Honorable-Engagement Clause Law and Legal Definition

Honorable engagement clause is an arbitration provision in a reinsurance contract which allows the arbitrators to view the reinsurance arrangement reasonably in accordance with the agreement's general purposes rather than strictly according to the rules of law or an overly technical interpretation of contract language.

The following is an example of a caselaw on the clause:

Courts have read honorable engagement clauses generously, consistently finding that arbitrators have wide discretion to order remedies they deem appropriate. No court has held that an honorable engagement clause gives arbitrators authority to re-write the contract they are charged with interpreting. Rather, courts have held just the opposite. For instance, the United States Court of Appeals for the Second Circuit has noted that where an arbitration clause is broad, arbitrators have the discretion to order remedies they determine appropriate, but only so long as they do not exceed the power granted to them by the contract itself. The principal question for the reviewing court is whether the arbitrator's award draws its essence from the parties' agreement, since the arbitrator is not free merely to dispense his own brand of justice. Even where the arbitrator's authority is broad, it is not unlimited. [PMA Capital Ins. Co. v. Platinum Underwriters Berm., LTD., 659 F. Supp. 2d 631 (E.D. Pa. 2009)]