We are seeing an increasing number of arbitration provisions in employment agreements with seamen. Traditionally, seamen bring claims pursuant to a Federal Statute known as the Jones Act, 46 U.S.C. § 30104. The Jones Act incorporates the Federal Employer’s Liability Act, known as FELA, which provides an action for Negligence against the employer for a railroad employee injured in the course and scope of his employment.
The FELA and Jones Act provides for the right to a jury trial. The Jones Act also prohibits the employer of the seamen from removing a case to Federal Court that is properly filed in State Court. Therefore, seamen traditionally have been able to chose their forums, and obtain a right to a jury trial.
The FELA, at 45 U.S.C. § 55, provides: “any contract, rule, regulation or device whatsoever, the purpose of which shall be to enable any common carrier to exempt itself from liability created by this chapter shall to that extent be void.” The Jones Act, by incorporating the FELA, allows the seaman to choose the venue in which to sue. Since the seaman has a right to chose his forum, and has a right to a jury trial, and there is a specific statutory provision allowing the seaman to choose the venue of the action, it appears that an employer/shipowner should not be able to eliminate all of these rights of the seaman with a swoop of a pen. Seamen have traditionally been deemed wards of the court, and in need of special protection from the courts because of the unequal bargaining power they have with their employer. They can be taken advantage of, and in fact most of the time they are in fact taken advantage of. They are given substandard employment conditions, unsafe work places, and are required to work excessive amounts of hours, seven days a week. Most seamen employment would violate United States Labor Laws if the laws were applicable to the employment relationship. However, since virtually all of the shipping companies fly foreign flags on their ships, and register their companies in foreign countries, and hire foreign crewmembers, they are able to escape the United States Labor Laws.
Despite these inequities, and despite clear statutory guidance stating that seamen have a right to chose their forum, and despite statutory provisions prohibiting the employer from removing cases to Federal Court, as well as preventing employers from trying to escape the rights seamen have to venue by contracting away these rights, the United Nations Convention on the recognition and enforcement of foreign arbitral awards (the “Convention”) and its implementing legislation, 9 U.S.C. § 202 et scq., as well as the decision in Bautista v. Star Cruises, 396 F.3d 1289 (11th Cir. 2005), have permitted the shipping companies, as well as the cruise ship companies, to take advantage of the unequal bargaining power by insertion of arbitration clauses into the employment agreements with seamen, depriving them of their venue rights, choice of forum, as well as their right to have their case decided by a jury.
The Convention applies to seamen employment agreements, despite arguments that seamen contracts were exempt from the Convention. This article will not get into the details of the legal arguments that seamen contracts should have been considered exempt. The Bautista Court ruled that the Convention applied to seamen employment agreements that met the necessary prerequisites, which include a requirement that the agreement arise out of a legal relationship which is considered commercial, and a party to the agreement is not an American citizen. Since virtually all of these seamen cases, especially those involving claims against the cruise ship companies, involve foreign crewmembers, this particular requirement of the applicability of the Convention is met in every case.
There are four conditions that must be met for the Convention to apply: “(1) There is an agreement in writing within the meaning of the Convention; (2) The agreement provides for arbitration in the territory of a signatory of the Convention; (3) The agreement arises out of a legal relationship, whether contractual or not, which is considered commercial; and (4) A party to the agreement is not an American citizen, or that the commercial relationship has some reasonable relation with one or more foreign states.”
In Bautista, the 11th Circuit clearly dealt with whether the seamen’s employment agreement was exempt from the Convention, ruling that it was not. In addition, the Bautista Court stated in deciding whether to compel arbitration involving a claim that an agreement is subject to the Convention, the Court conducts a very limited inquiry. The Court simply decides whether the four prerequisites or conditions are met.
The only avenue a seaman has to try to escape the harshness of the arbitration agreement is to assert an affirmative defense under the Convention.
