In CLMS Mgmt. Servs. et al. v. Amwins Brokerage et al., the U.S. Court of Appeals for the Ninth Circuit considered whether a state law (by operation of the federal McCarran-Ferguson Act, which gives states the authority to regulate the business of insurance) voiding arbitration agreements in insurance contracts reverse-preempted Article II, Section 3 of the New York Convention. Normally, Article VI, Clause 2 of U.S. Constitution (the “Supremacy Clause”) mandates that state law gives way to conflicting federal law, but the McCarran-Ferguson Act provides that state insurance law preempts conflicting federal law.
Faced with this question, the Ninth Circuit held that Article II, Section 3 of the New York Convention is “self-executing,” not an “act of Congress,” and not subject to reverse-preemption by the McCarran-Ferguson Act. Accordingly, the Ninth Circuit affirmed the district court’s order compelling arbitration, as further discussed and analyzed in this post.
The U.S. Constitution’s Supremacy Clause provides: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land” (emphasis added). This means that “state law gives way to conflicting federal law.”
