Asignacion v. Rickmers Genoa Schiffahrtsgesellschaft mbH & Cie KG , 783 F.3d 1010 ( 2015 )

Case: 14-30132 Document: 00513007448 Page: 1 Date Filed: 04/16/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 14-30132 United States Court of Appeals
Fifth Circuit
FILED
LITO MARTINEZ ASIGNACION, April 16, 2015
Lyle W. Cayce
Plaintiff–Appellee, Clerk
v.
RICKMERS GENOA SCHIFFAHRTSGESELLSCHAFT MBH & CIE KG,
Defendant–Appellant.
---------------------------------------------------------------------------------------------
RICKMERS GENOA SCHIFFAHRTSGESELLSCHAFT MBH & CIE KG,
Plaintiff–Appellant,
v.
LITO MARTINEZ ASIGNACION,
Defendant–Appellee.
Appeal from the United States District Court
for the Eastern District of Louisiana
Before STEWART, Chief Judge, and BENAVIDES and OWEN, Circuit Judges.
PRISCILLA R. OWEN, Circuit Judge:
Case: 14-30132 Document: 00513007448 Page: 2 Date Filed: 04/16/2015
No. 14-30132
Rickmers Genoa Schiffahrtsgesellschaft mbH & Cie KG (Rickmers)
sought to enforce a Philippine arbitral award given to Lito Martinez
Asignacion for maritime injuries. The district court refused to enforce the
award pursuant to the public-policy defense found in the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (the Convention) 1
and the prospective-waiver doctrine. Rickmers appeals. We reverse and
remand for the district court to enforce the award.
I
Asignacion, a citizen and resident of the Philippines, signed a contract
to work aboard the vessel M/V RICKMERS DAILAN. Rickmers, a German
corporation, owned the vessel, which sailed under the flag of the Marshall
Islands.
Philippine law mandates that foreign employers hire Filipino workers
through the Philippine Overseas Employment Administration (POEA), an arm
of the Philippine government. POEA requires Filipino seamen’s contracts to
include the Standard Terms and Conditions Governing the Employment of
Filipino Seafarers On Board Ocean Going Vessels (Standard Terms).
Asignacion’s contract incorporated the Standard Terms.
The Standard Terms include several provisions related to dispute
resolution. Section 29, in part, provides:
In cases of claims and disputes arising from this employment, the
parties covered by a collective bargaining agreement shall submit
the claim or dispute to the original and exclusive jurisdiction of the
voluntary arbitrator or panel of arbitrators. If the parties are not
covered by a collective bargaining agreement, the parties may at
their option submit the claim or dispute to either the original and
exclusive jurisdiction of the National Labor Relations Commission
(NLRC), pursuant to Republic Act of 1995 or to the original and
1 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June
10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3.
2
Case: 14-30132 Document: 00513007448 Page: 3 Date Filed: 04/16/2015
No. 14-30132
exclusive jurisdiction of the voluntary arbitrator or panel of
arbitrators.
Section 31 provides:
Any unresolved dispute, claim or grievance arising out of or in
connection with this Contract, including the annexes thereof, shall
be governed by the laws of the Republic of the Philippines,
international conventions, treaties and covenants where the
Philippines is a signatory.
Section 20(B) provides that when a seaman suffers work-related injuries, the
employer must provide the full cost of medical treatment until the seaman is
declared fit to work or his level of disability is declared after repatriation to the
Philippines. If the seaman is permanently disabled, he is entitled to scheduled
disability benefits. Section 20(G) provides that the contract covers “all claims
arising from or in the course of the seafarer’s employment, including but not
limited to damages arising from the contract, tort, fault or negligence under
the laws of the Philippines or any other country.”
While the M/V RICKMERS DAILAN was docked in the Port of New
Orleans, Asignacion suffered burns when a cascade tank aboard the vessel
overflowed. After receiving treatment at a burn unit in Baton Rouge for nearly
a month, Asignacion was repatriated to the Philippines, where he continued to
receive medical attention. The court below found that Asignacion sustained
severe burns to 35% of his body, suffered problems with his body-heat control
mechanism, and experienced skin ulcerations and sexual dysfunction. The
record and the district court’s opinion do not address Asignacion’s current
condition.
