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Published online by Cambridge University Press: 27 February 2017
Beckman Instruments, Inc. (Beckman) brought a claim before the American Arbitration Association (AAA) against the Overseas Private Investment Corporation (OPIC) to recover under insurance policies issued by OPIC certain losses sustained by Beckman in connection with the liquidation of Beckman’s wholly owned subsidiary, Aplar, S.A. (Aplar) in El Salvador. The OPIC insurance policies provided protection against injury directly caused by war, revolution or insurrection. Beckman’s local plant manager and a visiting Beckman engineer were kidnapped in El Salvador, setting in motion a chain of events leading to closure of the subsidiary and liquidation of the assets at a considerable loss to Beckman. OPIC denied Beckman’s claim for recovery of its losses under the OPIC insurance policies. The three-member AAA tribunal held: that the losses sustained by Beckman in connection with the liquidation of Aplar were the direct result of an act of insurrection—the kidnapping—and, consequently, were covered under the OPIC insurance policies, but that Beckman was not entitled to any compensation because the OPIC policies required that amounts received in compensation from other insurance companies and the value of all property recovered be set off against the amount that would otherwise be payable by OPIC.
1 No. 16-199-00209-87G, slip op. at 7, reprinted in 27 ILM 1260 (1988).
2 Pan Am. World Airways v. Aetna Casualty & Surety Co., 505 F.2d 989, 1005 (2d Cir. 1974).
3 Slip op. at 9.
4 Id.
5 Id.
6 Id. at 11.
7 Id. at 12.
8 Grover Hill Grain Co. v. Baughman-Oster, Inc., 728 F.2d 784, 792 (6th Cir. 1984) (applying Ohio law of torts); Freeman v. United States, 509 F.2d 626, 633 (6th Cir. 1975) (also applying Ohio law of torts) (citing Dougherty v. Hall, 70 Ohio App. 163, 172, 45 N.E.2d 608, 613(1942)).
9 Slip op. at 13.
10 Holiday Inns Inc. v. Aetna Ins. Co., 571 F.Supp. 1460, 1487 (S.D.N.Y. 1983) (citing Pan Am. World Airways v. Aetna Casualty & Surety Co., 368 F.Supp. 1098, 1124 (S.D.N.Y. 1973), aff’d, 505 F.2d 989 (2d Cir. 1974)).
11 Home Ins. Co. v. Davila, 212 F.2d 731, 738 (1st Cir. 1954).
12 The tribunal noted, almost in passing, that the former U.S. Ambassador to El Salvador testified that, as a general rule, members of the group thought to be responsible perpetrated kidnappings “in support of their insurrectionist objectives.” Slip op. at 8. The only analysis of the specific kidnappings in question was one victim’s statement that, following conversations with his captors, he believed them to be carrying out an act in support of insurrectionist goals. Id.
13 See Holiday Inns Inc. v. Aetna Ins. Co., 571 F.Supp. 1460 (S.D.N.Y. 1983).