Civil Law and UAE: Reinsurance Treaty Disputes

1. Introduction

Reinsurance treaty disputes arise when an insurer and reinsurer disagree about the operation, scope, interpretation, or enforcement of a treaty reinsurance arrangement.

Unlike facultative reinsurance, which generally covers an individually identified risk, treaty reinsurance establishes a continuing framework under which the reinsurer agrees to accept a defined category or portfolio of risks written by the cedant.

A simplified structure is:

                     REINSURANCE TREATY                           │                           ↓                  ┌─────────────────┐                  │     CEDANT      │                  │    (Insurer)    │                  └────────┬────────┘                           │              Transfers agreed portfolio                           │                           ↓                  ┌─────────────────┐                  │    REINSURER    │                  └─────────────────┘

In the UAE, treaty disputes can involve the Civil Transactions Law, specialised insurance legislation, contractual principles, arbitration law, procedural law, and—where applicable—DIFC or ADGM legislation.

Federal Decree-Law No. 48 of 2023 regulates insurance activities in the UAE and expressly recognises reinsurance companies.

The current Civil Transactions Law, Federal Decree-Law No. 25 of 2025, has applied since 1 June 2026 and provides the current federal private-law framework, subject to specialised legislation.

The central principle is that a treaty reinsurer's liability is determined by the treaty wording, the risks actually falling within the treaty, applicable conditions and exclusions, and the governing law—not merely by the existence of an underlying insurance loss.

2. Meaning of a Reinsurance Treaty

A reinsurance treaty is a continuing contractual arrangement under which a reinsurer agrees to accept specified categories of risks written by the insurer.

Common forms include:

1. Quota-share treaty

The reinsurer accepts a fixed percentage of each qualifying risk.

Example:

Cedant retains 40%; reinsurer receives 60%.

2. Surplus treaty

The reinsurer participates in amounts exceeding the insurer's retention.

3. Excess-of-loss treaty

The reinsurer becomes liable when losses exceed a specified attachment point.

4. Catastrophe excess-of-loss treaty

The reinsurer covers specified catastrophic accumulation losses.

5. Stop-loss treaty

The reinsurer's liability depends on aggregate loss experience over a specified period.

3. Treaty Reinsurance Versus Facultative Reinsurance

This distinction is important because a court should not automatically apply reasoning developed for an individual facultative placement to a treaty portfolio.

4. Legal Character of a Treaty

A treaty is fundamentally a contractual risk-allocation mechanism.

It normally determines:

• which risks must be ceded;
• which risks must be accepted;
• territorial limits;
• classes of business;
• exclusions;
• retention;
• limits;
• premium;
• commissions;
• claims cooperation;
• claims control;
• notification;
• accounting;
• settlement;
• inspection/audit rights;
• termination;
• dispute resolution.

Therefore:

The treaty wording is the primary source for determining the parties' rights and liabilities.

5. UAE Legal Framework

A treaty dispute may require consideration of several layers of law.

Layer 1 — UAE Civil Transactions Law

General principles concerning:

• contracts;
• interpretation;
• performance;
• breach;
• damages;
• good faith;
• compensation;
• unforeseen circumstances.

Layer 2 — Insurance Regulation

Federal insurance legislation regulates the insurance sector and reinsurance activity.

Layer 3 — Commercial Law

Commercial principles may become relevant depending on the transaction and applicable legislation.

Layer 4 — Arbitration Law

If the treaty contains an arbitration clause.

Layer 5 — DIFC/ADGM Law

Where the relevant transaction, court or arbitration framework falls within a free-zone jurisdiction.

Layer 6 — Foreign Law

Where the parties have validly selected foreign substantive law.

6. Why Treaty Disputes Are Complex

A treaty dispute can involve several questions simultaneously:

1. Was the risk within the treaty?
2. Was the cedant required to cede it?
3. Was the reinsurer required to accept it?
4. Was the risk properly classified?
5. Was the retention correctly calculated?
6. Was the claim within the treaty period?
7. Was notice properly given?
8. Was there proper disclosure?
9. Was there aggregation?
10. Did an exclusion apply?
11. Was the underlying settlement binding?
12. Does a follow-the-settlements clause apply?
13. What law governs?
14. Which tribunal has jurisdiction?
15. What amount is recoverable?

