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Indicted former FIFA official wins defense costs in D&O case

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A former FIFA official under criminal indictment in New York is entitled to defense costs from Lloyd’s of London underwriters and an Axis Capital Holdings Ltd. unit under the soccer organization’s directors and officers liability coverage, says a U.S. District Court.

Eduardo Li, a Costa Rica citizen who has held several positions within the international soccer organization, is one of 14 defendants charged with participating in an international racketeering conspiracy and related crimes, according to the ruling Wednesday by the U.S. District Court in Brooklyn in Eduardo Li v. Certain Underwriters at Lloyd’s Lon, Axis Specialty Europe SE. Mr. Li was arrested in Switzerland in May 2015 and subsequently extradited to the United States.

The insurers sold FIFA a D&O liability policy that provided for “worldwide coverage” for defense costs, according to the ruling.

In response to his request for coverage, the insurers in August 2015 denied any obligation to pay Mr. Liu’s defense costs, stating the principal charge against him was racketeering conspiracy under the Racketeer Influenced and Corrupt Organization Act and that the policy contains a RICO exclusion.

The ruling notes that another policy with a $3 million limit issued by Chubb Ltd. unit Federal Insurance Co. has been exhausted.

Mr. Li sued the insurers in state court in Brooklyn in September 2015 seeking to enforce the policy, and the case was moved to the federal court, according to the ruling.

“Li has made a clear showing that the insurers are required to pay the legal costs of his defense, investigation and extradition,” said the ruling by Judge Raymond J. Dearie.

“It is equally clear that the insurers have an obligation to pay Li’s legal costs at the time they are incurred and on an ongoing basis,” said the ruling, which states the insurers have “abandoned their initial and meritless ground for denial of coverage” on the basis of the policy’s “RICO exclusion.”

Judge Dearie also denied the insurers’ contention the case should be dismissed because Switzerland was the appropriate jurisdiction.

“Li chose to use a court within the district for legitimate reasons,” said the ruling. “Accordingly, I find that Li’s choice to bring suit in this district was legitimate and otherwise appropriate and is therefore entitled to deference.”

The ruling orders the insurers “to immediately reimburse and advance to Li his legal costs incurred in connection with his indictment extradition and defense.”

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