Asignacion sued Rickmers in Louisiana state court to recover for his
injuries. Rickmers filed an exception seeking to enforce the arbitration clause
of Asignacion’s contract. The state court granted the exception, stayed
litigation, and ordered arbitration in the Philippines.
3
Case: 14-30132 Document: 00513007448 Page: 4 Date Filed: 04/16/2015
No. 14-30132
Arbitration commenced before a Philippine panel, which convened under
the auspices of the Philippine Department of Labor and Employment. The
panel refused to apply, or even consider applying, United States or Marshall
Islands law, finding that Section 31 of the Standard Terms prevented the panel
from applying any law besides Philippine law. The arbitrators accepted
Rickmers’s physician’s finding that Asignacion had a Grade 14 disability—the
lowest grade of compensable disability under the Standard Terms—which
entitled Asignacion to a lump sum of $1,870.
Asignacion then filed a motion in the Louisiana state court asking that
Rickmers show cause as to why the Philippine arbitral award should not be set
aside for violating United States public policy. Rickmers removed the suit to
federal court and brought a second action in the district court seeking to
enforce the award.
The district court determined that the Convention provided the legal
framework for analyzing the award and that the only defense Asignacion
invoked was Article V(2)(b) of the Convention. Article V(2)(b) allows a
signatory country to refuse enforcement if “recognition or enforcement of the
award would be contrary to the public policy of that country.” 2
The district court proceeded to apply the traditional choice-of-law
analysis for maritime injury cases, the Lauritzen 3–Rhoditis 4 test, and
concluded that the law of the vessel’s flag—the Marshall Islands—should apply
absent a valid choice-of-law clause. The court also found that the Marshall
Islands adopts the general maritime law of the United States. The court then
held that enforcing the arbitral award would violate the United States public
2 Convention art. V(2)(b).
3 Lauritzen v. Larsen, 345 U.S. 571 (1953).
4 Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306 (1970).
4
Case: 14-30132 Document: 00513007448 Page: 5 Date Filed: 04/16/2015
No. 14-30132
policy protecting seamen. The public-policy violation arose not from the
arbitrator’s failure to apply United States law but rather because applying
Philippine law effectively denied Asignacion the “opportunity to pursue the
remedies to which he was entitled as a seaman,” i.e., maintenance and cure,
negligence, and unseaworthiness. The court additionally held that the
prospective-waiver doctrine, which invalidates certain combined choice-of-law
and choice-of-forum provisions, applied to Asignacion’s contract. Thus, the
court entered an order refusing to enforce the Philippine arbitral award.
Rickmers now appeals.
II
We review the district court’s decision refusing to enforce the Philippine
arbitral award under the same standard as any other district court decision. 5
We accept findings of fact that are not clearly erroneous and review questions
of law de novo. 6
III
The Convention applies when an arbitral award has been made in one
signatory state and recognition or enforcement is sought in another signatory
state. 7 Both forums in this case, the United States and the Philippines, are
signatories to the Convention. 8 An award’s enforcement is governed by the
Convention, as implemented at 9 U.S.C. § 201 et seq., if the award arises out
See Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
5
364 F.3d 274, 287 (5th Cir. 2004) (reviewing a district court judgment enforcing a foreign
arbitral award).
6 Hughes Training Inc. v. Cook, 254 F.3d 588, 592 (5th Cir. 2001).
Convention, 21 U.S.T. at 2566 (“The United States of America will apply the
7
Convention, on the basis of reciprocity, to the recognition and enforcement of only those
awards made in the territory of another Contracting State.”); see also id. art. I(3).
8 See, e.g., Lim v. Offshore Specialty Fabricators, Inc., 404 F.3d 898, 900-01 (5th Cir.
2005).
5
Case: 14-30132 Document: 00513007448 Page: 6 Date Filed: 04/16/2015
No. 14-30132
of a commercial dispute and at least one party is not a United States citizen. 9
The award issued as a result of arbitration between Asignacion, a Filipino
seaman, and Rickmers, a German corporation, is governed by the Convention.