7. Case Law

Because reported UAE treaty-reinsurance jurisprudence is relatively specialised, the authorities below include DIFC reinsurance decisions involving treaty/facultative structures and broader reinsurance principles. They should not all be treated as direct authorities on every type of treaty.

8. Case 1 — Allianz Risk Transfer AG Dubai Branch v Al Ain Ahlia Insurance Company PJSC [2012] DIFC CFI 012

This is an important UAE reinsurance authority concerning jurisdiction and governing law.

The claimant was a DIFC branch of a foreign company conducting insurance/reinsurance business. The reinsurance policy had been concluded in the DIFC.

The claimant relied on:

• its DIFC establishment;
• conclusion of the reinsurance policy in the DIFC;
• payment/performance in the DIFC;
• the absence of an express governing-law clause.

The court considered the connection between the reinsurance contract and the DIFC.

Principle

The physical location of the underlying loss does not necessarily determine the governing legal system for the reinsurance contract.

Relevance to treaty disputes

A treaty may cover risks occurring in many countries while the treaty itself has a different legal connection.

Therefore:

Underlying-risk location and reinsurance-contract jurisdiction must be analysed separately.

9. Case 2 — AIG UK Ltd & Others v Qatar Insurance Co. [2023] DIFC CFI 003/2022

This is an important example of layered reinsurance arrangements.

The underlying insurance was issued to United Arab Bank.

The risks were reinsured through five separate layers, including:

• a primary layer;
• first excess layer;
• second excess layer;
• third excess layer;
• fourth excess layer.

Different reinsurers participated at different percentages in each layer.

Importance

This demonstrates the complexity of large reinsurance structures.

A dispute cannot simply ask:

“Is the loss covered?”

It may need to ask:

Which layer responds, at what attachment point, and for what percentage?

Treaty relevance

Although the particular litigation involved structured reinsurance rather than a straightforward quota-share treaty, its reasoning is highly relevant to treaty disputes involving multiple participating reinsurers and layers.

10. Case 3 — AIG UK Ltd & Others v Qatar Insurance Co. [2024] DIFC CA 008

The AIG/Qatar Insurance litigation proceeded to the DIFC Court of Appeal.

The dispute involved substantial insurance/reinsurance arrangements and questions concerning:

• coverage;
• exclusions;
• sanctions;
• contractual interpretation;
• reinsurance liability.

The case illustrates how an apparently straightforward underlying insurance loss can become a complicated dispute over the separate reinsurance contracts.

Principle

The reinsurer's liability must be analysed by reference to the reinsurance agreement rather than assuming that every liability of the primary insurer automatically passes through.

Treaty application

In a treaty context, the same reasoning applies to:

• treaty exclusions;
• aggregation;
• attachment;
• limits;
• portfolio definitions.

11. Case 4 — Al Buhaira National Insurance Company v Arab War Risks Insurance Syndicate [2024] DIFC CFI 013

This is one of the most useful UAE authorities for understanding reinsurance wording and claims handling.

Although the dispute concerned facultative marine war-risk reinsurance rather than a conventional treaty, the court considered principles directly relevant to treaty disputes.

The case involved:

• a UAE insurer;
• a reinsurer syndicate;
• marine war-risk insurance;
• multiple vessels;
• the incorporation of reinsurance terms;
• governing law;
• follow-the-settlements;
• claims costs.

The court considered whether a Placement Document formed part of the reinsurance contract. At first instance, it concluded that the Placement Document had not been incorporated into the contract.

Treaty relevance

Treaty disputes frequently involve several documents:

• treaty wording;
• slips;
• schedules;
• endorsements;
• underwriting guidelines;
• renewal documents;
• broker confirmations.

The question is:

Which document actually forms part of the contract?

12. Case 5 — Al Buhaira National Insurance Company v Arab War Risks Insurance Syndicate [2026] DIFC CA 003

The Court of Appeal materially changed the first-instance position.

