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New York law requires that defendants to a lawsuit disclose insurance-related information. On December 31, 2021, New York Governor Kathy Hochul signed the Comprehensive Insurance Disclosure Act (the “Act”) into law, amending New York Civil Practice Law and Rules (“CPLR”) §3101(f) to expand the scope of insurance-related disclosure requirements in pending civil lawsuits. The aim of the Act is to ensure full disclosure of insurance information during litigation, including the existence and contents of any insurance agreement, including coverage amounts, under which any person or entity may be liable to satisfy part or all of a judgment.
From day one, however, the new law faced backlash from the insurance industry, which considered the new disclosure requirements to be unduly burdensome on both insurers and insureds. Governor Hochul appeared to agree, such that she identified several possible changes before signing the legislation into law. Within two months, on February 24, 2022, Governor Hochul signed into law amendments to modify the most onerous requirements in the Act.
Under CPLR 3101(f)(1), as amended, the production of a copy of the insurance policy in place at the time of the loss that may satisfy all or part of a judgment is required, unless a party agrees, in writing, to accept a declarations page. A party that agrees to accept a declarations page in lieu of a policy may revoke such agreement at any time, and demand the production of the full copy of the insurance policy in place at the time of the loss. The copy of the insurance policy or the declarations page produced must include:
- All primary, excess and umbrella policies that relate to the claim being litigated. CPLR §3101(f)(1)(i).
- Full and complete insurance agreements, “including, but not limited to, declarations, insuring agreements, conditions, exclusions, endorsements, and similar provisions.” CPLR §3101(f)(1)(iii).
- “[T]he contact information, including the name and e-mail address, of an assigned individual responsible for adjusting the claim at issue.” CPLR §3101(f)(1)(iii).
- The total limits available to satisfy a judgment or to reimburse for payments made to satisfy the judgment. CPLR §3101(f)(1)(iv).
The Act sets time limits to effect the mandatory disclosures. The automatic insurance-related disclosure applies to lawsuits filed on or after December 31, 2021. The first disclosure must be made within 90 days of filing an answer and continue throughout the litigation. CPLR §3101(f)(1). At certain specific points throughout the litigation, the disclosing party must update information disclosed. Additionally, the parties are required to maintain the accurate and complete insurance information for 60 days after any settlement or entry of final judgment, inclusive of all appeals. CPLR §3101(f)(2).
The Act, as amended, also adds a certification requirement for insurance-related disclosure. CPLR §3122-b mandates that the parties and counsel certify the accuracy and completeness of the documents and information disclosed, and that reasonable efforts have been taken and will be taken to assure that the information remains accurate and complete.
Jose A. Aquino (@JoseAquinoEsq on Twitter) is a special counsel in the New York office of Duane Morris LLP, where he is a member of the Construction Group and of the Duane Morris Cuba Business Group. Mr. Aquino focuses his practice on commercial litigation with a concentration in construction law, mechanics’ lien law and government procurement law. This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this blog are those of the author and do not necessarily reflect the views of the author’s law firm or its individual attorneys.
Cyber fraud is a real and present danger across almost all industry sectors, and the construction sector is not immune as our recent article demonstrated. According to the FCA there has been a jump of 52% in incident reports and recent global conflict may possibly increase this threat.
One of the primary types of fraud affecting the construction industry is the prevalence of payment diversion fraud. It is estimated that contractors pay out around £100m per year in fake invoices. In some cases, a single instance of payment diversion fraud can amount to millions of pounds. In such cases it is easy to see how the fraud would place intolerable pressure on the cash flow of a business and in extreme instances even lead to insolvency. In an industry already under pressure through factors such as super-inflation and rising energy costs, fraud is yet another unwelcome factor which can be detrimental to cash flow on a project.
In the construction sector solid cash flow throughout the supply chain is the lifeblood of most projects, no matter what size, and is arguably the single most important factor in ensuring that a project reaches its conclusion. However, the cumulative effect of various other factors such as Brexit, escalating global energy prices, the outlawing from 1 April 2022 of the use of the red diesel usage for construction plant, super inflation, higher material and labour costs and the end of government COVID-19 support schemes has led to increased lending costs and smaller profit margins. As such, the construction supply chain is likely to come under ever increasing pressure in 2022.
Construction, energy and engineering companies have lagged others in taking steps to protect themselves from the growing number of cyber-attacks, and failing to take preventive measures can lead to expensive litigation.
Glasgow and COP26 resulted in various commitments from global economies to work towards targets in the reduction of greenhouse gas emissions. The UK is to target the reduction of greenhouse emissions to net zero by 2050.
However, even prior to COP26 there were already legislative changes afoot to have cleaner air. The Finance Bill 2021, and the associated secondary legislation, as part of the government’s plans to reduce carbon emissions, has the effect of restricting the usage of red diesel after April 2022.
In the Achmea case the Court of Justice of the European Union (ECJ) held that Article 8 of the Netherlands – Slovakia bilateral investment treaty, which allowed for the resolution of disputes by way of arbitration, was incompatible with EU law. The rationale for the decision was that a tribunal may have to interpret or apply EU law and where a question of law arose, unlike a Member State court, that question of law could not be referred to the ECJ. In other words, intra-EU bilateral investment treaty arbitration provisions, as reasoned by the ECJ, deprived the EU courts of jurisdiction in respect of the interpretation of EU law.
We raised the prospect that the ramifications from the decision were potentially far reaching and were not, it seemed, confined to the BIT between Netherlands and Slovakia.
The global pandemic continues to challenge us, with various measures ranging from further lockdowns to restrictions on in-person meetings. The judicial machinery, including that in the arbitration world, has continued to function throughout the pandemic notwithstanding the difficulties of embracing innovative processes and new technology.
The impact and uncertainty caused by the Achmea case on investor state dispute settlement provisions contained in intra-EU Bilateral Investment Treaties continues. These issues are potentially far reaching and may extend further than originally envisaged, namely that this case was arguably specific to the BIT between Netherlands and Slovakia.
It’s probably too early to deliberate whether COP 26 was a success, and if progress has been made since Paris. Glasgow will be remembered for the passionate speech from the Maldives representative, which reminded us (if ever we needed reminding) of the Armageddon-esque effects of climate change to the planet as a whole, and to small island nations in particular. The target remains to aim for net-zero carbon emissions by 2050, and to keep global warming close to 1.5 degrees.