whether the reinsurance treaties executed for consecutive underwriting years should be assessed separately, or whether they could be evaluated as a whole by reference to the transaction background, course of performance and settlement arrangements.

Third, whether Snapshot reports, bordereaux and related account documents periodically issued by the MGA in the course of international reinsurance business could serve as a valid basis for the settlement of premiums, claims, claims reserves and balances.

Fourth, whether settlement and payment obligations under the reinsurance contracts should be handled in accordance with reinsurance contract rules and international reinsurance market practice, or by reference to policy-by-policy reconciliation and internal accounting logic commonly used in direct insurance business.
The arbitral tribunal conducted a comprehensive review of the transaction structure, contractual provisions, settlement process, correspondence between the parties and relevant reinsurance market practice.

3. Award and Industry Significance

The arbitral tribunal ultimately upheld the claimant’s core claims, finding that the respondent should pay the outstanding amount to the claimant and bear the corresponding legal fees and most of the arbitration costs. The award confirmed the validity of overall settlement, Snapshot data and contractual objection mechanisms under the cross-border reinsurance arrangements, and made clear that reinsurance disputes should not be resolved simply by applying direct insurance logic.

The significance of the case lies in its practical value for cross-border specialty-risk reinsurance disputes.
First, the case clarifies the distinction between reinsurance contract disputes and direct insurance claims in terms of limitation periods. Settlement claims between a cedant and a reinsurer under reinsurance contracts should generally not be subject to the special limitation rules applicable to insurance contracts under the PRC Insurance Law.

Second, the case confirms that in reinsurance transactions involving consecutive underwriting years, rolling settlements and netting-off arrangements, a tribunal may assess the transaction relationship as a whole by reference to the contractual arrangements and actual performance.

Third, the case recognises the function of Snapshot reports, bordereaux and objection-period mechanisms in international reinsurance transactions. For highly specialised reinsurance business involving large volumes of data and multi-year continuing settlements, respecting statement mechanisms and market practice helps maintain transaction efficiency and contractual certainty.

Finally, the case reminds Chinese insurers participating in international aviation, aerospace and energy specialty-risk reinsurance business that they should fully understand settlement clauses, objection-period provisions, the follow-the-fortunes principle and cross-border statement mechanisms in reinsurance contracts, and should not handle reinsurance relationships simply by applying direct insurance business logic.

4. East & Concord Partners Team

The case was led by Jennifer ZHANG, partner of East & Concord Partners Shanghai office, and jointly handled by partner Peter YANG and team member Lora Zhou . Combining insurance law, reinsurance market practice, cross-border transaction analysis and arbitration experience, the team assisted the client in effectively reconstructing the transaction chain, organising complex accounting materials and ultimately securing a favourable award. The case also demonstrates East & Concord Partners’ professional capabilities in insurance and reinsurance disputes and complex commercial arbitration.