Great Lakes Ins. SE v. Raiders Retreat Realty Co.
The Supreme Court unanimously ruled that when two parties to a maritime contract agree in advance on which state's law will govern their disputes, that agreement is presumptively enforceable under federal maritime law — and a state's competing insurance policy cannot override it.
The decision resolves a split among federal appeals courts, giving shipping companies and marine insurers greater certainty that the governing-law clauses they negotiate will be honored, and keeping maritime commerce under a uniform national legal framework.
“A federal presumption of enforceability would not be much of a presumption if it could be routinely swept aside based on 50 States' public policy determinations.”
The majority explains why allowing state public policy to override choice-of-law clauses would defeat the whole point of those clauses.
How it got here: The federal district court enforced the New York choice-of-law clause; the Third Circuit vacated and remanded, holding Pennsylvania's public policy could override it; the Supreme Court granted certiorari to resolve a circuit split.
The Case in Depth
What happened
Raiders Retreat Realty, a Pennsylvania boat-rental company, purchased a marine insurance policy from Great Lakes Insurance, a company organized in Germany and headquartered in the United Kingdom. Their contract included a clause designating New York law to govern any future disputes. When Raiders' boat ran aground near Fort Lauderdale, Florida, Great Lakes denied coverage, claiming Raiders had breached the policy by failing to maintain the boat's fire-suppression system. Raiders fought back by invoking Pennsylvania's more favorable insurance rules instead of the agreed-upon New York law.
The question before the Court
Can a maritime insurance contract's clause picking which state's law governs future disputes be overridden because the state where a lawsuit is filed has a strong public policy favoring its own insurance rules?
The Court's answer
Yes — choice-of-law provisions in maritime contracts are presumptively enforceable under federal maritime law, and that presumption applied here. The Pennsylvania boat owner and its insurer agreed at the outset that New York law would govern any disputes. When the boat ran aground and the insurer denied coverage, the boat owner wanted to invoke Pennsylvania's insurance rules instead — but the Court ruled the contractual choice of New York law must be honored.
The Court rejected the argument that Pennsylvania's public policy on insurance should override the parties' contractual agreement. Allowing any state's public policy to trump a choice-of-law clause would undermine the very purpose of such clauses — providing stable, predictable rules — and would inject the kind of state-by-state variation that federal maritime law is designed to prevent. None of the recognized narrow exceptions to enforceability (such as a conflict with federal law or a completely unreasonable choice of jurisdiction) applied, and the Court declined to create a new state-public-policy exception.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Businesses and insurers involved in maritime commerce can rely on the governing-law clause they negotiated at the start of a contract, rather than facing a court substituting whatever state's law that state prefers. This reduces legal uncertainty and litigation costs for the marine insurance industry and may help stabilize insurance pricing for boat owners and shipping companies operating across state and international lines.
What changes now
The Third Circuit's judgment is reversed, reinstating the federal district court's original ruling that New York law governs the dispute. Raiders' coverage claim will be evaluated under New York contract law. For the maritime industry broadly, the decision settles a split among federal appeals courts and gives parties across the country firm assurance that governing-law clauses in maritime contracts will be enforced, subject only to narrow exceptions tied to federal law and reasonableness.
What this does not decide
The Court did not overrule Wilburn Boat or specify exactly what remains of that decision's holding. Justice Thomas's concurrence argues it was wrongly decided, but the majority left that question for another day. The Court also did not decide the merits of Raiders' underlying coverage claim — only which state's law applies to resolve it.
Concurrences and dissents
Concurrence — Justice Thomas
Justice Thomas joined the majority in full but wrote separately to argue that Wilburn Boat (1955) was wrongly decided from the start. He contends it incorrectly found no established federal admiralty rule on warranty breaches, ignored the Constitution's uniformity mandate entirely, and relied on a faulty analogy to general state insurance regulation. He traces how later decisions have quietly narrowed Wilburn Boat to only 'inherently local' disputes, argues its broader rationale is indefensible, and warns courts and litigants not to apply it beyond that narrow scope.
How the Court got there
The legal reasoning, step by step
- The Constitution grants federal courts authority over 'all Cases of admiralty and maritime Jurisdiction,' and the Court has long read this to require a single, uniform system of maritime law across the country. Federal courts make that law themselves — acting like common-law courts — drawing on prior decisions, treatises, and other sources. The first question was whether an 'established' federal maritime rule already covered the enforceability of choice-of-law clauses.
- The Court found that such an established rule existed. Multiple federal appeals courts had consistently held that choice-of-law clauses in maritime contracts are presumptively enforceable, and the Supreme Court's own older cases had routinely honored such clauses without question. Because the rule was already settled, no gap existed for state law to fill.
- The Court reinforced this conclusion by analogy to its prior rulings on forum-selection clauses — provisions that designate where a dispute must be litigated. In The Bremen (1972) and Carnival Cruise (1991), the Court declared forum-selection clauses in maritime contracts 'prima facie valid' under federal maritime law. Choice-of-law clauses serve the same function — reducing confusion and pre-dispute costs — so the same presumption of enforceability applies, especially since courts have historically been even more skeptical of forum-selection clauses than choice-of-law clauses.
- The boat owner argued that the Court's 1955 decision in Wilburn Boat Co. v. Fireman's Fund Insurance Co. required courts to apply state law in marine insurance disputes. The Court rejected this reading. Wilburn Boat involved a warranty coverage question where no federal maritime rule existed, so state law filled the gap. Here, because an established federal rule already governs choice-of-law clauses, there is no gap to fill, and Wilburn Boat does not control.
- The Court refused to create a new exception allowing state public policy to override a contractually chosen law. Fifty different states could each invoke their own public policy to substitute their preferred law, destroying the uniformity and predictability that choice-of-law clauses are designed to deliver. Federal maritime law offers no reason to prefer one state's law over another — substituting Pennsylvania law for New York law serves no federal maritime interest. The Court similarly declined to adopt the comparable exception from the Second Restatement of Conflict of Laws, which was designed for interstate disputes and does not fit the federal-maritime-law context.
Doctrinal impact
Cases affected by this decision
Distinguishes Wilburn Boat Co. v. Fireman's Fund Ins. Co. (348 U.S. 310)
That case involved a warranty gap with no federal rule; here an established federal rule exists, so Wilburn Boat does not control.
Reaffirms The Bremen v. Zapata Off-Shore Co. (407 U.S. 1)
Reaffirmed as authority that maritime contract clauses choosing forum or governing law are presumptively enforceable under federal law.
Reaffirms Carnival Cruise Lines, Inc. v. Shute (499 U.S. 585)
Reaffirmed as support for enforcing contractual dispute-resolution clauses in maritime contracts to reduce litigation costs.