Reinsurance is one of the black arts. Before one can get to grips with the complex and difficult questions of law which arise in reinsurance disputes, it is necessary first of all to penetrate the jargon and curious practices of the reinsurance market. Any lawyer coming to the subject for the first time will probably not find the brief outline of reinsurance practice at the start of this book sufficient to understand precisely what it is that the parties to a particular reinsurance transaction are seeking to achieve. Frequently, the parties themselves are less than clear as to what their rights and obligations are. While in the past the gentlemen in the market have been quite happy to settle their own disputes, their increasing resort to litigation has meant that, over the last dozen or so years, commercial judges have been struggling to make legal sense of the reinsurance market. A casual glance through the last few volumes of Lloyd’s Law Reports will reveal the proliferation of reinsurance case law. Thus, the appearance of a substantial book devoted to a detailed analysis of reinsurance law, written by two authors with considerable experience in the field, is both timely and welcome. I have already indicated that this is not really a book for the uninitiated. Practitioners will read it with interest and find the discussions and summaries of recent case law helpful. However, they may not always agree with the authors’ conclusions nor will they find all the answers to problems not covered by decided authority!

The first major legal puzzle which the book considers is precisely what is a contract of reinsurance. Not surprisingly, the courts have not yet fully grasped the conceptual problems involved in treaty, as opposed to facultative, reinsurance. Parliamentary draughtsmen, in laying down rules for the regulation of insurance business in the Insurance Companies Acts 1974–1982, have not focused their minds on the question either. The authors’ discussion of the whole problem of illegality (the saga in Bedford Ins. Co. Ltd. v. Instituto de Ressaguros do Brasil [1985] 1 Q.B. 966, Stewart v. Oriental Fire & M.I. Co. Ltd. [1985] 1 Q.B. 988 and Phoenix Gen. Ins. Co. of Greece S.A. v. A.D.A.S. [1988] Q.B. 216 and the status of reinsurance under the relevant Acts) is most illuminating. It should be noted that, to the immense frustration of the insurance industry, the parties in Phoenix v. A.D.A.S. have settled their dispute at the doors of the House of Lords. I would, however, respectfully take issue with the statement that “section 132 of the Financial Services Act 1986 … in effect