United States: Federal Court Enforces Foreign Arbitral Award Resolving Jones Act Seaman's Personal Injury Claim

Last Updated: August 23 2017
Article by Jason P. Minkin and Jonathan A. Cipriani

The U.S. District Court for the Western District of Washington has enforced a settlement between a Jones Act seaman and his employer for maintenance and cure payments, pursuant to the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"). Castro v. Tri Marine Fish Co., LLC, 2017 WL 3262473 (W.D. Wash. July 31, 2017). Because the employment contract between the employer and the Jones Act seaman calling for arbitration satisfied all the requirements of an arbitration agreement under the New York Convention and was not contrary to public policy, it was irrelevant that it called for arbitration in a nation other than the one where the settlement of the personal injury claim was formalized. Despite the Jones Act seaman's status as a ward of admiralty, the court found that the arbitral award approving the settlement did not offend the United States' "most basic notions of morality and justice." For that reason, according to the court, the award "can and will be enforced."

Plaintiff Michael Castro, a citizen of the Philippines, signed an employment contract with Tri Marine Fish Co. that contained a clause calling for arbitration of any disputes in American Samoa. Two weeks later, he suffered torn knee ligaments while working on Tri Marine's fishing vessel. Tri Marine transported him to the Philippines, made arrangements for his medical care, and paid him maintenance and cure. Castro negotiated, and received, an advance on any final settlement amount with Tri Marine. The advance agreement provided that Castro would be bound by the arbitration agreement in his employment contract.

Castro and Tri Marine later entered into a final settlement pursuant to which he received a lump sum payment. During the settlement negotiations, Castro received a document explaining his rights as a seafarer and the extent of the waiver he would be agreeing to; had the documents translated into his native language, Tagalog; and was given the opportunity to ask questions. Notwithstanding the employment contract calling for arbitration in American Samoa and the advance agreement referring back to the employment contract, Castro and the claims executives who negotiated the release then took the settlement documents to an accredited Maritime Voluntary Arbitrator at the Philippines' Office of the National Conciliation and Mediation Board. The arbitrator explained to Castro the legal consequences of the settlement in both English and Tagalog, including the permanent waiver provision. Castro told the arbitrator that he understood the implications of the settlement agreement. The arbitrator then entered an order finding that the signed release and compromise were "not contrary to law, morals, good customs, and public policy." The arbitrator dismissed the case between the parties.

Nearly three years later, Castro sued Tri Marine in Washington state court, asserting claims for negligence, unseaworthiness, maintenance and cure, and statutory wages. Tri Marine removed the suit to the Western District of Washington and moved to enforce the arbitral award to which it and Castro had agreed in the Philippines. The court noted that a federal statute, specifically 9 U.S.C. § 7, provides that a reviewing court shall confirm an arbitral award unless it is subject to one of seven enumerated grounds for refusal: (1) incapacity; (2) lack of proper notice; (3) the award exceeds the scope of the arbitration agreement; (4) composition of the arbitral authority did not comply with the parties' agreement or the law of the place of the arbitration; (5) the award is not yet binding; (6) the subject matter is incapable of arbitration in the country where enforcement is sought; or (7) enforcement would be contrary to the public policy of that country. Castro challenged the award on six grounds, all of which the court rejected. We discuss Castro's defenses below.

Lack of jurisdiction; scope of the arbitration agreement; selection of the arbitrator: Castro argued that the settlement agreement and arbitral award failed on each of these grounds because they had been formalized by a Filipino arbitrator, notwithstanding that Castro's employment contract called for arbitration in American Samoa. The court disagreed. The court noted that the employment contract and the written receipt for the cash advance providing that Castro agreed to be bound by the arbitration provision in the employment contract qualified as "agreements in writing" to arbitrate and therefore were subject to the New York Convention. Acknowledging that the arbitration had not occurred in American Samoa, the court nonetheless noted that arbitration agreements are subject to general contract law principles. Accordingly, because Castro had accepted the benefits of the arbitral award—i.e., his final maintenance and cure payment—in the Philippines, he was equitably estopped from arguing that the arbitration was invalid because it did not occur American Samoa. The court determined that it had jurisdiction to enforce the award.

Coercion: citing Supreme Court precedent holding that seamen's releases are subject to special scrutiny because seamen are "wards of admiralty," Castro argued that he had not entered into the release agreement freely and voluntarily. The court found that Tri Marine had met its burden to prove otherwise. Tri Marine produced testimony from multiple witnesses confirming Castro had been informed of his rights and the consequences of the waiver, both orally and in writing, and in English and Tagalog. Castro affirmed that he understood, and ultimately received an award that exceeded the payment schedule amount for seamen's disability allowance claims in the Philippines given the nature of his injuries.

Lack of notice: Castro said he did not receive adequate notice that the settlement proceedings in the Philippines were "arbitration proceedings." But the court noted that "this defense applies where a party is unable to participate meaningfully or in the proceedings at all." Because Castro had negotiated the settlement in person and appeared in person before the arbitrator, this defense was inapplicable, regardless of whether he knew the process was an "arbitration proceeding."

Public policy: Castro argued that the arbitral award violated public policy because it did not comply with Jones Act requirements granting special legal protection to seafarers. The court noted that this defense is narrow and applies only where enforcing an award would violate the forum state's "most basic notions of morality and justice." The court also observed that provisions of the Federal Arbitration Act exempting seamen's employment contracts from arbitration do not apply to agreements that are subject to the New York Convention. Ultimately, the arbitral award did not violate public policy because Castro had received most of the benefits afforded under U.S. maritime law, including transportation to his home country, medical care, maintenance and cure payments, and robust notice of his rights during the settlement process. Castro complained that the proceedings overly emphasized the Philippines disability payment schedule, but the court observed that a Filipino regulatory agency had created those guidelines to protect the interest of Filipino citizens. And, in any event, Castro was paid more than twice the prescribed amount under the guidelines.

As we have discussed in a prior post, the New York Convention is a powerful tool for the enforcement of international arbitration awards. The Castro decision is an example of the broad reach of the New York Convention and the considerable deference that U.S. courts will give to agreements that fall within the Convention. Tri Marine also appears to have benefited from a well-developed record that showed ample consideration for the rights of the seaman during the settlement process, and a settlement payment that exceeded local standards.

Originally published by Wolters Kluwer

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Moritt, Hock & Hamroff LLP
Smith, Currie & Hancock LLP
Wilson Elser Moskowitz Edelman & Dicker LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Moritt, Hock & Hamroff LLP
Smith, Currie & Hancock LLP
Wilson Elser Moskowitz Edelman & Dicker LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions