Effect of Parties’ Choice of Law in Admiralty Actions

The general rule of federal civil procedure permits a claimant whose claim is cognizable under either law or admiralty to choose to identify the claim as an admiralty claim to obtain certain procedural benefits.  However, it does not authorize the plaintiff to choose the substantive law applicable to the claim.[i]  If admiralty jurisdiction applies, the court must apply federal common law to a choice of law determination.  Generally, where the parties specify in their contractual agreement which law will apply, admiralty courts will give effect to that choice.[ii]  In admiralty, to govern contractual rights and duties, the law of state chosen by parties will be applied, if parties could not have resolved a particular issue by explicit provision in agreement directed to that issue, unless either:

  • chosen state has no substantial relationship to parties or transaction;
  • there is no other reasonable basis for parties’ choice; or
  • application of law of chosen state would be contrary to fundamental policy of state which has materially greater interest than chosen state in determination of particular issue and which would be state of applicable law in absence of effective choice of law by parties.

However, in absence of contrary indication of intention, reference is to the local law of state of chosen law.[iii]

 

[i] Carey v. Bahama Cruise Lines, 864 F.2d 201 (1st Cir. Mass. 1988)

[ii] Zepsa Indus. v. Kimble, 2008 U.S. Dist. LEXIS 94602 (W.D.N.C. 2008)

[iii] Chase Manhattan Bank, N.A. v. Greenbriar North Section II, 835 S.W.2d 720 (Tex. App. Houston 1st Dist. 1992)


Inside Effect of Parties’ Choice of Law in Admiralty Actions