It declared that the reinsurance contract contained the following substantive term:

the facultative reinsurers would follow settlements agreed between the ceding company and the insured.

The Court also declared that:

• the insurer had not breached the relevant good-faith/fair-presentation obligations;
• the reinsurer was not entitled to avoid the reinsurance contract on the basis of misrepresentation/non-disclosure;
• the claim had been notified and brought within time;
• the claim was not barred by late notification, time bar or limitation. 

Importance for treaty disputes

This case is especially useful for understanding:

incorporation + follow-the-settlements + disclosure + notification + limitation.

These issues can occur in treaty arrangements as well.

13. Case 6 — Nessim v Nader [2024] DIFC CFI 013

This is another highly relevant reinsurance authority.

The case concerned a reinsurance contract and a dispute over whether its terms were contained in:

• a Cover Note; and/or
• a later Placement Document.

The parties disagreed over:

• governing law;
• jurisdiction;
• claims costs;
• notification;
• exclusions;
• follow-the-settlements/follow-the-fortunes;
• incorporation of documents.

The insurer argued that UAE law applied and that UAE market practice supported recovery of reasonable costs incurred in defending underlying claims. The reinsurer disputed both the governing-law argument and the alleged market custom.

Principle

A court will not simply assume that a claimed market practice forms part of a treaty or reinsurance contract.

Evidence may be required to establish:

• existence of the market practice;
• consistency of the practice;
• knowledge of the parties;
• contractual intention.

Treaty relevance

This is particularly important where treaty wording is supplemented by:

• market conventions;
• broker practices;
• accounting practices;
• claims-handling practices.

14. Case 7 — Qatar General Insurance & Reinsurance Company QSPC v Emrgent Risk Solutions Ltd [2026] DIFC CFI 053/2024

This is a very recent authority involving reinsurance and retrocession brokerage.

The claimant was an insurance/reinsurance company and the defendant was a reinsurance and retrocession broker.

The broker had agreed to place retrocession coverage for reinsurance obtained by the claimant. The dispute concerned contractual obligations in that risk-transfer chain.

The court ultimately found contractual liability and awarded substantial damages.

Importance for treaty disputes

This illustrates that a dispute can arise not only between:

Cedant ↔ Reinsurer

but also between:

Reinsurer ↔ Retrocession Broker.

Thus, treaty disputes can involve the entire risk-transfer chain.

15. Case 8 — AIG/Qatar Insurance: Multi-Layer Reinsurance Structure

The AIG proceedings are particularly useful because the court record expressly identifies multiple reinsurance layers.

For example:

Different reinsurers participated at different percentages.

Lesson

A treaty or layered programme requires a precise loss allocation analysis.

The court must determine:

1. gross loss;
2. covered loss;
3. retention;
4. attachment point;
5. layer;
6. participating percentage;
7. limit;
8. recoverable amount.

16. Treaty Scope

A treaty usually defines a portfolio.

For example:

“All commercial property risks written by the cedant in the UAE.”

A dispute might arise over whether a particular risk qualifies.

The court may examine:

• class of business;
• geographical territory;
• policy period;
• insured category;
• maximum exposure;
• underwriting guidelines.

Example

If the treaty covers:

“commercial property”

but the cedant includes:

an offshore energy facility,

the reinsurer may argue that the risk falls outside the treaty.

The court then has to interpret the treaty wording.

17. Automatic Cession

Some treaties require the cedant to cede qualifying risks automatically.

This creates two potential disputes.

Cedant's argument

“The risk fell within the treaty and therefore had to be accepted.”

Reinsurer's argument

“The risk did not satisfy the treaty criteria.”

Therefore, a treaty dispute may concern whether coverage ever attached, rather than merely whether a later claim was properly handled.

18. Treaty Capacity

A treaty may impose:

• maximum capacity;
• per-risk limit;
• per-event limit;
• annual aggregate limit.

For example:

Treaty Capacity = AED 500 million Cedant retention = AED 50 million Reinsurance = AED 450 million

A dispute may arise if the cedant writes a risk exceeding the permitted capacity.

The questions become:

• Was the excess automatically covered?
• Was special acceptance required?
• Was the cedant obliged to retain the excess?
• Was the reinsurer prejudiced?

