Under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards , an American seaman can be compelled to arbitrate a claim, even a claim for personal injury, if:
1. There is a written agreement to arbitrate the matter.
2. The agreement provides for arbitration in the territory of a Conventionsignatory.
3. The agreement arises out of a commercial legal relationship.
4. A party to the agreement is not an American citizen.
In the U.S. an arbitration clauseis presumptivelyvalid and must be enforced unless the crewmember can prove that it was a product of fraud or coercion. The Federal Arbitration Act, which is the U.S. legislation implementing the Convention, imposes a mandatory obligation upon the court to order arbitration and provides the procedural framework for obtaining the dismissal or stay of litigation of an arbitral dispute. Typically this requires nothing more than the filing of a motion in the court in which the crewman has instituted litigation.
Point 4, as detailed above, has been interpreted to mean that at least one party is not an American citizen or that there be a substantial foreign, i.e. non-American, aspect of the crewman’s employment. The cases which have touched on the subject have held that arbitration can be compelled where there is a reasonable relationship between the parties’ commercial relationship and some important foreign element. So, where a U.S. company employs a U.S. national to work on a vessel which operates solely in international waters, arbitration can be compelled provided the other Convention requirements are met..
In the of case Freudensprung v Offshore technical Services Inc (OTSI), the plaintiff brought claims under the Jones Act and U.S. General Maritime Law asserting that he sustained permanently disabling injuries whilst working as a leaderman aboard a sea-going derrick barge. He worked under a Consultant's Agreement which contained an arbitration clause. Freudensprung contended that he was exempt from arbitrating his Jones Act and maritime law claims because his Consultant's Agreement with OTSI constituted a seaman's employment contract and, as such, is expressly excluded from coverage under the Federal Arbitration Act. The District Court ruled that the arbitration clause was enforceable under the Convention, an international treaty to which the U.S. is party and this was affirmed on appeal by the Fifth Circuit which held the agreement was enforceable unless the crewman, “allege[s] and prove[s] that the arbitration clause itself was a product of fraud, coercion, or ‘such grounds as exist at law or in equity for the revocation of the contract’”
This case is of relevance because it is an example of a U.S. national having to arbitrate his claim against a U.S. employer. The wording of the arbitration clause remains critical, however, so it is recommended that special care be taken in its drafting.
Therefore, if the relationship involves property located abroad, envisages performance or enforcement abroad, or has some other reasonable relationship with one or more foreign states then an arbitration clause could be enforced.
Where an American owner has vessels operating in non-U.S. waters with U.S. crewmembers, because the agreement between employer and employee envisages performance abroad, then, as per the finding in the Freudensprung case, that would be enough to satisfy point 4 of the above noted requirements and to allow a court to compel arbitration. This is assuming that the first three requirements are also met.
The plaintiff's bar will no doubt argue that this is unenforceable because it takes away the crewmember’s right to a jury trial. This can then be countered with the argument that the crewmember bargained this right away under the terms of the collective bargaining agreement in return for better pay, benefits and so on. This argument was accepted by the Federal Court when they were considering the enforceability of arbitration clauses in the contract of foreign seamen who had Jones Act status.
The courts do not want to undermine contractual terms unless there is good reason to do so and the current climate is as good as it has ever been for getting these clauses enforced.
