Stipulating to Arbitration in U.S. Crew Employment Contracts: FAQs
This article considers the enforceability of arbitration clauses within U.S. crew employment contracts, the statutory and common law principles applicable, and the benefits of arbitration.
Owen Mearing
Published: June 30, 2025
Does the Federal Arbitration Act allow for arbitration of U.S. crew claims?
The Federal Arbitration Act (“FAA”) was enacted in 1925 to congressionally overcome the historical, hostile approach taken by common law courts in refusing to order parties to arbitrate, despite the same being provided for by express agreement. The FAA applies to maritime transactions as outlined within section 1.
Section 2 provides that:
“A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract” (9 USC. § 2.).
However, shipowners should note that section 1 contains an express carveout whereby:
“nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” (9 USC. § 1.).
As a result, an arbitration agreement contained within a U.S. crewmember’s employment contract is not enforceable under the FAA.
Does this mean that an employer cannot require U.S. crewmembers to arbitrate claims via a clause within the employment contract?
Whilst the FAA does not apply to arbitration of U.S. crew claims, it does not follow that such claims can never proceed to arbitration. Instead, if the FAA is inapplicable, then it becomes a matter of state, rather than federal, law. Indeed, in Sherwood v. Marquette Transportation Co., on appeal (Seventh Circuit), it was held that “when a contract is not covered by the federal Act, states are free to favor, disfavor, or even ban arbitration” (587 F.3d 841 (7th Cir. 2009)).
In Trejo v. Sea Harvest, Inc. (United States District Court for the District of Massachusetts), the same was found in that:
“the fact that an employment contract with an arbitration provision is not covered by the FAA does not necessarily mean that the arbitration provision cannot be enforced. Rather, it means only that enforceability is a matter of state, rather than federal, law” (No. 21-cv-10978-ADB).
Whilst applying to an arbitration agreement within a transportation worker’s employment contract, it is useful to note that in Palcko v. Airborne Express, Inc., on appeal (Third Circuit), it was held that:
“There is no language in the FAA that explicitly preempts the enforcement of state arbitration statutes … Here, enforcement of the arbitration agreement between Palcko and Airborne under Washington state law, as if the FAA “had never been enacted,” does not contradict any of the language of the FAA, but in contrast furthers the general policy goals of the FAA favoring arbitration” (372 F.3d 588 (3d Cir. 2004)).
In this case, the employment contract importantly and expressly provided for an alternative law and jurisdiction to apply to agreements to arbitrate “to the extent that the Federal Arbitration Act is inapplicable”. This neatly brings us onto...
What things need to be considered when drafting arbitration agreements in employment contracts?
It is imperative that the contract expressly states that to the extent the FAA is inapplicable then an alternative state law will apply. In Rodgers-Rouzier v. American Queen Steamboat Operating Company, the agreement stated that “the applicability/construction of any arbitration decision shall be governed by the Federal Arbitration Act”. This was reviewed under the Indiana Uniform Arbitration Act (“IUAA”) which applies to employment contracts, including those of seafarers, and “can render an arbitration agreement in a seaman’s contract of employment valid and enforceable, despite the FAA exemption”.
The issue stemmed from the fact that the arbitration agreement was subject only to the FAA and the court subsequently held that:
“Because the parties agreed that arbitration would be governed by the FAA, which would not permit American Queen to compel arbitration, we conclude that Indiana law also would not compel Rodgers-Rouzier to arbitrate under this agreement” (23-1812 (7th Cir. 2024)).
It is also important that the employment of the crewmember is not conditional upon their acceptance of an agreement to arbitrate. In Brown v Nabors 339 F.3d 391, 392 (5th Cir. 2003), a letter was sent to all employees requiring any disputes to be resolved through arbitration. This letter provided that in the event the employee failed to return the enclosed acknowledgement form, their continued employment after the date the documents are received would constitute acceptance of the program. It was found that the agreement was considered part of the individual’s contract of employment and, as a seafarer, this would be excluded from the application of the FAA.
One way to emphasise the “not a condition of hire” point could be via opt out language within the agreement, giving the crewmember 30 days (for example) after signing the employment contract to withdraw from the arbitration agreement. Whilst it is unlikely that a crewmember would do this, it would show to a judge/arbitrator that an individual’s employment was not conditional upon acceptance of the arbitration provision within the contract. Another option is to present the arbitration agreement as a separate contract to the employment contract and ask the crewmember to sign both. It should be noted that in both cases to do so is optional and they are perfectly entitled to only sign the employment contract if that is their preference.
