Great Lakes Insurance SE v. Raiders Retreat Realty Co., LLC, No. 22-500

The Supreme Court case recently opined on a case called Great Lakes Insurance SE v. Raiders Retreat Realty Co. This case was decided on February 21, 2024.

In the ruling, the Supreme Court made it clear that when it comes to maritime contracts, the choice-of-law provisions are generally enforceable under federal maritime law. This means that if two parties agree on which laws will govern their contract, that agreement is usually respected. The Court did note that there are some narrow exceptions, but those didn’t apply in this case.

The Supreme Court reversed a previous decision made by the Third Circuit Court of Appeals, which had suggested that these provisions should give way to state public policy. Justice Brett Kavanaugh wrote the majority opinion, and he was joined by six other justices, including Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito, Sonia Sotomayor, Elena Kagan, Neil Gorsuch, and Amy Coney Barrett.

This ruling reinforces the idea that parties involved in maritime contracts can rely on their agreements about which laws will apply, providing more certainty in these types of legal matters.

Summary of the Case

The case of Great Lakes Insurance SE v. Raiders Retreat Realty Co., LLC arose from a maritime insurance contract dispute. Great Lakes Insurance, a company based in Germany and the UK, and Raiders Retreat Realty, a Pennsylvania-based business, had a contract that specified New York law would govern any disputes. After Raiders' boat ran aground in Florida, Great Lakes denied coverage, claiming a breach of contract due to the boat's maintenance issues. Great Lakes filed a declaratory judgment action in the U.S. District Court for the Eastern District of Pennsylvania, which upheld the choice-of-law provision favoring New York law. However, the Third Circuit Court of Appeals reversed this decision, asserting that while choice-of-law provisions are generally enforceable, they must yield to strong public policy considerations of the state where the suit is brought—in this case, Pennsylvania.

Opinion of the Court

The Supreme Court held that choice-of-law provisions in maritime contracts are presumptively enforceable under federal maritime law, with limited exceptions that did not apply in this case. The Court emphasized the need for a uniform system of maritime law to promote navigation, commerce, and diplomatic relations, as outlined in Article III of the Constitution. The Court noted that longstanding precedent supports the enforceability of choice-of-law provisions, akin to forum-selection clauses, which are also presumed valid unless unreasonable. The Court rejected the Third Circuit's approach, which suggested that public policy could override the choice-of-law provision, arguing that such a standard would undermine the predictability and uniformity essential to maritime commerce. The Court ultimately reversed the Third Circuit's decision, affirming that New York law should apply as per the contract.

Separate Opinions

Justice Thomas filed a concurring opinion, agreeing with the Court's conclusion that federal maritime law governs the enforceability of choice-of-law provisions. He emphasized that the precedent set by Wilburn Boat Co. v. Fireman's Fund Insurance Co. was flawed and should not be applied broadly to maritime insurance disputes. Thomas highlighted the importance of maintaining a uniform body of maritime law, which Wilburn Boat had undermined.

Dissenting Opinions

There were no dissenting opinions in this case; the decision was unanimous.

Affected Doctrine

The ruling underscores the principle that federal maritime law governs the enforceability of choice-of-law provisions in maritime contracts, promoting uniformity across jurisdictions. The Court's decision clarifies that while states have traditionally regulated insurance, this does not extend to overriding the parties' contractual agreements regarding applicable law. The Court rejected the notion that public policy considerations of the state where a suit is brought could invalidate a choice-of-law provision, emphasizing that such an approach would lead to disuniformity and uncertainty in maritime commerce. This ruling reinforces the importance of predictability in maritime contracts, allowing parties to clearly identify the governing law in advance, which is crucial for risk assessment and operational planning in the maritime industry.