19. Treaty Premium Disputes

Treaty disputes can concern:

• premium calculations;
• deposit premium;
• adjustable premium;
• minimum premium;
• reinstatement premium;
• brokerage;
• commission;
• profit commission.

For example:

Treaty premium = percentage of ceded premium.

The reinsurer may audit the cedant's accounts and challenge:

• classification;
• premium reporting;
• excluded risks;
• currency conversion;
• policy cancellations.

20. Claims Cooperation

Treaties may require the cedant to:

• notify reinsurers;
• provide information;
• cooperate in claims;
• permit inspection;
• obtain consent before settlement above a threshold.

A dispute may arise where the cedant settles a large claim without consulting the reinsurer.

The key question becomes:

Was the consent requirement a condition of liability, a procedural obligation, or merely a claims-cooperation mechanism?

The answer depends on the wording and applicable law.

21. Follow-the-Settlements in Treaty Reinsurance

A treaty may provide that reinsurers will:

“follow the settlements of the cedant.”

This can be commercially important because the reinsurer normally does not deal directly with every original insured.

The principle may prevent the reinsurer from repeatedly reopening the underlying claim.

But it does not necessarily mean unlimited automatic liability.

Questions remain:

1. Was the loss within the treaty?
2. Was the settlement within the scope of the reinsured risk?
3. Did the cedant act honestly?
4. Did it act properly/business-like?
5. Was the settlement affected by fraud?
6. Does the treaty impose conditions?

The Al Buhaira litigation provides an important UAE illustration of the contractual importance of such wording.

22. Follow-the-Fortunes

A follow-the-fortunes clause can provide broader protection for the cedant.

It may require the reinsurer to follow the cedant's good-faith determination concerning:

• liability;
• settlement;
• allocation.

But:

A follow-the-fortunes clause should not be presumed merely because the contract is a reinsurance treaty.

It should be found in the contractual wording or otherwise established under the applicable law.

23. Aggregation of Treaty Losses

Aggregation is one of the most important treaty-dispute issues.

Suppose the cedant has:

• Loss A = AED 300 million
• Loss B = AED 200 million
• Loss C = AED 150 million

Can these be treated as one occurrence?

The answer depends upon wording such as:

• one event;
• one occurrence;
• originating cause;
• series of losses;
• catastrophe;
• hours clause.

This may determine whether the treaty's retention is exceeded.

24. Example of Aggregation

Assume:

Retention: AED 100 million

Treaty limit: AED 500 million

Three losses:

• A = AED 80m
• B = AED 70m
• C = AED 200m

If separate:

A → below retention

B → below retention

C → AED 100m potentially recoverable.

If aggregated:

AED 350m total

→ AED 100m retention

→ AED 250m reinsurance recovery.

Thus, aggregation can change the recovery dramatically.

25. Exclusions

Treaties commonly contain exclusions involving:

• war;
• terrorism;
• nuclear risks;
• cyber risks;
• sanctions;
• pollution;
• political risks;
• particular geographical areas.

The dispute may concern whether an exclusion applies to:

• the original policy;
• the ceded risk;
• the reinsurance treaty;
• a specific layer.

The AIG/Qatar Insurance litigation illustrates how exclusions and sanctions-related contractual issues can become significant in reinsurance disputes.

26. Claims Notification

Treaty wording may require notification:

“as soon as reasonably practicable”

or

“within X days”

or

“in respect of any claim likely to exceed X.”

The parties may dispute:

• when the cedant became aware;
• whether the claim was sufficiently serious;
• whether notification was adequate;
• whether late notification discharged liability;
• whether the reinsurer waived the requirement.

The Al Buhaira appellate decision is particularly useful because the Court expressly considered and rejected a late-notification/time-bar defence on the facts.

27. Good Faith and Fair Presentation

Reinsurance involves substantial information asymmetry.

The reinsurer may rely heavily on information provided by the cedant.

Potential disputes concern:

• previous claims;
• unusual risks;
• underwriting changes;
• material losses;
• regulatory investigations;
• sanctions exposure.