A party to an award governed by the Convention may bring an action to
enforce the award in a United States court that has jurisdiction. 10 The court
“shall confirm” the award unless a ground to refuse enforcement or recognition
specified in the Convention applies. 11 The Convention permits a signatory to
refuse to recognize or enforce an award if “recognition or enforcement of the
award would be contrary to the public policy of that country.” 12
Arbitral awards falling under the Convention are enforced under the
Federal Arbitration Act (FAA). 13 An “emphatic federal policy” favors arbitral
dispute resolution. 14 The Supreme Court has noted that this policy “applies
with special force in the field of international commerce.” 15 The FAA permits
courts to “vacate an arbitrator’s decision ‘only in very unusual
circumstances.’” 16 A district court’s review of an award is “extraordinarily
narrow.” 17 Similarly, a court reviewing an award under the Convention cannot
9See 9 U.S.C. § 202 (providing that commercial arbitral awards fall under the
Convention except for certain awards entirely between United States citizens).
10 9 U.S.C. § 207.
11 Id.
12 Convention art. V(2)(b).
13 See Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 631
(1985); see also 9 U.S.C. § 201 (“The [Convention] shall be enforced in United States courts
in accordance with this chapter.”).
14 Mitsubishi, 473 U.S. at 631 (1985).
15 Id.
16Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064, 2068 (2013) (quoting First
Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 942 (1995)).
17Kergosien v. Ocean Energy, Inc., 390 F.3d 346, 352 (5th Cir. 2004), abrogated on
other grounds by Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008).
6
Case: 14-30132 Document: 00513007448 Page: 7 Date Filed: 04/16/2015
No. 14-30132
refuse to enforce the award solely on the ground that the arbitrator may have
made a mistake of law or fact. 18 The party opposing enforcement of the award
on one of the grounds specified in the Convention has the burden of proof. 19
We have held that the Convention’s “public policy defense is to be
‘construed narrowly to be applied only where enforcement would violate the
forum state's most basic notions of morality and justice.’” 20 In the context of
domestic arbitral awards, the Supreme Court has recognized a public-policy
defense only when an arbitrator’s contract interpretation violates “‘some
explicit public policy’ that is ‘well defined and dominant, and is to be
ascertained by reference to the laws and legal precedents and not from general
considerations of supposed public interests.’” 21 The Eleventh Circuit has held
that the “explicit public policy” requirement applies with the same force to
international awards falling under the Convention. 22 We see no reason to
depart from that standard here. 23
The parties do not dispute these standards. Rather, they disagree
whether Asignacion’s case provides the narrow circumstances that would
18Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
364 F.3d 274, 288 (5th Cir. 2004).
19Id. (citing Imperial Ethiopian Gov’t v. Baruch-Foster Corp., 535 F.2d 334, 336 (5th
Cir. 1976)).
20 Id. at 306 (quoting M & C Corp. v. Erwin Behr GmbH & Co., KG, 87 F.3d 844, 851
n.2 (6th Cir. 1996)).
21 United Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 43 (1987)
(quoting W.R. Grace & Co v. Local Union 759, Int’l Union of United Rubber, Cork, Linoleum
and Plastic Workers of Am., 461 U.S. 757, 766 (1983)) (some internal quotation marks
omitted).
22 Indus. Risk Insurers v. M.A.N. Gutehoffnungshütte GmbH, 141 F.3d 1434, 1445
(11th Cir. 1998).
23 Cf. Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 631
(1985) (noting that the federal policy in favor of arbitral dispute resolution “applies with
special force in the field of international commerce”).
7
Case: 14-30132 Document: 00513007448 Page: 8 Date Filed: 04/16/2015
No. 14-30132
render the arbitral award unenforceable under the Convention because it
violates United States public policy.
A
Asignacion’s public-policy defense primarily turns on the adequacy of
remedies under Philippine law. But at oral argument, Asignacion’s counsel
also urged that United States public policy requires that foreign arbitral panels
give seamen an adequate choice-of-law determination; he argued that the
arbitrators’ exclusive reliance on the choice-of-law provision in Asignacion’s
contract did not constitute a choice-of-law determination, let alone a fair one.
To the extent that Asignacion’s defense turns on the Philippine
arbitrators’ exclusive reliance on the contract’s choice-of-law provision, courts
are unable to correct this sort of unexceptional legal error (if one was in fact
made) when reviewing an arbitral award. 24 Applying Philippine law to a
Filipino seaman in Philippine arbitration, by itself, is not cause for setting
aside the award, even if American choice-of-law principles would lead to the
application of another nation’s law.
B
Asignacion has the burden of proving that the Convention’s public-policy
defense applies. 25 The Philippine arbitrators awarded Asignacion $1,870.
Were he to prevail in a suit under United States general maritime law, we have
little doubt his recovery would be greater.
