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Reversing a Superior Court decision, the Delaware Supreme Court ruled that New York law governs an environmental coverage dispute regardless of the state in which the claims arose.  Certain Underwriters at Lloyds, London v. Chemtura Corp., 2017 WL 1090544 (Del. Mar. 23, 2017)

In this coverage dispute between a chemical company and its insurers, the parties disagreed as to which state’s law should govern policy interpretation.  Applying Delaware’s most significant relationship framework, a Delaware Superior Court ruled that the policy should be interpreted under the respective laws of the states where the underlying environmental claims arose.  Under the Superior Court ruling, Arkansas and Ohio law (both of which have utilized an “all sums” approach to allocation) applied, respectively, to claims arising in those states.  The Delaware Supreme Court reversed. 

The Delaware Supreme Court agreed with the lower court’s most significant relationship approach, but concluded that New York law (which has endorsed pro rata allocation) should govern the entire dispute given its contacts to the parties and contract formation.  Emphasizing the importance of “certainty, predictability and uniformity of result,” the court stated:

This result . . . fulfills the need for comprehensive insurance programs to have a single interpretive approach utilizing a single body of law unless the parties to the scheme choose otherwise.  Precisely because this is an insurance scheme covering diverse nationwide risks, the relationship of the parties cannot center in a rotating and ever-changing way on where the insurer happens to be sued currently, resulting in the policy being read in fundamentally different ways in different cases, based on the happenstance of where, across a broad variety of possible locations and jurisdictions, potential liability results in litigation.