Southern District Federal Judge Declares Arbitration Provision Null and Void in Seamen’s Employment Agreement

952313_gavel[1].jpgIn a decision hot off the press, Erikson v. NCL (Bahamas) Ltd., Case Number 1:11-Civ-20414-COOKE/TURNOFF (S.B. Fla. April 27, 2011), Federal District Judge Cooke of the Southern District of Florida ruled that an arbitration provision in a seamen’s employment agreement with Norwegian Cruise Lines was null and void as against public policy.

The seaman originally filed an action in State Court. Norwegian Cruise Lines removed the case to Federal Court and sought to compel arbitration based on the arbitration clause and the employment agreement. Norwegian Cruise Lines argued that the arbitration clause was enforceable pursuant to the United Nations Convention on Recognition and Enforcement of Arbitral Awards (New York 1958) (“The Convention”).

The arbitration provided the substantive law would be the law of the flag state of the vessel, which in the case of Norwegian Cruise Lines is the Bahamas.

I recently published a blog on our injury board blog, concerning arbitration provisions in seamen employment contracts. In this particular case, Norwegian Cruise Lines attempted to require application of foreign law to the seaman’s claims, depriving him of his United States statutory rights under the Jones Act. In Thomas v. Carnival Corp., 573 F.3d 1113 (11th Cir. 2009), the Court held that an arbitration clause was null and void as a matter of public policy when it deprived the Plaintiff of his United States statutory rights. In Thomas, the statutory right involved was the penalty wage statute available to a seaman. The arbitration provision was determined to be null and void in Thomas because Carnival attempted to deprive the seaman of his U.S. statutory rights under the penalty wage statute.

In the Norwegian Cruise Lines case under discussion, the Federal Judge ruled that the same reasoning applied with respect to the seaman’s Jones Act claim. Since the agreement called for the applicability of Bahamian Law, the agreement improperly took away Plaintiff’s United States statutory remedies. Accordingly, the clause was determined void as a matter of public policy.

The Court then decided that the case should be remanded to the State Court because since the arbitration provision was null and void as against public policy, the case had to be remanded because it was not subject to removal to the Federal Court in the absence of a valid arbitration provision.

The Court did note that the employment agreement did not contain a severability clause, which some of the employment agreements with seamen do contain. Where a severability clause is contained, the Court can strike the unenforceable choice of law provision from the agreement, and enforce the arbitration clause without the offending choice of law language, although some courts have declined to sever the offending language and simply strike down the entire agreement.

There is conflict among the judges in the Southern District of Florida regarding the handling of these employment agreements containing arbitration provisions. There are several cases currently on appeal in the 11th Circuit Court of Appeals which should address the issues and resolve the conflicts.

We will keep you informed of any further developments in this very important area involving seamen claims.

Our maritime personal injury firm continues to fight for the rights of seamen, including the right granted to them under the Jones Act, which include the right to a jury trial and the seaman’s choice of the forum.