The Al Buhaira Court of Appeal concluded on the evidence before it that the cedant had not breached the relevant good-faith/fair-presentation obligations and that avoidance was unavailable.

Treaty implication

For a treaty, the question can become more complicated because the relationship covers a portfolio rather than one isolated risk.

28. Treaty Audit Rights

A treaty may allow the reinsurer to inspect:

• underwriting records;
• premium accounts;
• claims files;
• policy schedules;
• accounting records.

This can become crucial where the reinsurer alleges:

“The cedant improperly included risks outside the treaty.”

The cedant may respond:

“The reinsurer has no right to reopen settled accounts.”

The scope of the audit clause and contractual accounting provisions then become central.

29. Claims Control Clauses

A treaty may give reinsurers:

• claims cooperation rights;
• claims control rights;
• consent rights;
• settlement approval rights.

These provisions should be distinguished.

Claims cooperation

Cedant must inform and cooperate.

Claims control

Reinsurer may exercise greater control over defence/settlement.

Consent

Certain settlements require prior approval.

The legal consequence of non-compliance depends on the precise wording.

30. Governing Law

Treaty contracts frequently involve parties from several countries.

For example:

• UAE cedant;
• Bahrain reinsurer;
• London broker;
• English-language treaty;
• UAE risks;
• arbitration in DIFC.

The question becomes:

Which law governs?

The Al Buhaira litigation demonstrates that the existence of English-law Institute Clauses and an underlying policy governed by English law does not necessarily eliminate the need to examine whether the parties actually selected English law for the reinsurance contract.

31. Jurisdiction Versus Governing Law

These must be kept separate.

Governing law

Which substantive legal rules apply?

Jurisdiction

Which court decides the dispute?

Arbitration seat

Where is the arbitration legally seated?

Enforcement

Where will the award/judgment be executed?

Nessim is useful here because the parties disputed the effect of a clause stating:

“JURISDICTION: UNITED ARAB EMIRATES”

The court record demonstrates why such language may not automatically answer the separate question of substantive governing law.

32. Arbitration of Treaty Disputes

Large treaty programmes often contain arbitration clauses.

A good clause should identify:

• arbitration institution;
• seat;
• number of arbitrators;
• appointment procedure;
• language;
• governing law;
• confidentiality;
• emergency relief;
• consolidation;
• joinder.

Ambiguous drafting can itself generate jurisdictional litigation.

33. Broker Disputes

A treaty may have been negotiated through a broker.

The broker may have obligations relating to:

• presentation;
• placement;
• confirmation;
• premium;
• claims notification;
• documentation.

If the broker fails to place the treaty properly, a separate civil claim may arise.

The Qatar General Insurance & Reinsurance v Emrgent Risk Solutions case illustrates the importance of broker liability within the reinsurance/retrocession chain.

34. Treaty Accounting Disputes

A treaty may require periodic accounts.

Disputes can concern:

• premiums;
• commissions;
• claims;
• recoveries;
• reserves;
• outstanding losses;
• currency;
• interest.

A simple accounting dispute can therefore become a substantial contractual claim.

35. Currency and Large-Risk Claims

International treaties may involve:

• AED;
• USD;
• EUR;
• GBP;
• other currencies.

The parties may disagree over:

• exchange-rate date;
• conversion methodology;
• currency of settlement;
• interest;
• currency fluctuation.

These issues become especially important when claims remain unresolved for years.

36. Retrocession and Treaty Chains

The structure may extend further:

Original Insured       ↓ Primary Insurer       ↓ Treaty Reinsurer       ↓ Retrocessionaire       ↓ Retrocession Broker

A dispute at one level does not necessarily create automatic liability at another.

Each contract must be separately analysed.

37. Civil-Law Remedies

Depending upon the applicable law and facts, remedies can include:

• payment;
• damages;
• restitution;
• declaratory relief;
• specific performance;
• interest;
• costs;
• injunctions;
• contractual compensation.

But a court must identify the legal basis for each remedy.

38. Large Treaty Dispute — Practical Example

Assume:

UAE insurer: Cedant

Treaty: 60% quota share

Reinsurer: Foreign company

Annual treaty limit: AED 1 billion

The cedant writes:

AED 800 million of qualifying business.

