A clause submitting treaty disputes to an arbitral tribunal of practitioners rather than to the state courts.
An arbitration clause sends disputes arising under the treaty to an arbitral tribunal, most often three members of whom two are party-appointed, and traditionally requires the arbitrators to be serving or retired insurance and reinsurance practitioners. Many wordings invite the tribunal to decide by reference to market custom rather than the strict letter of the contract. The problem it solves lies in the nature of the reinsurance contract: it is short, largely implicit, and rests on practices few judges know, so that a strictly literal reading by a non-specialist court produces outcomes neither cedant nor reinsurer contemplated. Arbitration also brings confidentiality, valuable where the dispute concerns the quality of a cedant's underwriting. Its limits are well known: high cost, no real appeal, and scattered outcomes since no award sets precedent, which leaves the same questions relitigated indefinitely from one treaty to the next.
A 2026 dispute over the aggregation of cyber losses sets a cedant against six reinsurers on the same layer. The arbitration clause requires a tribunal of practitioners sitting in London. The award, delivered in eleven months for 1.4 million euros of costs, aggregates by exploited vulnerability rather than by insured affected. Two years later a different tribunal decides the opposite on a treaty drafted in near-identical terms.
Clause compromissoire, Arbitration clause, Clause d'arbitrage, Arbitrage de réassurance