Harshness of Arbitration Provisions in Seaman’s Employment Contracts Highlighted By Piddly Award For Burn Injuries to Seaman

In recent years, ship owners have increasingly been able to avoid their responsibilities and obligations under the United States laws that are designed to protect seaman, namely the Jones Act enacted by Congress in 1920, and the General Maritime Law which give seaman rights to maintenance and cure as well as claims for unseaworthiness of the vessel. Unseaworthiness is a form of liability without fault. The maritime laws have consistently been interpreted to protect seamen, who historically have been considered the wards of the United States Admiralty Courts.

Ship owners, including cruise ship companies, have fought hard, and spent lots of money, trying to escape their responsibilities under the favorable laws to protect seaman. They have petitioned Congress to repeal the Jones Act, or amend it to lessen the rights of the seamen. They have consistently tried to contract away their obligations, as they do in the context of passenger claims.

In recent years, courts have started to enforce arbitration provisions in a seaman’s employment agreement. Even though a seaman’s employment agreement is a take it or leave it employment agreement, with the seaman having no bargaining rights, and most of the time without any understanding of his legal rights, the courts have allowed ship owners to insert a mandatory arbitration clause into the seaman’s employment agreement.

The Jones Act, enacted in Congress in 1920, which is to be liberally interpreted to benefit seamen, provides for a right to a jury trial. This standard of causation in a negligence case under the Jones Act is very liberal, a seaman only has to prove that his injuries were caused in part by the employer’s negligence. If there was any negligence, no matter how small, which contributed in any way to the seaman’s injury, under the American law, the seaman is entitled to compensation.

Not only has mandatory arbitration provisions in a seaman’s employment contract taken away the seaman’s rights to a jury trial, the ship owners have now been using the employment agreement to take away the seaman’s rights under the Jones Act, putting a mandatory foreign choice of law provision into the employment agreement. The 11th Circuit Court of Appeals recently, in a case involving Norwegian Cruise Lines, enforced the mandatory arbitration clause in the seaman’s employment agreement which also contained a foreign choice of law clause. The court did not accept the argument that since the ship owner was trying to contract away the seaman’s statutory rights under the Jones Act the whole agreement should be stricken as against public policy and thus void. Instead, the court said the arbitration provision was enforceable, and if the seaman could prove at a later date that he was denied his statutory rights, he could come back to court and oppose enforcement of any arbitration award. Obviously, a long and tedious process for a seaman, who has little or no funds to pursue a big shipping company thru long and expensive litigation, especially a cruise ship company.

In a recent case reported by a colleague, who did not allow a case to go away involving a Filipino seaman, the maritime attorney, after having the case dismissed and sent to arbitration in the Philippines, obtained a decision out of the Philippines which is shocking. The case involved a seaman who was on a ship that was docked in the port of New Orleans. On October 27, 2010, this seaman was seriously burned when a cascade tank overflowed and hot water splashed over his abdomen and lower extremities. The seaman had to be rushed by ambulance to the hospital and received emergency medical attention and evaluation. He was treated for 35 percent burns and was required to undergo skin grafting.

The seaman had to receive subsequent treatment and plastic surgery.

Based on the Filipino law, the arbitration panel went through a systematic analysis of a disability rating that would have to be assessed by a medical doctor, and applied the Filipino compensation scheme to the case.

They rejected the application of the American Maritime law, in which the seaman was claiming past and future wage losses in the amount of $353,000.00 dollars, and past and future medical expenses, past and future maintenance and cure, and moral and compensatory damages totaling $12 million dollars. There was also a request for an additional $10 million dollars in punitive damages.

Of course, the ship owner relied on the contractual terms, put in the take it or leave it employment agreement, and successfully argued that the law of the Philippines should apply, which unbelievably resulted in an award of only $1,870.00 U.S dollars. Yes, you read right! Unbelievable! Hard to believe! However, sadly true!

The conclusion was that the seaman had to be paid his disability benefits based on grade 14 of the payment scheme dictated by the Philippines, which resulted in the seaman only receiving $1,870.00. All of the American claims were rejected.

This case hopefully will be a catalyst to all seamen to allow them to return to the proper place for resolution of their claims, which is in a court of law, whether that be a state or federal court in the United States, pursuing their rights under the Jones Act and the General Maritime Law of the United States. Hopefully, a court will recognize the harshness and unfairness of allowing ship owners to escape their obligations under the Jones Act, and deny seamen their statutory rights. It is naïve of the courts to expect a seaman will receive the substantial equivalent of their rights under the Jones Act in a foreign country pursuant to foreign law. This process has been carefully calculated by the ship owners over the years, who have continually tried to figure out a way to “screw” the seamen.

When I started handling maritime cases 30 years ago, seamen were the wards of the court. Now the seaman, who use to have the courts to somewhat protect them, and in addition to their counsel, are left only with their lawyer to hopefully hang on and fight to the bitter end. Hopefully, this case will be an example of just that, fighting to the bitter end, and returning to the federal court that dismissed the case in the first place, and proving the injustice involved and by enforcing a mandatory arbitration claim cause in a take it or leave it employment agreement which sends a seaman off to a foreign country, depriving him of his U.S. statutory rights that have been in place since 1920.

We will continue to monitor the development of this matter and any changes that it might cause in the law concerning enforcement of arbitration clauses in seaman contracts.

Our firm continues to be safety advocates for both passengers and crewmembers, hoping we can make a difference in the safety of all those who choose to use the waterways, either as a passenger, operator, or crewmember.