Skip to main content

CONFLICT OF LAW-CHOICE OF LAW-MARITIME CONTRACTS

Great Lakes Ins. SE v. Raiders Retreat Realty Co., LLC, 217 L. Ed. 2d 401 (February 21, 2024) (Cavanaugh, J.)

Maritime contracts often contain choice-of-law provisions that designate the law of a particular jurisdiction to control future disputes. The enforceability of those choice-of-law provisions is governed by federal maritime law. Applying federal maritime law in this case, we conclude that choice-of-law provisions in maritime contracts are presumptively enforceable, with certain narrow exceptions not applicable here.

To insure its boat, Raiders Retreat Realty, a Pennsylvania business, purchased a policy from Great Lakes Insurance, a company organized in Germany and headquartered in the United Kingdom. The insurance contract included a choice-of-law provision that, as relevant here, selected New York law to govern future disputes between the parties.

Years later, Raiders’ boat ran aground near Fort Lauderdale, Florida. After Raiders submitted an insurance claim, Great Lakes denied coverage. Great Lakes asserted that Raiders breached the insurance contract by failing to maintain the boat’s fire-suppression system. According to Great Lakes, the breach voided the insurance contract in its entirety, even though the boat’s fire-suppression system did not contribute to the accident.

Great Lakes sued Raiders for declaratory relief in the U. S. District Court for the Eastern District of Pennsylvania. Great Lakes alleged that Raiders breached the insurance contract and that the breach allowed Great Lakes to deny insurance coverage.

In response, Raiders advanced contract claims under Pennsylvania law. Great Lakes countered that Pennsylvania law did not apply to this dispute; rather, New York law applied under the choice-of-law provision in the parties’ insurance contract.

The District Court agreed with Great Lakes. The court reasoned that federal maritime law regards choice-of-law provisions as presumptively valid and enforceable. 521 F. Supp. 3d 580, 585-586 (ED Pa. 2021). The court therefore enforced the parties’ choice-of-law provision and rejected Raiders’ Pennsylvania-law contract claims. Id., at 588-589.

The U. S. Court of Appeals for the Third Circuit vacated that judgment. 47 F. 4th 225 (2022). The Court of Appeals held that choice-of-law provisions in maritime contracts are presumptively enforceable as a matter of federal maritime law, but nonetheless must yield to a strong public policy of the State in which suit is brought—here, Pennsylvania’s public policy regarding insurance. Id., at 230, 233. The court remanded for the District Court to consider whether applying New York contract law here would violate Pennsylvania’s public policy and whether Pennsylvania law therefore should apply. Id., at 233.

This Court granted certiorari to resolve a split in the Courts of Appeals regarding the enforceability of choice-of-law provisions in maritime contracts. See 598 U. S. ___, 143 S. Ct. 999, 215 L. Ed. 2d 137 (2023). Compare Great Lakes Ins. SE v. Raiders [*407] Retreat Realty Co., LLC, 47 F. 4th, at 233, with Galilea, LLC v. AGCS Marine Ins. Co., 879 F. 3d 1052, 1060 (CA9 2018); Stoot v. Fluor Drilling Servs., Inc., 851 F. 2d 1514, 1517 (CA5 1988).