February 21, 2024

Supreme Court Decides Great Lakes Insurance SE v. Raiders Retreat Realty Co., LLC

On February 21, 2024, the U.S. Supreme Court decided Great Lakes Insurance SE v. Raiders Retreat Realty Co., LLC, No. 22-500. The Court held that choice-of-law provisions in maritime contracts are presumptively enforceable under federal maritime law with narrow exceptions that were not applicable in the case before it.

Raiders Retreat Realty, a Pennsylvania business, purchased a boat-insurance 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 selected New York law to govern future disputes between the parties. After the boat ran aground in Florida, Great Lakes denied Raiders’ claim for coverage. 

In the parties’ ensuing dispute, which was venued in the Eastern District of Pennsylvania, Raiders asserted contract claims under Pennsylvania law. Great Lakes countered that Pennsylvania law did not apply, pointing to the choice-of-law provision. The District Court agreed with Great Lakes, and the Third Circuit vacated and remanded, holding that although choice-of-law provisions in maritime contracts are presumptively enforceable as a matter of federal law, such provisions must yield to a strong public policy of the State in which suit is brought — here, Pennsylvania.

The Supreme Court reversed, holding that there was an established federal maritime rule that choice-of-law provisions were presumptively enforceable and that that presumption was subject to only narrow exceptions, none of which applied to the case before it. The Court declined to create a new exception for cases where there was a conflict between the law of the forum state and the law of the state designated by the contract, finding no historical basis for such an exception and concluding that it would significantly undermine the predictability and uniformity that maritime law seeks to afford. The court also declined to adopt a rule that state law should apply in marine insurance cases, concluding that nothing in the Court’s prior cases supported such an exception. 

Justice Kavanaugh delivered the opinion for a unanimous Court. Justice Thomas filed a concurring opinion.

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