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Miami Federal Court to Determine Whether Dismissal of Crewmember’s Personal Injury Arbitration Claim Violates United States Public Policy

Cruise-Arbitration-Agreement-300x200The major cruise lines insert a provision into their crewmember employment contracts requiring any dispute between them and their seamen employees, including personal injury claims, to resolved at arbitration. Often times these employment contracts require the arbitration to occur outside the United States and to apply foreign law. This means that if a crewmember is injured on the job, he or she will have to bring an arbitration claim in a myriad of foreign locations, but not in the United States and not under United States law. The reason cruise lines are forcing their crewmembers to foreign arbitration is because it is more likely that the arbitrators, who are compensated by the cruise lines, will favor the cruise lines position and will be reluctant to give the injured seamen high money awards.

A treaty called the New York Convention on the Enforcement of Foreign Arbitration Awards allows the cruise lines to compel personal injury claims to arbitration where there is a written agreement to arbitration between citizens of two different countries or where the contract contemplates foreign performance. However, after the parties arbitrate, the treaty provides that a court of competent jurisdiction can review the arbitration award and vacate or find it unenforceable on various grounds including public policy.

A recent case filed in the United States District Court for the Southern District of Florida challenges such an arbitration award. In that case, the crewmember brought a claim against a cruise line for an injury sustained by the medical malpractice of the doctor selected by the cruise line to fulfill its obligation to provide medical care to the seaman. The employment contract required the seaman to arbitrate his claim in Monaco under Panamanian law. The arbitration went forward in Monaco and the seaman’s claim was dismissed under Panamanian law. The crewmember filed an action in the Southern District of Florida asking the Federal Court to vacate or, alternatively, refuse to recognize the award the arbitration award.

The crewmember argued that the arbitration proceeding precluding him from seeking the protections of the Federal Jones Act statute and that is a violation of United States’ public Policy. This is known at the Prospective Waiver doctrine. The Prospective Waiver doctrine stands for the proposition that arbitration agreements which deprive persons of United States statutory protections are void for public policy. The cruise line moved to dismiss the action arguing that the District Court did no have jurisdiction to vacate or modify the award and that only a Monaco court has such jurisdiction.

The Federal Court found that although a Monaco court would have Primary Jurisdiction to vacate the award, the Untied States court has Secondary Jurisdiction to refuse to enforce or recognize the arbitration award under public policy. The District Court acknowledged the Supreme Court expressly recognized that Federal District courts have jurisdiction to consider the Prospective Wavier Doctrine when deciding whether to recognize a foreign arbitration award. Upon finding that it had jurisdiction under the treaty, the District Court denied the cruise line’s motion to dismiss and allowed the crewmember to pursue her prospective waver argument regarding her Jones Act claim.