Issue:
The case involved whether Infrassure Ltd., a retrocessionaire, was bound by a "Follow Settlements Clause" in its contract with VIG to reimburse VIG for its share of a $140 million settlement paid under a primary insurance policy.

Background:
In 2011, an incident at Vale Canada’s smelter led to a major business interruption claim. Zurich, the primary insurer, settled the claim for $140 million. VIG, a reinsurer, indemnified Zurich for its portion and sought reimbursement from Infrassure under the Retrocession Agreement. Infrassure refused, disputing its obligation under the Follow Settlements Clause.

Decision:
The trial court ruled in favor of VIG, holding that the Follow Settlements Clause unambiguously required Infrassure to follow Zurich’s settlement unless expressly limited by the Retrocession Agreement, which it was not.

Appeal Findings:

1. Contractual Obligation: The Follow Settlements Clause was binding, and no “express term providing otherwise” in the Retrocession Agreement limited Infrassure’s obligations.
2. Proper Conduct: Zurich took proper and businesslike steps in settling the claim, including thorough investigations and expert consultations.
3. Coverage: The settlement was “arguably” within the primary policy’s terms, meeting the standard for reinsurance.
4. Loss Adjustment Costs: VIG’s claim for reimbursement of loss adjustment fees was valid.

Conclusion:
The Ontario Court of Appeal dismissed the appeal, affirming that Infrassure was liable for $8.97 million, plus costs of $150,000 to VIG.