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When hurricane Ida hit, the two properties were insured against first-party property losses by a policy that was separately underwritten by the insurers, and was effective from Sept. 7, 2020, through Sept. 7, 2021, according to YAC’s complaint.

YAC filed a claim against the policy on Aug. 26 in the 24th Judicial District Court for Jefferson Parish as it wanted coverage for its property damage and "extra-contractual" penalties under the Louisiana insurance statutes related to an insurer's bad faith actions and conduct in handling claims.

However, on Oct. 10th the insurers removed the action to the Louisiana federal court, and then filed a motion to compel arbitration, claiming, "The market asserts that there is a valid arbitration clause that falls under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Therefore, this court has original jurisdiction."

But, YAC countered by saying the insurers have waived arbitration pursuant to the "service of suit" clauses contained in the separate insurance contracts.

"The policies have 'service of suit' clauses that have the effect of amending endorsements to the policies, which have the same effect of the insurers waiving arbitration" YAC said in its opposition brief. "In the service of suit clauses, the insurers agreed that they would submit to a jurisdiction at the request of the insured in the event that the insurers failed to pay a claim."

The insurer's motion to compel arbitration is currently under court submission.