In Great Lakes Insurance v. Raiders Retreat Realty, decided on February 21, 2024, the Court ruled that a “choice-of-law” provision in a “maritime” contract is “presumptively” enforceable as a matter of federal law. By “presumptively,” the Court acknowledged that the general rule has some exceptions, but the Court made it clear that those exceptions could not be based on the law or public policy of any one state. That was due to the fact that one of the purposes of the “Maritime Jurisdiction Clause” of Article III, Section 2 of the United States Constitution was to assure the uniformity of “maritime law” throughout the United States. The decision and the rationale for the ruling were unanimous.
COMMENT: The justice of this rulingis illustrated by the facts of the case. A boat owned by a Pennsylvania company ran aground near the coast of Florida. The owner had insured the boat through an insurance company based entirely in Europe. The insurance policy required the application of New York law to any insurance disputes. New York law allows insurers to deny coverage on the basis of the insured’s breach of the insurance contract, even when the breach did not cause any tangible loss to either party. Pennsylvania public policy does not. Regardless of the fairness of either of those rules, allowing the Pennsylvania rule to prevail would upset the uniformity of the law federal courts are required to apply to “maritime” contracts. The rule favoring the parties’ choice of law in a “maritime” contract enhances that uniformity. (A “maritime” contract is a contract concerned with a commercial vessel traversing the high seas or any navigable tributary thereto. The parties to this case agreed that the insurance policy at issue was a “maritime” contract.)
Dan Rhea
RECENT RULINGS 