In Various Insurers v. GE [1], the United States Court of Appeals for the Eleventh Circuit had to decide whether subrogated insurers, reinsurers, and retrocessionaires were bound by an arbitration agreement as third-party beneficiaries. The Eleventh Circuit concluded that they were and affirmed an order compelling arbitration. 

Background

Shariket Kahraba Hadjret En Nouss (“SKH”) owned of a power plant in Algeria. The power plant was constructed by SNC-Lavalin Contructeurs International Inc. (“SNC”). SNC was an indirect controlling shareholder in SKH. 

Additionally, SNC was the operator of the plant based on the Operation and Maintenance Contract it entered into with SKH in July 2006 (“O&M Contract”). The O&M Contract contained an arbitration clause. 

As the operator of the plant, SNC entered into several contracts with General Electric International and various connected companies and corporations (“GE”), including a services agreement (“GE Contract”). All these contracts contained arbitration clauses. For example, the GE Contract included an arbitration clause requiring parties to refer to ICC arbitration all disputes arising from or concerning the contract.

In October 2019, a gas turbine designed, manufactured, and installed by GE detached from its housing in the power plant while still rotating, causing damage to the power plant. 

As the power plant had been insured, SKH retained partial indemnification for its losses from its direct insurers. These insurers had been partially reimbursed by its reinsurers and retrocessionaires (“Insurers”).

The Insurers, as subrogees of SKH, initiated proceedings to seek reimbursement from GE for losses they have incurred in connection with the incident.

District Court proceedings

In the course of the proceedings, GE filed a motion to compel arbitration based on the arbitration agreements concluded in the GE Contract under the theory of third-party beneficiary. 

The Insurers resisted that motion by claiming that the dispute was not within the scope of arbitration and that the theory relied upon by GE did not apply.

On March 17, 2023, the District Court compelled arbitration [2], as requested by GE. 

The district court reasoned that:

• This case was subject to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“NY Convention”) and its implementing legislation.
• Under the relevant law, the first prerequisite for compelling arbitration is the existence of a written agreement to arbitrate. However, the NY Convention does not conflict with the enforcement of arbitration agreements by or against non-signatories under equitable estoppel doctrines. 
• There was no dispute that SKH did not execute any written agreement with GE. 
• However, the third-party beneficiary doctrine applied to this case, binding the Insurers to the arbitration agreement. This is because SKH (which the Insurer subrogated) had been conferred a benefit as a result of the SNC’s entry into the GE Contract: 
  • First, the recitals to the GE Contract clarified that SNC wished to use GE to provide maintenance services for the power plant and explicitly referred to the O&M Contract binding SKH.
  • Second, GE was to repair or replace components of the power plant, which was for the benefit of the owner of the power plant—SKH.
  • Third, GE provided a warranty for the parts delivered under the contract, and SKH received the benefit of this warranty as it appeared to cover the incident. This was not an incidental benefit, but a direct, tangible one, owned by SKH.
• The issue of the scope of the arbitration agreement was left for the arbitral tribunal to decide. This was because the parties agreed to conduct arbitration under the ICC arbitration rules, which delegated such arbitrability questions to the arbitrator.

The Insurers appealed. 

Eleventh Circuit proceedings

On March 18, 2025, the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s order to compel arbitration. 

The Eleventh Circuit reasoned that: 

• The key issue in the case was whether the provisions of the GE Contract bind SKH (and, therefore, also the Insurers as SKH’s subrogees). 
• Under federal common law, parties to a contract may create rights for a third-party beneficiary if they manifest their intention to do so. 
• SKH was a third-party beneficiary as the language of the GE Contract and the circumstances of its formation led to such a conclusion:
  • First, the GE Contract explicitly referred to the O&M Contract, which bound SNC and SKH.
  • Second, the GE Contract required GE to provide services when SNC or SKH decide on changes to the power plant. 
  • Third, the GE Contract explicitly acknowledged that SKH would have had access to the operation and maintenance reports that GE was obliged to prepare.
  • Fourth, the GE Contract allowed SKH to unilaterally act and make decisions, without informing GE, in case GE failed to respond to an emergency.
• This case was distinguishable from two cases decided by the First Circuit [3], cited by the Insurers. This is because, in the current case, the language of the arbitration agreement in the GE Contract was not limited only to GE and SNC, and the GE Contract explicitly referenced SKH, granting it certain rights and benefits.
• As to the scope of the arbitration agreement, the issue was to be decided by the arbitral tribunal. This is because, in the Eleventh Circuit, the binding precedent is that parties agreeing to arbitration rules that delegate the issues of arbitrability to arbitrators are bound by that delegation [4]. 

Takeaways

This case offers several practical takeaways for arbitration users in the U.S.:

• First, non-signatories may be compelled to arbitrate their dispute if they are deemed third-party beneficiaries of a contract containing an arbitration clause—even in international contracts involving non-U.S. parties.
• Second, insurers, reinsurers, and even retrocessionaires acting as subrogees must tread carefully. They step into the shoes of the insured and will be bound by arbitration agreements the insured is bound by. The impact of an arbitration agreement concluded by an insured can cascade down the chain of insurance contracts. To avoid unexpected arbitration, insurers, reinsurers, and retrocessionaires should review the language used in their policies, as well as seek clarity from the insured about potential dispute resolution fora before entering into insurance contracts.
• Finally, when parties incorporate into their arbitration agreements institutional arbitration rules that delegate arbitrability questions to the arbitral tribunal, courts in the Eleventh Circuit will enforce that delegation and refrain from deciding such threshold issues.

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[1] Various Insurers, Reinsurers & Retrocessionaires v. Gen. Elec. Int’l, Inc., No. 23-11211 (11th Cir. Mar. 18, 2025).

[2] Various Insurers, Reinsurers & Retrocessionaires v. Gen. Elec. Int’l, Inc., No. 1:21-cv-04751 (N.D. Ga. Mar. 17, 2023).

[3] InterGen N.V. v. Grina, 344 F.3d 134 (1st Cir. 2003) and Hogan v. SPAR Grp., Inc., 914 F.3d 34 (1st Cir. 2019).

[4] Terminix Int’l Co., LP v. Palmer Ranch Ltd. P’ship, 432 F.3d 1327 (11^th Cir. 2005).