Reading Room Document

Submission of Aviation Insurance Program Claims to Binding Arbitration

In insurance policies issued to air carriers pursuant to authority arising under chapter 443 of title 49, the Secretary of Transportation may include "50-50 clauses," which require that disputes between insurers over coverage liability be submitted to binding arbitration unless the insurers are able to negotiate a settlement in advance, if the use of such clauses is an accepted practice in the aviation insurance business. 49 U.S.C. § 44309 does not preclude the use of binding arbitration to resolve disputes regarding the liability of the United States for losses insured under chapter 443. 50-50 clauses included in insurance policies issued under chapter 443 may include a provision for arbitration under state or foreign law if it is a common practice of the commercial insurance business to resolve liability disputes by reference to the decisional rules of a non-federal sovereign. The OLC does not provide release dates for its opinions, so the release date listed is the date on which the opinion was authored. The original opinion is available at www.justice.gov/file/19946/download.

September 27, 1996