Victory by Mound Cotton Wollan & Greengrass' Lloyd A. Gura, Esq. & Matthew J. Lasky, Esq.

Victory by Mound Cotton Wollan & Greengrass' Lloyd A. Gura, Esq. & Matthew J. Lasky, Esq. .

On September 19, 2008, the federal court for the District of Colorado (Weinshienk, J.) confirmed an arbitration panel's award in favor of the Insurance Company of North America against NI, Limited.

INA and NIL entered into three consecutive one year reinsurance agreements, the first of which incepted on July 18, 1982. Under the Reinsurance Agreements, NIL — as a captive reinsurer — bore a substantial amount of the risk incurred by its parent corporation, Newmont U.S.A. Limited f/k/a Newmont Mining Corp., and Newmont’s subsidiaries. Each of the three Reinsurance Agreements reinsured one three year INA insurance policy. The INA policy named Newmont and all of its then subsidiaries, including Magma Copper Co., as insureds. Pursuant to its policy, INA settled certain claims asserted by BHP Copper, Inc. f/k/a Magma Copper Co. in connection with alleged environmental damages and legal costs arising from BHP’s Pinal Creek Mining Site.

INA commenced arbitration to recover NIL’s assumed share of these environmental damages and legal costs. NIL refused to pay the amounts owed, and filed an action in the District Court seeking to stay the arbitration. NIL argued that all of its reinsurance obligations to INA — including the duty to arbitrate — had been released under two unrelated settlement agreements between INA and Newmont. After oral argument was heard before Judge Weinshienk, the District Court ruled in favor of INA and ordered the matter to proceed to arbitration. See Newmont U.S.A., Ltd. v. INA, 2006 U.S. Dist. Lexis 67905 (D.Colo. Sept. 20, 2006).

After an arbitration hearing was held, the panel rendered a unanimous award in favor of INA and ordered NIL to pay: (1) amounts due for the Pinal Creek Site claims; (2) 18% annual interest on amounts owed; and (3) INA's attorneys' fees and costs. The panel subsequently issued an order clarifying its final award, finding that the 18% annual interest rate should apply until unpaid bills were satisfied and that INA was entitled to all attorneys' fees and costs until all amounts due were paid.

The parties thereafter sought to have judgment entered on the awards. Upon written submissions, the District Court confirmed the panel's awards "as modified," awarding INA: (1) amounts due for the Pinal Creek Site claims; (2) compounded interest at a monthly rate of 1.5% to January 18, 2008; (3) attorney's fees and costs incurred through January 18, 2008; (4) interest on outstanding balances at a monthly rate of 1.5% from January 19, 2008 up to and including June 5, 2008; (5) INA's attorneys' fees and costs incurred after January 18, 2008 in attempting to collect the amounts due; and (6) interest at the statutory rate on amounts due after June 5, 2008.