A Nov. 13 decision from the U.S. District Court for the Southern District of New York in Flextronics International Ltd. v. Allianz Global Corporate & Specialty SE represents far more than a routine confirmation of an arbitration award: It is a meaningful recalibration of several foundational issues in directors and officers insurance coverage — allocation, insurability, "best efforts" obligations and the limits of insurer challenges to arbitral decisions.
Although the court's task was technically narrow — confirming a $10.96 million arbitration award in favor of the policyholder — the opinion provides clear guidance on how courts expect insurance companies and policyholders to approach allocation disputes, how broadly choice-of-law and insurability clauses may operate, and how difficult it is for insurers to reverse an adverse arbitration result.
For policyholders, the decision is a road map for pressing allocation and insurability arguments in complex, multidefendant disputes. For insurers, it is a warning that unsupported allocation theories, rigid approaches to best-efforts obligations and aggressive attempts to unwind arbitration decisions will find little traction.
