Christopher J. DiCicco

The Supreme Court of the United States recently granted certiorari to decide whether, under federal admiralty law, “a choice of law clause in a maritime contract can be rendered unenforceable if enforcement is contrary to the ‘strong public policy’ of the state whose law is displaced.” The underlying claim involved damage to a vessel that ran aground, which resulted in the vessel owner filing a coverage claim under its marine insurance policy. The insurer denied coverage and subsequently filed a declaratory judgment action seeking to rescind the policy. The vessel owner then filed multiple counterclaims, including extra-contractual claims under Pennsylvania law. The insurer subsequently moved for judgment on the pleadings on the Pennsylvania law counterclaims, arguing that the policy’s choice of law provision required the application of New York law, precluding those counterclaims. The United States District Court for the Eastern District of Pennsylvania ruled in favor of the insurer, and the vessel owner appealed to the Third Circuit Court of Appeals. The Third Circuit reversed and remanded, finding that a choice of law provision is unenforceable if it “would contravene a strong public policy of the forum in which suit is brought.” The Third Circuit instructed the District Court to consider whether Pennsylvania “has a strong public policy that would be thwarted by applying New York law.” In turn, the insurer filed a petition for writ of certiorari, which the Supreme Court granted, limited to the above-referenced question. The Supreme Court’s decision on this issue may have wide-ranging implications on contract cases going forward, particularly those involving choice-of-law provisions. 

_{Case Law Alerts, 2nd Quarter, April 2023 is prepared by Marshall Dennehey to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2023 Marshall Dennehey, all rights reserved. This article may not be reprinted without the express written permission of our firm.}