## Facts

- In the 1950s, United States Rubber Company (later Uniroyal) purchased liability coverage from London-market insurers as part of a worldwide, comprehensive insurance program.
- At the inception of coverage, United States Rubber’s principal place of business was New York.
- Chemtura Corporation later acquired Uniroyal and sought coverage for environmental remediation expenses and related liabilities tied to two sites: one in Arkansas and one in Ohio.
- The parties’ dispute centered on choice of law for interpreting the policies and allocating liability for long-tail environmental losses, not on the amount of loss.
- The insurers argued New York law governed the program, which would allocate liability pro rata across policy periods and insurers.
- Chemtura argued the law of each contaminated site should govern the site-specific claim, which could impose “all sums” liability on each triggered insurer.
- The Delaware Superior Court applied the Restatement (Second) of Conflict of Laws and selected Arkansas law for the Arkansas site and Ohio law for the Ohio site under a site-based approach.
- The Superior Court certified an interlocutory appeal, and the Delaware Supreme Court accepted review.

## Issues

1. Under Delaware’s Restatement (Second) “most significant relationship” framework, should a comprehensive, multistate liability insurance program be governed by a single state’s law or by the law of each state where an underlying environmental claim arises?
2. If a single law applies, which state has the most significant relationship to the insurance contracts for purposes of interpretation and allocation?

## Decision

- The Delaware Supreme Court reversed the Superior Court’s interlocutory choice-of-law ruling and remanded.
- The court held the Superior Court erred by applying a site-by-site choice-of-law approach.
- The court concluded a single governing law should apply to interpretation of the insurance program.
- New York law was held to have the most significant relationship to the insurance contracts and therefore governs the allocation dispute.

## Legal Principles

- Delaware applies the Restatement (Second) of Conflict of Laws “most significant relationship” test to contract choice-of-law questions, considering Restatement §§ 6, 188, and (for casualty insurance) 193.
- Restatement § 193’s focus on the “principal location of the insured risk” does not control mechanically when the policy covers risks in multiple states or is part of a broad multistate program; courts may rely on the broader § 188 contacts and § 6 policies.
- For a comprehensive insurance scheme covering multijurisdictional exposures, the choice-of-law inquiry should seek the state with the most significant interest in applying its law to the program’s terms “as a whole” to yield consistent, durable interpretation that contracting parties can rely on.
- A choice-of-law method that causes key policy terms to vary based on the location of particular underlying claims is disfavored where it would undermine predictability in long-term insurance contracting.

## Conclusion

The Delaware Supreme Court required a single governing law for interpreting and allocating liability under a comprehensive, multistate liability insurance program and selected New York law as having the most significant relationship to the contracts, rejecting a site-by-site approach tied to the locations of environmental claims.


Certain Underwriters at Lloyds, London v. Chemtura Corp., 160 A.3d 457 (Del. 2017)