In Henriquez v. NCL (Bahamas), Ltd., the 11th Circuit followed its recent decision in Lindo v. NCL, recognizing that arbitration agreements and seaman employment agreements are enforceable notwithstanding a choice of law provision which requires the application of foreign law to the seaman’s claims.
We previously blogged about the disturbing opinion in Lindo, in which the 11th Circuit affirmed the trial court’s dismissal of the seaman’s case, compelling arbitration, based on an arbitration provision in the seaman’s employment contract. The 11th Circuit rejected the argument that the choice of law provision, which required the application of foreign law, rendered arbitration agreement void as against public policy. The public policy defense is available under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitration, which the 11th Circuit Court of Appeals had previously recognized in the decision in Thomas v. Carnival Corp., 573 F.3d 1113 (11th Cir. 2009), cert. denied, 130 S.Ct. 1157 (2010).
In Thomas, the 11th Circuit Court of Appeals ruled that a arbitration provision in the seaman’s employment agreement was unenforceable, ruling that it was against the public policy of the United States for the cruise line company to require foreign law to apply to the seaman’s wage claim pursuant to the penalty wage statute of the United States. The 11th Circuit ruled that it violated public policy, and thus was a defense to the enforceability of the arbitration agreement. The 11th Circuit recognized prior United States Supreme Court precedent in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 629 (1985), which stated that if a choice of law provision operates in tandem with an arbitration clause to deprive an individual of their statutory rights under the United States Law, the arbitration agreement is void as against public policy. Thomas ruled that since the arbitration agreement in the seaman’s employment agreement drafted by Carnival Cruise Lines attempted to deprive him of his United States Statutory rights under the penalty wage statute, the arbitration agreement was void as against public policy. The seaman was permitted to pursue his penalty wage statute claim in the courts, and was not required to go to arbitration.
In Lindo, the 11th Circuit did a complete about face, ignoring Thomas, and ruled that the arbitration agreement in the seaman’s employment agreement was enforceable notwithstanding the choice of law provision requiring the application of foreign law to the seaman’s claims, including his statutory claims under the Jones Act. The court rejected the arguments by the seaman that the arbitration agreement violated public policy and was void based on the fact the choice of law provision deprived the seaman of his statutory claims under the Jones Act. The Lindo court also rejected any claims that the agreement could be stricken based on an inequality of bargaining power, or that the arbitration agreement was invalid because of the specific language contained in the Jones Act prohibiting the contracting away of rights seaman have under the Jones Act. Despite the fact that these arbitration agreements in the seaman employment agreements deprive the seaman of their venue rights under the Jones Act, as well as their rights to a jury trial, the court said that such arbitration agreement are valid.
In Lindo, the court left open the possibility of later review by the District Court to determine whether the seaman ends up being deprived of his rights in the arbitration proceedings. In other words, the seaman has an opportunity to come back to the court and demonstrate that the arbitration proceedings resulted in a deprivation of his statutory rights. The court suggested that the foreign law can provide the substantial equivalent of the statutory rights under the Jones Act, and basically that it was a wait and see game, and that it was not enough to strike the arbitration agreement prior to seeing what happened in the arbitration proceeding.
The Lindo court determined that the public policy defense to enforcement of the arbitration agreement under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitration, was a defense that was to be raised in the enforcement stage of any arbitration award, not prior to arbitration as the Thomas court had ruled. It remains a mystery how the Lindo court ignored the Thomas decision, as the rules of the 11th Circuit Court of Appeals require the court to follow its own prior decisions unless reversed by a re-hearing en banc. The court’s decision reverses Thomas without an en banc hearing. We expect a Motion for Re-Hearing, and Re-Hearing En Banc to be filed shortly, and we will see if the remaining members of the 11th Circuit decide to hear this case en banc and address this obvious ignoring of their prior Thomas decision.
In the meantime, the 11th Circuit issued their opinion in Henriquez v. NCL, and ruled that a Nicaraguan seaman must arbitrate his claims against Norwegian Cruise Lines, citing to the Lindo decision.
This new area of seaman’s claims, including their claims under the Jones Act, being required to be arbitrated in foreign countries, will have to be followed carefully to see if in fact the seaman ends up being deprived of significant rights that have been given to them by the courts and by Congress in order to protect them against the overreaching by their employers who enjoy overwhelming economic power over them.
Our firm continues to be safety advocates for both passengers and crewmembers injured at sea.