Wednesday, May 22, 2024

NEW ENGLAND LEGAL FOUNDATION

NEW ENGLAND LEGAL FOUNDATION PRAISES UNANIMOUS U.S. SUPREME COURT RULING UPHOLDING CHOICE-OF-LAW CLAUSES IN MARINE INSURANCE POLICIES, TO REDUCE INSURANCE COSTS AND ENSURE PREDICATIBILITY UNDER FEDERAL MARITIME LAW

BOSTON – The pro-business New England Legal Foundation (NELF – www.newglandlegal.org) today praised the unanimous U.S. Supreme Court decision in Great Lakes Insurance v. Raiders Retreat Realty Co. LLC, which NELF believes will lead to the uniform enforcement of pre-dispute, choice-of-law clauses in marine insurance policies across the nation.  The unanimous decision allows parties to select in advance which state law will govern their contract performance, costs, risk assessments, and any future disputes. 

NELF, which filed an amicus brief in the case urging this exact result, stated that the decision should allow greater predictability for insurance companies in assessing risks and setting premiums, which in turn can result in cost savings to insured businesses by more closely matching insurance costs to actual risks.

The case arose when a maritime insurance contract specified that New York law should govern the insurance policy, and that choice of law clause was disregarded by a judge who applied more liberal Pennsylvania law to govern the dispute instead. NELF argued for uniformity of federal maritime law in upholding choice-of-law clauses, rather than allowing a federal court to choose another state to impose its policies without regard to the parties’ choice of law.

“The presumption that choice of law provisions in business contracts are valid and must be honored by judges is a huge win for the freedom of contract in the United States,” noted NELF President Dan Winslow. Winslow predicted that the decision will have a ripple effect of greater predictability, lower risk and reduced costs for business in the maritime industry.”

The NELF amicus brief was authored by Senior Staff Attorney Ben Robbins. Robbins stated that “we are thrilled that much of the Court’s opinion closely reflects the points NELF made in its amicus brief to overcome legal stumbling blocks to this outcome.”