If the arbitration agreement is part of the overall employment contract, then another option to consider would be to have the crewmember sign the specific page where arbitration is mentioned in addition to any other page/s that they would sign as part of the requirements of their employment. The arbitration agreement should not merely be one page in a larger contract that the crewmember signs once without specifically confirming their acceptance to arbitrate.
The crewmember must have the opportunity to read and ask questions about the arbitration agreement before signing it. The employer should identify the person/s and/or relevant email address where the crewmember can submit such questions. In this event, it is advisable that any query be addressed to multiple individuals to ensure this is not overlooked should one be away from the office.
The contract should take care to specify all claims that are subject to arbitration and the full range of damages recoverable. The remedies available via arbitration should not be less than what the crewmember could obtain in a court action.
The agreement should provide that the employer / shipowner will pay all costs associated with the arbitration. This will not include the plaintiff’s legal fees unless they would otherwise be recoverable under general maritime law.
In summary:
- There must be an alternative state law option in the contract.
- The employment of the crewmember must not be made conditional upon their agreement to arbitrate all claims.
- Text should be in bold font, big letters and the agreement must identify all viable claims (Jones Act, general maritime law, maintenance and cure) subject to arbitration. It must be made clear that a crewmember’s agreement to arbitrate in turn forfeits any right to have a case decided by a judge or jury.
- The crewmember must be afforded the opportunity to read the arbitration agreement and ask questions.
- The employer must pay for the costs of arbitration.
Which States are generally favourable to arbitration?
The considerations when drafting arbitration agreements in employment contracts naturally becomes a moot point if the state law to which the agreement applies does not permit arbitration or contains some additional requirements which must be satisfied. This will not be an exhaustive list and advice should always be taken from local lawyers regarding the merits of each individual case, however our experience is as follows:
In Texas, a jurisdiction where one can easily see the benefits of keeping a plaintiff away from juries, arbitration is governed by the Texas Arbitration Act (“TAA”). Personal injury claims are excepted from the scope of the TAA, unless “(1) each party to the claim, on the advice of counsel, agrees in writing to arbitrate; and (2) the agreement is signed by each party and each party's attorney” (Tex. Civ. Prac. & Rem. Code § 171.002). Regrettably, this seems rather unlikely in practice.
Louisiana is another jurisdiction where employers / shipowners will equally wish to keep disputes away from juries. Unfortunately, local law constitutes a strong public policy against the enforceability of forum-selection (including arbitration) clauses. There are only limited exceptions to this.
Under Louisiana law:
“The provisions of every employment contract or agreement, or provisions thereof, by which any foreign or domestic employer or any other person or entity includes a choice of forum clause or choice of law clause in an employee's contract of employment or collective bargaining agreement, or attempts to enforce either a choice of forum clause or choice of law clause in any civil or administrative action involving an employee, shall be null and void” (La. R.S. 23:921(A)(2)).
It is understood that an agreement to arbitrate effectively acts as “a specialized kind of forum selection clause” (417 U.S. 506 (1974)). As such, any provision compelling arbitration within an employment contract under Louisiana law will be null and void, unless certain exceptions are met.
Whilst this article focuses on stipulating to arbitration within employment contracts, for the sake for completeness, we will briefly note that one such exception relates to the use of post-accident arbitration agreements. The aforementioned statutory provision highlights this exception where “the choice of forum clause or choice of law clause is expressly, knowingly, and voluntarily agreed to and ratified by the employee after the occurrence of the incident which is the subject of the civil or administrative action” (La. R.S. 23:921(A)(2)).
The other exception is of narrower scope. In Matthews v. Tidewater, Inc., 108 F.4th 361 (5th Cir. 2024), the court was tasked with examining whether the forum-selection clause can be enforced even though it contradicts Louisiana’s strong public policy against this. This examination was mindful of the U.S Supreme Court decision in Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) that “the forum clause should control absent a strong showing that it should be set aside” (407 U.S. 1 (1972).
The court additionally reflected upon its past decision in Lim v. Offshore Specialty Fabricators, Inc., 404 F.3d 898 (5th Cir. 2005), whereby it noted that:
“plaintiffs' employment contracts do not present the inequities the Louisiana statute was crafted to prevent. That statute seeks to protect Louisiana citizen-employees from being subjected to litigation in a foreign forum, under laws with which they are not familiar and before a foreign body” (404 F.3d 898 (2005)).