A major claim of:

AED 400 million

arises.

The cedant claims:

60% × AED 400m = AED 240m.

The reinsurer argues:

1. the risk was outside treaty class;
2. notification was late;
3. aggregation clause applies;
4. an exclusion applies;
5. the cedant failed to disclose material information.

The court must then analyse:

Treaty scope → coverage → conditions → exclusion → notification → quantum → governing law → jurisdiction.

39. Treaty Dispute Decision Tree

Was the risk within the treaty?          │        YES          ↓ Was the risk properly ceded?          │        YES          ↓ Did a covered loss occur?          │        YES          ↓ Is the loss within the attachment point?          │        YES          ↓ Does an exclusion apply?          │       NO          ↓ Was notification compliant?          │        YES          ↓ Does follow-the-settlements apply?          │        YES/NO          ↓ Calculate treaty recovery          │          ↓ Apply governing law          │          ↓ Determine jurisdiction/remedy

40. Current UAE Law and Historical Cases

A significant caution is necessary.

Many leading UAE reinsurance decisions were decided under:

• the former Civil Transactions Law;
• earlier commercial legislation;
• earlier DIFC legislation.

Since Federal Decree-Law No. 25 of 2025 became effective on 1 June 2026, practitioners should not mechanically transfer every proposition from an older case into the current statutory framework.

The correct approach is:

Current statute first → contract second → applicable precedent third → historical case law as interpretive guidance.

41. Six Core Cases for Examination

These are predominantly DIFC authorities. DIFC judgments should not be presented as automatically binding precedents for onshore UAE Courts. Their value here is especially strong for sophisticated UAE-linked international reinsurance disputes.

42. Key Legal Principles

Principle 1

Treaty reinsurance is a continuing contractual risk-allocation arrangement.

Principle 2

The treaty wording is the primary source of rights and obligations.

Principle 3

The underlying insurance contract and reinsurance treaty are separate contracts.

Principle 4

A loss under the original policy does not automatically establish the reinsurer's liability.

Principle 5

Treaty scope and automatic cession must be determined from the treaty.

Principle 6

Attachment points, limits and aggregation provisions can determine the amount recoverable.

Principle 7

Follow-the-settlements clauses can substantially affect the reinsurer's ability to challenge an underlying settlement.

Principle 8

The clause must actually form part of the reinsurance contract.

Principle 9

Notification, disclosure and claims-cooperation requirements can become major defences.

Principle 10

Governing law, jurisdiction, arbitration seat and enforcement are separate questions.

43. Important Distinction: Treaty Versus Individual Risk

An exam answer should clearly state:

Facultative reinsurance asks primarily whether a particular identified risk was reinsured; treaty reinsurance asks whether a category or portfolio of risks falls within the agreed treaty framework.

Therefore, treaty disputes commonly focus on:

• portfolio definition;
• automatic cession;
• treaty capacity;
• underwriting guidelines;
• aggregate limits;
• accounting;
• premium;
• claims cooperation;
• treaty period.

44. One-Minute Revision

Remember:

TREATY → SCOPE → CESSION → LOSS → CONDITIONS → RECOVERY

T — Treaty

What does the treaty actually provide?

S — Scope

Does the risk fall within the defined portfolio?

C — Cession

Was it properly ceded and accepted?

L — Loss

Is there a covered loss?

C — Conditions

Were notification, disclosure and claims obligations satisfied?

R — Recovery

What amount is recoverable after retention, aggregation, exclusions and limits?

Core formula

Treaty Reinsurance Recovery = Covered Treaty Loss − Retention ± Aggregation/Allocation − Valid Exclusions, subject to Treaty Limits and Conditions.

The Al Buhaira [2026] DIFC CA 003 decision is particularly useful for revision because it demonstrates how contractual incorporation, follow-the-settlements, fair presentation, notification and limitation can collectively determine a major reinsurance dispute.

And the AIG/Qatar Insurance proceedings are useful for understanding how large UAE-linked reinsurance programmes can involve multiple layers, participating reinsurers and separate contractual questions at each layer.