Great Lakes Ins. SE v. Raiders Retreat Realty Co.

Background

Great Lakes Insurance is a company organized in Germany and based in the United Kingdom. Raiders Retreat Realty is a Pennsylvania business that bought a policy for a boat. After the boat ran aground in Florida, Great Lakes denied coverage and sued in federal court in Pennsylvania. Their insurance contract named New York law to govern disputes. The District Court enforced that clause; the Third Circuit disagreed and sent the case back for more analysis. The Supreme Court reviewed and resolved a split among appeals courts.

Reasoning

The Court considered whether federal maritime law governs choice-of-law clauses in maritime contracts. It held that these clauses are presumptively enforceable under federal maritime law, subject to narrow exceptions like conflict with a federal statute, an established federal maritime rule, or no reasonable basis for the parties’ choice. The Court rejected a new exception allowing the law of the forum State’s public policy to override the parties’ agreement. As a result, the parties’ choice of New York law controls here.

Real world impact

Maritime businesses, insurers, and owners will generally be able to rely on the law they pick in their contracts, reducing surprise litigation and uncertainty. That predictability can lower insurance costs, discourage forum shopping, and help commercial planning. This decision resolves a disagreement among federal appeals courts and directs lower courts to apply federal maritime law to these clauses.

Dissents or concurrances

Justice Thomas wrote a separate opinion agreeing with the outcome but urging that Wilburn Boat’s limits be strictly recognized and criticizing its reasoning.