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Enron Mail |
Bruce just fyi, I am already on top of this. Ken Blades and I had a
conversation with Justin Williams yesterday about this ongoing saga (which has been ongoing a long time...). Essentially here's where we are and why it is a good thing that United India has sued us in the London Court. In the early part of the dispute, we gave consideration to litigation vs. arbitration, but we could only sue UI in India, which was a bad option. Several months ago, after lengthy settlement discussions with United India (UI) and reinsurers about DPC's DSU claim resulting from the first rotor problems, UI served DPC with a notice of arbitration under the policy. The notice was curious because UI clearly disputed both liability and quantum; however, the policy's arbitration clause states that arbitration can only include issues of quantum. Through a series of correspondence, we believe UI has agreed to arbitrate liability & quantum in the same proceeding and to include reinsurers in the arbitration. (The cut through clause in the policy enables DPC to recover directly from the reinsurers). It appears, however, (at least we speculate) that UI has suddenly become uncomfortable with the anomaly, that while they have served DPC a notice of arbitration, the clause limits arbitration to quantum, not liability. Hence UI's declaratory judgment action in the London Commercial Court to determine liability. Now, this gives us an option we didn't have earlier: litigation in the London court since they have submitted to jurisdiction or arbitration. There are pros & cons to both which we are discussing with Justin and Peter. An interesting piece of the puzzle is that UI is now trying to realign the parties since DPC is the insured seeking recovery. The reason UI wants to do this is because (i) it would put the burden of proof on DPC as claimant & (ii) UI as claimant will have a very difficult time meeting its burden of proof on a dec action because they do not have all the technical information DPC has. Pros of litigation: The London court is less likely to permit this realignment than arbitrators who are typically more lenient in procedural matters of this type. We also believe the London court will be cheaper (no cost of 3 arbitrators) and quicker, since there are statutory time lines. UI has no incentive to resolve this expeditiously and has, at every opportunity, slowed the arbitration process by rejecting everything DPC proposes from the number of arbitrators to the names submitted etc. Also, in the London court, there is a strong possibility DPC can get an advance security for attorneys' fees as the defendant, which is not possible in arbitration. Downside of litigation: It is less likely that DPC can litigate directly against the reinsurers for procedural reasons. Furthermore, DPC could potentially end up in two proceedings: litigation to determine liability & arbitration to determine quantum which could take longer and be expensive. Ken Blades believes the loss adjuster stipulated to quantum in a prior meeting which would enable us to avoid that scenario. Until we see the document, however, we cannot determine whether the stipulation is enforceable because of issues of authority etc. The bottom line is, now that UI has sued us in London court, we have a choice we didn't have before. We plan to obtain Ken's document re the stipulation, send a letter to UI and then see their reaction before we decide. Now that we've been served it just shortens our time limit to do this. I'm inclined to go the litigation route, but I want to see that stipulation document first and discuss with Linklaters its value either as an enforceable agreement or its strength as evidence of quantum. Call me if you have questions. In the meantime I'll keep you informed. Michelle ---------------------- Forwarded by Michelle Blaine/ENRON_DEVELOPMENT on 12/21/99 03:38 PM --------------------------- Robert C Williams 12/21/2000 09:09 AM To: Michelle Blaine/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Bruce Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT Subject: Insurance Claim under CAR/DSU Policy Michelle, this looks like yours. ---------------------- Forwarded by Robert C Williams/ENRON_DEVELOPMENT on 12/21/2000 09:16 AM --------------------------- Sandeep Katwala 12/21/2000 01:51 AM To: Wade Cline/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rob Walls/NA/Enron@Enron, Robert C Williams/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bruce Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Subject: Insurance Claim under CAR/DSU Policy Gentlemen, Santa is really working overtime as far as we are concerned. Peter Cornell will be preparing a response and I am working with Suhas to get all this in train. This is not the easiest time to collate all the information we require to put a response together given the holiday but the clock is running. Will get back to you as soon as I can once we have got our thoughts in order as to the way forward. Sandeep ---------------------- Forwarded by Sandeep Katwala/ENRON_DEVELOPMENT on 12/21/2000 01:13 PM --------------------------- Suhas Tuljapurkar 12/20/2000 06:17 PM To: Sandeep Katwala/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Paul Kraske/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Mukesh Tyagi/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mohan Gurunath/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Krishna Murthy/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT Subject: Insurance Claim under CAR/DSU Policy We have been served with a Claim Form issued by the Commercial Court in London in respect of above claim. The service (alongwith the order of the Court & an acknowledgement form ) has been effected through Mulla & Mulla acting under the instructions of M/s Beachcroft Wansbroughs on behalf of UII. We shall be collecting and collating the necessary back up documents so as to submit the Claim Form within stipulated period of 23 days. I am connecting the hard copies .
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