Eleventh Circuit affirms a motion to compel arbitration
based on the New York Convention, so long as the agreement concerns subject
matter capable of settlement by arbitration
Plaintiff Harold Leonel Pineda Lindo, a citizen and resident
of Nicaragua, began employment with NCL Ltd., a Bermudan corporation with its
principal place of business in Miami, Florida. In December 2008, Lindo claims
that he injured his back while onboard one of NCL’s vessels while acting within
the course and scope of his employment, later requiring surgery for his injury.
Lindo’s employment contract with NCL was governed by a collective bargaining
agreement. The contract also stated that all personal injury and Jones Act
claims would be resolved by binding arbitration pursuant to the United Nations
Convention on Recognition and Enforcement of Foreign Arbitral Awards. The
contract stated that the place of arbitration would be the place of the
employee’s citizenship, unless arbitration is unavailable under the Convention
in that country, in which case it shall take place in Nassau, Bahamas. The
choice of law would be that of the flag state of the vessel (Bahamas).
Lindo challenged arbitration, arguing that the claim would
arise under Bahamian negligence law, not the Jones Act. Lindo then filed a
lawsuit in Florida state court. NCL moved to compel arbitration and removal to
federal court. Lindo amended his complaint to allege a single count of Jones
Act negligence. The district court granted NCL’s motion to compel arbitration
and dismissed Lindo’s amended complaint. Lindo appealed.
The United States Court of Appeals for the Eleventh Circuit
affirmed the district court's order to compel arbitration of Lindo’s Jones Act
negligence claim. The Court began its analysis by evaluating the New York
Convention. This Convention recognizes written arbitration agreements
concerning subject matter capable of settlement by arbitration. Both Nicaragua
and the Bahamas are signatories to the Convention. Both parties agree that the
Convention applies to Lindo’s contract.
After reviewing the Convention along with Supreme Court and
circuit court precedent, the Eleventh Circuit concluded that the district court
properly enforced Lindo’s arbitration agreement and rules that the Jones Act
claims must be arbitrated in a foreign forum (Nicaragua) under Bahamian law.
The Court noted that there is a strong presumption in favor of freely
negotiated contractual choice of law and forum selection provisions. The
presumption applies greatly with regard to international commerce. “Indeed, the
Convention provides that contracting states ‘shall recognize’ written
agreements wherein parties agree to submit any and all disputes to settlement
by arbitration. New York Convention, art. II(1). This Circuit has stated, in
agreement with other circuits, that ‘a court conducts a very limited inquiry’
when ‘deciding a motion to compel arbitration under the Convention Act.’
Bautista v. Star Cruises, 396 F.3d 1294 (11th Cir. 2005) (quotation marks
omitted).” 652 F.3d 1275.
Next, the Court evaluated whether a null‑and‑void defense
would apply to the arbitration agreement, thereby making it inoperable. “In
Bautista, this Court held that an arbitration agreement is null and void under
Article II(3) of the Convention only where it is obtained through those limited
situations, ‘such as fraud, mistake, duress, and waiver,’ constituting
‘standard breach‑of‑contract defenses’ that ‘can be applied neutrally on an
international scale.’ 396 F.3d at 1302 (quotation marks omitted). Lindo’s
Contract incorporates a union‑negotiated CBA, and there is no claim—much less
any showing—of fraud, mistake, duress, or waiver. To the extent Lindo relied on
Article II, his claim fails.” 652 F.3d 1276.
Lindo also argued that the arbitration provision is
unconscionable, maintaining that he signed the Contract on a “take‑it‑or‑leave‑the‑ship”
basis. However, this was the same argument asserted by the plaintiff seamen in
Bautista. . . . This Court expressly rejected that argument, concluding that an
unconscionability defense was not available under Article II of the
Convention.” 652 F.3d 1276.
“Another defense to arbitration enforcement is one based upon
the public policy of the United States under Article V of the Convention. The
Court stated that this defense does not apply because Article V only applies at
the arbitral award‑enforcement stage, not at the arbitration‑enforcement stage
at issue here. “Article V expressly provides, ‘Recognition and enforcement of
an arbitral award may also be refused if the competent authority in the country
where recognition and enforcement is sought finds that ... [t]he recognition or
enforcement of the award would be contrary to the public policy of that
country.’ New York Convention, art. V(2) (emphasis added). Yet, Article V has
no application in the interlocutory procedural posture of this case, where NCL
seeks to enforce arbitration at the outset of the dispute.” 652 F.3d 1280.
Lastly, the Court denied Lindo’s arguments against the
enforcement of the arbitration agreement, stating that “Lindo’s challenge to
his arbitration agreement fails because (1) Bahamian law itself recognizes
negligence actions; and (2) even if, as Lindo claims, U.S. law under the Jones
Act has a more relaxed causation standard for negligence claims than Bahamian
law, these were precisely the same arguments lodged (and rejected [by this
Court]) in [Lipcon v. Underwriters at Lloyd’s, London, 148 F.3d 1285 (11th
Cir.1998)].” 652 F.3d 1283.
In Lipcon, the Court held “that the choice‑of‑law and forum‑selection
clauses were enforceable and ordered the matter to be heard in English courts
under English law, since we will declare unenforceable choice clauses only when
the remedies available in the chosen forum are so inadequate that enforcement
would be fundamentally unfair.” 652 F.3d 1283 (internal citation omitted).
“In Lindo’s case, the arbitration clause, if anything, is
fundamentally fair for several reasons. For starters, the clause is part of a
union‑negotiated collective bargaining agreement. The fact that the Jones Act
claim was expressly referenced in that CBA is clear indication that this type
of claim was expressly considered during the negotiation process. Lindo cannot
obtain the advantages of his union‑negotiated Contract, while rejecting what he
now perceives as its disadvantages. This union‑negotiated agreement is
enforceable and valid even if it waives Lindo’s U.S. statutory claim under the
Jones Act.” 652 F.3d 1284.
“Lastly, Lindo’s position would effectively eviscerate the
mutually binding nature of the Convention. Lindo maintains that his arbitration
agreement is void as against public policy because he cannot assert his U.S.
statutory rights under Bahamian law. By this logic, courts in other nations
could likewise refuse to recognize valid, mutually agreed‑upon arbitration
provisions if they contemplated the application of American law, in derogation
of home‑based statutory remedies. Yet if every country refused to recognize
arbitration agreements that contemplate the application of foreign law, the
multilateral commitment of the Convention would be defeated.” 652 F.3d 1284.
Judge
Barkett issued a dissent citing the tradition of recognizing
the “great public policy of preserving [seamen as an] important class of
citizens for the commercial service and maritime defense of the
nation.” According to the dissent, Seamen have been regarded historically
as "wards of the admiralty," and their rights have been a special
subject of U.S. maritime jurisdiction. The majority opinion
in Lindo completely ignores this well-established tradition and a
long line of cases promoting the important role of seamen in this country.
The Lindo decision fails to mention, let alone discuss,
equitable principles, public policy, or basic human rights.
Citation: Lindo v. NCL (Bahamas), 652 F.3d 1257 (11th
Cir. 2011).
*** Mr. Kenneth Todd Wallace is an attorney and founding partner of the law firm. He has nearly 20 years of experience in the legal and business professions with established excellence in trial advocacy, negotiation, strategic and initiative planning, government relations, mergers and acquisitions, and team building. See http://www.walmey.com/
