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R+V awarded EUR3.5mn in long-running dispute

German reinsurer R+V was awarded EUR3,528,357 in damages on 10 July from the former Lloyd’s-based managing agency Risk in the latest round of their long-running dispute.

The award came in a judgement handed down by Mr Justice Tomlinson in London’s Royal Courts of Justice.

The decision stemmed from a 2004 trial between the two parties which was won by R+V. In that trial the German reinsurer successfully argued that one of its former employees, Daniel Gebauer, conspired with the founder of Risk, Jean-Claude Chalhoub, to alter the terms of a binding agreement under which the two companies established and ran a London operation. Gerbauer, argued R+V, did so without authority and without the knowledge of R+V’s board.

According to corporate law firm Addleshaw Goddard it is “one of the most interesting reinsurance cases to have gone through the courts in recent years, as it has involved findings of conspiracy, abuse of process, and allegations of contempt of Court”.

The latest decision is the fifth judgement handed down by the UK courts as they attempt to unravel all the issues of quantum and liability generated by the case and committal proceedings may be initiated following the most recent decision.

“These numerous judgments also cover issues of interest to all insurers and reinsurers; including binding authorities, ratification, relationship with agents and recoverability of investigatory costs,” added Addleshaw Goddard.

In 2003 a new director of R+V carried out investigations into the business between R+V and Risk, which unveiled the existence of the binders and led to both Gebauer and R+V director, Dr Wolfgang Kernbach, having to leave R+V. In April 2003, R+V wrote to Risk terminating the binders with immediate effect.

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