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In the recent case of Great Lakes Insurance v. Raiders Retreat Realty, the Supreme Court, in a unanimous decision led by Justice Brett Kavanaugh, underscored the imperative for robust enforcement of choice-of-law clauses in maritime insurance contracts. The case revolved around a dispute where a European insurance company, insuring a yacht owned by a Pennsylvania company, stipulated New York law in the contract. Raiders Retreat Realty contested this, preferring Pennsylvania law, which would have exposed the insurer to certain tort actions. Kavanaugh’s opinion, rooted in constitutional principles governing federal maritime law, emphasized the need for predictability in enforcing such clauses to foster maritime commerce.

Kavanaugh highlighted the existing federal maritime rule endorsing the enforceability of choice-of-law provisions, drawing from legal precedents like The Bremen v. Zapata Off-Shore Co. and Carnival Cruise Lines v. Shute. He dismissed the precedential weight of Wilburn Boat Co. v. Fireman’s Insurance Co., asserting its irrelevance to choice-of-law provisions. Kavanaugh stressed the narrow exceptions to enforcement, only applying when the chosen law contradicts federal statutes or established maritime policies, or when no reasonable basis supports the jurisdiction’s selection.

The opinion concluded by affirming New York law, even without direct ties to the parties or the contract’s performance, citing its well-established commercial laws. Kavanaugh rebuffed arguments for additional exceptions based on conflicting state public policies, prioritizing uniformity and stability in maritime contracts.

#MaritimeInsurance #LegalContracts #ChoiceOfLaw #SupremeCourt #CommercialLaw #LegalRulings

Source: https://www.scotusblog.com/2024/02/justices-order-vigorous-enforcement-of-choice-of-law-clauses-in-maritime-insurance-contracts/