Enforceability of Sole-Remedy Clauses and Economic Loss Rule in Maritime Fuel Supply Contracts

Introduction

This commentary examines the Second Circuit’s Summary Order in Serifos Maritime Corporation and Andros Maritime Agencies Ltd. v. Glencore Singapore Pte Ltd., No. 24-1303-cv (2d Cir. June 2, 2025). Plaintiffs-appellants (“Serifos”) contracted with defendant-appellee Glencore Singapore Pte Ltd. (“GSPL”) for the supply of marine bunker fuel in Singapore. After testing revealed elevated organic chlorides in the fuel and the vessel suffered engine malfunctions, Serifos sued for breach of contract, negligence, strict products liability, intentional misrepresentation, and gross negligence. The district court dismissed most of Serifos’s claims under governing contract terms and maritime tort principles and denied leave to amend. On appeal, the Second Circuit affirmed in full.

Key issues:

Are contractual liability limitations and a sole-remedy clause enforceable against claims for mitigation and consequential damages?
Does the admiralty economic loss rule bar negligence and strict liability claims based solely on economic harm?
Can a gross-negligence tort claim proceed alongside a breach of contract theory when no independent duty is alleged?

Summary of the Judgment

The Second Circuit affirmed dismissal of all claims except for a narrow contract remedy (removal and replacement costs). It held:

The GTC’s unambiguous limitation‐of‐liability clause (no consequential or indirect damages) and sole‐remedy clause (direct expenses only) apply, even in the face of alleged gross negligence or willful misconduct.
Under New York law, a “sole remedy” clause limiting contract damages is not an exculpatory or nominal‐damages clause and thus is not voidable on public‐policy grounds.
The admiralty economic loss rule bars negligence and strict products liability claims when only economic loss is alleged and no physical injury or property damage has occurred.
Gross negligence cannot be pleaded as a separate tort where the only duty breached arises from the contract and the harm alleged overlaps fully with the contract claim.
Leave to amend was properly denied as futile because the proposed new allegations could not overcome the contractual waiver or the economic loss rule.

Analysis

Precedents Cited

In re Part 60 Put-Back Litigation, 36 N.Y.3d 342 (2020): Confirmed that sole-remedy clauses are “limitations on the remedies available” and not subject to the gross‐negligence public‐policy exception that voids nominal‐damages exculpatory clauses.
Kalisch-Jarcho, Inc. v. City of New York, 58 N.Y.2d 377 (1983): Recognized that exculpatory or nominal damages clauses can be void for public policy but distinguished such clauses from genuine limitations on remedies.
Eastern River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858 (1986): Established the admiralty economic loss rule barring product‐liability claims in admiralty where the only injury is economic loss.
American Petroleum & Transportation, Inc. v. City of New York, 737 F.3d 185 (2d Cir. 2013): Extended the bright‐line economic loss rule to unintentional maritime torts lacking physical injury.
Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382 (1987): Held that tort claims must rest on a duty independent of a contract to avoid duplicating contract remedies.
Sommer v. Federal Signal Corp., 79 N.Y.2d 540 (1992): Applied the “nature of the injury” and “resulting harm” tests to determine when a contract breach can support a tort claim.
New York University v. Continental Insurance Co., 87 N.Y.2d 308 (1995): Clarified that regulatory duties incorporated into a contract do not create independent tort obligations.

Legal Reasoning

Contractual Limitations: The court parsed Sections 7(a) and 7(d) of the GTC. Section 7(a) waives consequential and indirect damages, and Section 7(d) provides the sole remedy of removal and replacement costs. Under New York law, limitations on remedies negotiated by sophisticated parties are enforceable, even in gross‐negligence scenarios, so long as they are not nominal‐damages exculpatory clauses.

Economic Loss Rule: The Second Circuit reaffirmed that maritime negligence and strict liability claims seeking only economic losses are barred absent physical injury or property damage. The rule protects the boundary between contract law and tort law, preventing plaintiffs from “drowning contract law in a sea of tort.”

Duplicative Tort Claims: Under New York’s “independent duty” doctrine, a tort claim cannot proceed where the only duty arises from the parties’ contract and the injuries alleged overlap with contract damages. Regulatory standards incorporated into contracts do not create new tort obligations.

Impact

This decision reinforces contractors’ freedom to negotiate liability limitations and sole‐remedy clauses in maritime supply agreements. It underscores the robust application of the admiralty economic loss rule, discouraging plaintiffs from recasting contract disputes as tort claims. Future maritime‐fuel disputes will turn heavily on the precise wording of liability provisions and the availability of independent duties outside the contract.

Complex Concepts Simplified

Sole Remedy Clause: A contractual term that limits the non‐breaching party’s recovery to a specific remedy (here, removal and replacement costs) and bars other damages.
Exculpatory vs. Remedy-Limiting Clauses: Exculpatory clauses absolve a party of all liability (often voidable if nominal), whereas remedy-limiting clauses simply cap or define the recoverable damages.
Economic Loss Rule: A maritime doctrine barring recovery in tort for purely economic losses when contracting parties have allocated risks by contract.
Independent Duty Doctrine: Under New York law, a tort claim requires a duty separate from the contract; performance of a contractual obligation alone does not give rise to tort liability.

Conclusion

Serifos Mar. Corp. v. Glencore Sing. Pte Ltd. affirms that sophisticated parties can enforce narrow liability and sole‐remedy provisions in maritime fuel contracts, even where gross negligence is alleged. It also confirms the strength of the admiralty economic loss rule in foreclosing tort claims for purely economic harm and reiterates that a tort cause of action cannot proceed absent an independent duty. Together, these principles provide clear guidance to maritime contractors on risk allocation and dispute resolution.