In Matthews, the plaintiff-appellant was not a Louisiana citizen and therefore was not the object of the statute. The forum-selection clause in this case was considered valid and enforceable. It therefore follows that in the event the crewmember is not a Louisiana resident and otherwise possesses little connection to Louisiana, it may be the case that the local employment-related prohibition of forum-selection (encompassing arbitration) clauses is inapplicable.
In the other U.S states and by way of a few examples, the state laws of New York, New Jersey, Massachusetts, Florida and Washington are all favourable towards the enforcement of arbitration. Additionally, the 1st, 3rd and 9th circuits have dealt with this issue for other transport workers and found in favour of arbitration clauses within crew contracts (assuming it is appropriately drafted).
What arguments do we generally see progressed against the enforcement of arbitration?
“There is uniformity under General Maritime Law and to enforce arbitration will result in different states applying different results”.
This argument was addressed in Kozur v. F/V Atlantic Bounty, whereby the arbitration clause was subject to the laws of the State of New York (and New Jersey) if it was exempt from enforcement under the FAA. In response to the above argument, the court looked towards Romero v. International Terminal Operating Co., where it was held:
“it is true that state law must yield to the needs of a uniform federal maritime law when this Court finds inroads on a harmonious system. But this limitation still leaves the States a wide scope. … state laws governing the specific performance of arbitration agreements … have been accepted as rules of decision in admiralty cases, even at times, when they conflicted with a rule of maritime law which did not require uniformity” (358 U.S. 354 (1959)).
In other words and as concluded in Kozur, this general requirement of uniformity does not preclude the application of state law to the issue of arbitration and its enforcement.
“There is federal presumption under the FAA”.
In Volt Information Sciences, Inc. v. Board of Trustees of the Leland Stanford Junior University, it was found that:
“The FAA contains no express preemptive provision, nor does it reflect a congressional intent to occupy the entire field of arbitration. Moreover … the FAA's principal purpose is to ensure that private arbitration agreements are enforced according to their terms” (489 U.S. 468 (1989)).
Ultimately, and as also highlighted in Rodgers-Rouzier, so long as the state law arbitration statues do not conflict with the FAA, then the FAA will not preempt arbitration in that state.
“The Jones Act incorporated the Federal Employers Liability Act (“FELA”) which rendered arbitration clauses in employment contracts unenforceable under FELA’s choice of venue provision”.
This argument stems from the Supreme Court’s ruling in Boyd v. Grand Trunk W.R Co., that "contracts limiting the choice of venue are void as conflicting with the Liability Act” (338 U.S. 263 (1949)).
However, in Kozur v. F/V Atlantic Bounty, it was noted that Boyd did not consider the enforceability of arbitration clauses and instead only considered forum selection clauses. It further went on to emphasise that courts have in the past noted that FELA’s venue provision is inapplicable to the Jones Act, citing Terrebonne v. K-Sea Transp. Corp., 477 F.3d 271, 283 (5th Cir. 2007) and Harrington v. Atl. Sounding Co., 602 F.3d 113, 121– 22 (2d Cir. 2010). As such, FELA’s choice of venue provision does not affect a JA claim, nor will it invalidate an arbitration agreement contained within an employment contract.
What are the benefits to employers / shipowners to arbitrate, rather than litigate, claims?
Arbitration is the submission of a dispute by agreement between parties to an arbitration forum before either one arbitrator or a panel of arbitrators for a resolution. The general benefits of arbitration are:
- The parties can choose the arbitrator/s with the experience appropriate to the relevant dispute
- Exchange of pleadings can be agreed by the parties or arbitrator/s to fit the nature of the dispute
- The process can be faster and more flexible than litigating through the courts
- Generally, arbitration agreements will specify that the award/s granted cannot be appealed, which can be viewed as a positive as it avoids drawn-out and expensive appeal proceedings.
In the context of personal injury claims subject to U.S. jurisdiction with the possibility of a jury trial and increased likelihood of a higher award of damages and liberal assessment of liability favourable to the Plaintiff, the benefit of arbitration becomes apparent. Shipowners can avoid the risk and uncertainty of a jury. This in turn means that there is a reduced risk of shipowners being featured in headlines exclaiming the latest nuclear verdict for a case which may only have had maintenance and cure expenses in the high five / low six figures. Many shipowners will be familiar with the considerations applying to the risk of a runaway jury which may overly caution general attitudes towards trial, notwithstanding the potential weak liability position. Arbitration, whilst not necessarily cheaper than litigation (fees), will remove the above issue/s and this alone can potentially save shipowners hundreds of thousands, if not millions, in settlements paid to plaintiffs (and plaintiff law firms).
