By Louis M. Solomon
v. Carnival Cruise Lines, Case No. 10-24457-Civ-Moore/Torres (S.D. Fla. July 2011) [enhanced version available to lexis.com subscribers], is another in the line of recent
cases struggling with the interplay between the public policy favoring
arbitration of international disputes and the freedom of contract permitting
parties to select non-U.S. law to govern their dispute even where a U.S. statutory
claim is barred as a result. The plaintiff here is a citizen and
resident of Peru alleging injuries sustained while employed on a Carnival
vessel. His contract contained a broad arbitration clause, a Peru
choice of law clause, and a severability clause. He brought a Jones Act
claim, among others, and the Court determined that the plaintiff could not
bring a Jones Act claim under Peruvian law.
The District Court made the
following rulings pertinent to international litigation and dispute resolution:
First, the case was properly removed
from state to federal court by reason of the New York Convention.
the Court was willing to entertain a challenge to the enforceability of the
arbitration provision. The Court addressed Rent-A-Center, West. Inc.
v. Jackson, 130 S. Ct. 2772 (2010) [enhanced version / unenhanced version available from lexisONE Free Case Law], which compelled arbitration of an
employee's claim against his employer because the contract at issue contained
an arbitration delegation provision and, pursuant to that provision, the
employee's claim that the entire contract was procedurally and
substantively unconscionable had to be resolved by the arbitrator.
The instant case, however, which challenged the arbitration provision itself,
would be considered by the Court.
Court followed the Eleventh Circuit's decision in Thomas v. Carnival Corp.,
573 F.3d 1113 (11th Cir. 2009) [enhanced version / unenhanced version ], which held that an arbitration clause that precluded
a seafarer's claims under the federal Seaman's Wage Act was contrary to
public policy. The Court concluded that no different result should be
reached with respect to the plaintiff's Jones Act claims. The Court
analyzed the cases decided since Thomas and decided that a "broader
application" of the Thomas holding was appropriate ("a holistic reading
of Thomas indicates that the Eleventh Circuit's reasoning applies with
equal force to claims brought pursuant to the Jones Act"). The District
Court, however, did not analyze the line of authority (going as far back
as Transunion v. PepsiCo, Inc., 811 F.2d 127 (2d Cir. 1987) [enhanced version ],
in which the author was counsel) holding that forum non conveniens dismissal of
claims in favor of non-U.S. jurisdictions was not precluded even if the
plaintiff would lose the ability to assert a federal claims as a result.
Fourth, the Court permitted the
defendant to invoke the severability clause to excise the non-U.S. choice of
law provision in the agreement and force arbitration, with the stipulation that
U.S. law would apply to the plaintiff's Jones Act claim. The District
Court stated: "This Court cannot cast aside the fact that the Parties
agreed - by contract - to arbitrate their disputes".
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