In a case called Thomas v. Carnival Corp., 573 F.3d 1113 (11th Cir. 2009), the 11th Circuit recognized the affirmative defenses in the Convention, specifically the affirmative defense that an agreement violates the public policy of the country where the action is pending. In Thomas, Carnival Cruise Lines’ arbitration agreement was found to violate the public policy of the United States because it attempted to deprive the seaman of the applicability of an American statute that governed his claims, the Jones Act. The employment agreement utilized by Carnival Cruise Lines calls for the applicability of foreign law to seaman’s claims, not only depriving the seaman of his choice of forum, venue rights and right to a jury trial, but also depriving the seaman of his right to have United States Law apply to his claims. The Thomas Court said it was against public policy to require a perspective waiver of statutory rights the seaman had. Since the employment agreement Carnival utilized stated the arbitrator was required to apply Panamanian Law, the arbitration clause was deemed to have waived and foreclosed the seaman’s rights under the Seaman’s Wage Act.
Many courts in the Southern District of Florida have extended the Thomas holding to Jones Act claims, finding that the employer cannot foreclose the seaman’s claims under the Jones Act, which is a United States statute governing the seaman’s claims. If the arbitration clause attempts to apply foreign law, depriving the seaman of his claims under the Jones Act, many of the Southern District decisions have deemed the agreement void as against public policy, and therefore deny enforcement of the arbitration clause. They do so by utilizing the affirmative defenses available under the Convention.
An additional hurdle that the seamen have been facing in trying to pursue their Jones Act claims in the face of arbitration clauses and choice of law clauses is the attempt by shipowners to avoid the agreement being stricken by stipulating that United States Law will apply in the arbitral forum. In other words if the seaman is lucky enough to get a lawyer who knows to argue that the attempted deprivation of the rights under the Jones Act is grounds to void the arbitration clause, the employer simply says we will stipulate to United States Law in the arbitral forum. Several decisions in the Southern District of Florida have accepted such a stipulation and enforced the arbitration clause despite the attempt on the part of the employer to apply foreign law and deprive the seamen of their Jones Act claims. This encourages the employers to insert foreign law clauses into their employment agreements, hoping they will not get challenged, and if they do get challenged, they simply stipulate to United States Law and arbitration is compelled.
There are many decisions of the Southern District of Florida currently on appeal in the 11th Circuit Court of Appeals, and many issues will have to be resolved. They include whether the Jones Act should be the type of claim that is not subject to arbitration based on clear Congressional intent that the Jones Act provides the substantive right to a jury trial, and a substantive right for the seamen to choose the forum. The 11th Circuit is facing arguments that arbitration clauses in seamen employment agreements violate the public policy of the United States, specifically explicit provisions in the Jones Act which state that a seaman has a right to choose the forum, venue, and right to a jury trial. There is also language stating that any contract which attempts to deprive a seaman of any of the rights under the statute should be deemed void. It is being argued this expresses clear Congressional intent to give seamen the absolute right to their forum and to obtain a jury trial.
The 11th Circuit Court of Appeals appears to favor arbitration as do the Federal Courts. There is a strong federal policy encouraging arbitration. The Bautista Court did hold that an arbitration clause was applicable to a seamen’s employment agreement. However, Bautista did not really address head on the issues involving the explicit provisions of the Jones Act which prohibit employers from contracting away the seamen’s rights. In Bautista, the seamen were Philippine, and in the Philippines the Filipino crewmembers are governed by an employment agreement that is mandated by the Philippine government, and any claims arising out of that agreement are subject to resolution in a tribunal in the Philippines. Therefore, in Bautista, there were issues of comity, meaning deference to the policies of another country.
By contract, the vast majority of the seamen claims against the cruise lines based in Miami, Florida involve no strong public policy of any foreign country that would support allowing the cruise line to contract away the seamen’s rights. To the contrary, there is clear legal precedence in the United States, as well as public policy set forth in the Jones Act, which should compel a finding that these arbitration clauses being used by the employer to deprive seamen of their rights are against the public policy of the United States. Accordingly, it should be deemed void as against public policy and the seamen’s rights to their choice of forum and jury trial should be protected.
Our maritime personal injury firm continues to fight for the rights of seamen to a jury trial.