Significant numbers of non-US seamen continue to try to link their cases to US jurisdictions due to the perception that this jurisdiction is more likely to provide a favourable result, reports UK P&I Club in the summer edition of Bodily Injury News (the journal of the Thomas Miller Americas’ bodily injury team).
Senior Claims Executive Dee O’Leary and Attorney Dan Tadros noted that many UK Club Members had clauses in their contracts with their foreign crewmembers that provided for arbitration rather than litigation in the event of a dispute. The Federal Arbitration Act (FAA) provides that a contract evidencing an agreement to settle such a dispute by arbitration is valid, irrevocable, and enforceable.
The writers said that arbitration clauses were enforceable provided: the agreement to arbitrate was written; the agreement provided for arbitration in a territory of a Convention signatory; the agreement arose out of a commercial relationship; a party to the agreement is not an American citizen, or the contract contemplates performance abroad.
Provided these conditions are met, US Courts have jurisdiction over claims falling under the Convention. Claims subject to the Convention are removable to Federal Court and a US District Court may order that arbitration be held in accordance with the agreement.
However, O’Leary and Tadros noted that despite this many foreign crewmembers were still trying to bring lawsuits in the US. Tadros, a partner at Chaffe McCall in New Orleans, noted that in Shah v.BlueWake Shipping the US District Court for the Western District of Louisiana twice rejected a foreign seaman’s challenges to the written arbitration agreement incorporated into his employment contract. Tadros said that in this case the sole connection to the US was the foreign-owned and foreign-flagged vessel’s fortuitous call in the Port of Lake Charles, Louisiana. The plaintiff, a citizen of India, filed suit in Louisiana state court under the Jones Act, the US general maritime law, and the laws of Singapore. The vessel owners removed the plaintiff’s lawsuit to the US District Court for the Western District of Louisiana, pursuant to the Federal
Arbitration Act and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The plaintiff sought remand to state court, disputing the incorporation of the CBA into his employment contract and the arbitrability of his claim. The district court rejected the plaintiff’s challenges to the arbitration agreement. Shortly after this defeat the plaintiff filed a second motion to remand the case to state court, alleging that his efforts to initiate arbitration in Singapore had been unsuccessful. This motion was also denied, confirming that the matter should be resolved by the method designated in the plaintiff’s employment contract and the incorporated CBA.
Tadros said that the result was a “notable victory for vessel owners, who often have to defend foreign seamen’s personal injury claims in US courts and under US law, despite the fact that there is hardly any connection between the incidents giving rise to the claims and the US”.
He said that the decision was valuable precedent in favour of the validity and enforceability of arbitration agreements in foreign seamen’s employment contracts. However, the writers noted that the issue of the validity and enforceability of arbitration clauses in seamen’s employment contracts continued to spur litigation in US courts, with the outcome of each case possibly varying according to factors such as the exact wording of the arbitration clause, the manner in which the CBA was incorporated into the seaman’s employment contract, and the competence of the designated arbitral tribunal to hear the dispute.