Originally from Dispute Resolution Journal

INTERNATIONAL

When Foreign Law Applies

The 11th Circuit has ruled that an arbitration agreement in a seaman’s employment contract that called for arbitration in a foreign country under yet another country’s law is against U.S. public policy and can be denied enforcement under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) because application of that law would prospectively waive statutory protections to which the seaman is entitled.

A headwaiter on Carnival’s cruise ship Imagination was injured in a slip and fall accident aboard ship. Although he was treated by the ship’s doctor, he complained of inadequate treatment. Eventually he could not work and left the ship. He returned to his job but still complained of injuries and inadequate care and left the ship a second time. Both times Carnival treated his leave as vacation. When he again returned to work, he signed a new Seafarer’s Agreement. This agreement required arbitration of disputes in the Philippines under Panamanian law. The ship’s doctor determined that his previous injuries made him unfit for work. As a result, Carnival discharged him and paid him $700.

The seaman filed a lawsuit for damages arising from his fall on the ship and alleged poor medical treatment. He also asserted a Jones Act claim, two general maritime law claims, and the failure to pay wages under the Seaman’s Wage Act. Carnival moved to compel arbitration under the New York Convention. The district court granted the motion and the seaman appealed.

The 11th Circuit reversed. First it concluded that the arbitration clause met the requirements of the New York Convention because it called for arbitration in a signatory country, one party was not a U.S. citizen, and the arbitration clause was contained in a commercial contract. 

Next, the court held that the Jones Act and general maritime law claims were not covered by the arbitration clause because they were based on events that occurred prior to signing the agreement containing the arbitration clause. However, the Seaman’s Wage Act claims for wages earned after the new Seafarer’s Agreement was signed were subject to the arbitration clause.