XL Insurance Ltd v. Owens Corning Corp.

XL Insurance Ltd. (XL) (plaintiff) issued an insurance policy to the Owens Corning Corp. (Owens Corning) (plaintiff). The terms of the policy contained either long-form or short-form arbitration and choice-of-law provisions. The long-term arbitration provision stated that any dispute would be resolved in London under the Arbitration Act 1996 and that the parties would waive the right to seek collateral review in court. The long-term provisions entitled “governing law and interpretation” required that internal regulation laws of New York State applied to the policy except for the laws inconsistent with any provisions of this policy and for regulations pertaining to the New York Insurance Law. The short-form arbitration provisions stated that XL’s London arbitration clause would replace certain clauses about Owens Corning and that the internal regulation laws of New York State would govern the policy. Owens Corning filed a suit in Delaware superior court, causing XL to file a suit in English courts to determine whether the policy contained a valid arbitration clause. Owens Corning argued that, by the choice-of-law clause in the arbitration agreement, the parties chose New York law, which necessarily included the Federal Arbitration Act (FAA). Owens Corning also argued that under the FAA, the arbitration clause in the contract was invalid.