New York law applied in pollution indemnity

Speaking of pollution, a New York Law Journal article this morning relates that the Manhattan Supreme Court has ruled that “the interpretation of insurance policies indemnifying the General Electric Company against liabilities for hundreds of millions of dollars in claims from polluted sites around the country, including the Hudson River, should be decided under New York law. ( Ruling )

Justice Bernard Fried held that even though GE’s operations & pollution risks were spread nationwide, its New York domicile should be regarded as “a proxy for the principal location of the insured risk, and thus, the source of applicable law.” citing the 2006 asbestos case, Lloyd’s of London v. Foster Wheeler Corp., which had held that “because no single state was the principal location of the insured risks, the insureds’ domicile is used as a proxy for choice of law purposes.”

Fried had also said that the coverage dispute wouldn’t affect GE’s liability for the cleanups or whether victims of pollution should be compensated, but rather the extent to which GE or the insurers must bear the cost of the cleanup.

He also stressed “the need to adopt an approach that would promote uniformity of results, writing that ‘it would not only be an enormous burden to consider the laws of numerous states on every issue in this case, but such an approach would make uniform interpretation of the contract impossible,’” the article related.