As detailed above, the United States has a public policy strongly favoring
arbitration, which “applies with special force in the field of international
24See Karaha Bodas, 364 F.3d at 288 (“The court may not refuse to enforce an arbitral
award solely on the ground that the arbitrator may have made a mistake of law or fact.”); id.
at 290 & n.27 (“Under the New York Convention, the rulings of the [arbitrators] interpreting
the parties' contract are entitled to deference.”).
25See id. at 288 (citing Imperial Ethiopian Gov’t v. Baruch-Foster Corp., 535 F.2d 334,
336 (5th Cir. 1976)).
8
Case: 14-30132 Document: 00513007448 Page: 9 Date Filed: 04/16/2015
No. 14-30132
commerce.” 26 On the other hand, the United States has an “explicit public
policy that is well defined and dominant” 27 with respect to seamen: maritime
law provides “special solicitude to seamen.” 28 Seamen have long been treated
as “wards of admiralty,” 29 and the causes of action and the remedies available
to seamen reflect this special status. 30 In addition to the foundational policies
favoring arbitration and protecting seamen, other policies concerning
international dispute resolution weigh in our decision.
The Supreme Court has rejected the “concept that all disputes must be
resolved under our laws and in our courts,” 31 even when remedies under
foreign law do not comport with American standards of justice. The Supreme
Court has stated: “To determine that American standards of fairness . . . must
[apply] demeans the standards of justice elsewhere in the world, and
unnecessarily exalts the primacy of United States law over the laws of other
countries.” 32 Similarly, in Romero v. International Terminal Operating Co.,
which addressed the application of choice-of-law principles to a seaman’s claim,
the Court stated:
To impose on ships the duty of shifting from one standard of
compensation to another as the vessel passes the boundaries of
26 Mitsubishi, 473 U.S. at 631 (1985).
27 United Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 43 (1987)
(internal quotation marks omitted).
28 Miles v. Melrose, 882 F.2d 976, 987 (5th Cir. 1989).
29 U.S. Bulk Carriers, Inc. v. Arguelles, 400 U.S. 351, 355 (1971).
30 See Mitchell v. Trawler Racer, Inc., 362 U.S. 539, 550 (1960) (noting that
unseaworthiness liability is not tied to negligence); Boudreaux v. Transocean Deepwater, Inc.,
721 F.3d 723, 725-26 (5th Cir. 2013) (noting that the right to maintenance and cure cannot
be “contracted away by the seaman, does not depend on the fault of the employer, and is not
reduced for the seaman's contributory negligence” (footnotes omitted)).
31 M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 9 (1972).
32Scherk v. Alberto-Culver Co., 417 U.S. 506, 517 n.11 (1974) (citation and internal
quotation marks omitted); see also Haynsworth v. The Corporation, 121 F.3d 956, 966 (5th
Cir. 1997).
9
Case: 14-30132 Document: 00513007448 Page: 10 Date Filed: 04/16/2015
No. 14-30132
territorial waters would be not only an onerous but also an unduly
speculative burden, disruptive of international commerce and
without basis in the expressed policies of this country. The amount
and type of recovery which a foreign seaman may receive from his
foreign employer while sailing on a foreign ship should not depend
on the wholly fortuitous circumstance of the place of injury. 33
Therefore, even with regard to foreign seamen, United States public policy does
not necessarily disfavor lesser or different remedies under foreign law.
The importance of the POEA Standard Terms to the Philippine economy
also weighs in favor of enforcement. As the Ninth Circuit has noted,
“[a]rbitration of all claims by Filipino overseas seafarers is an integral part of
the POEA's mandate to promote and monitor the overseas employment of
Filipinos and safeguard their interests.” 34 Asignacion points out, correctly,
that the Convention directs a court to consider the public policy of the country
in which it sits, 35 not the public policy of the arbitral forum. But, while
Philippine public policy does not apply of its own force, our analysis of a foreign
arbitral award is colored by “concerns of international comity, respect for the
capacities of foreign and transnational tribunals, and sensitivity to the need of
the international commercial system for predictability in the resolution of
disputes . . . even assuming that a contrary result would be forthcoming in a
domestic context.” 36
33 358 U.S. 354, 384 (1989) (emphasis added).
34 Balen v. Holland America Line, Inc., 583 F.3d 647, 651 (9th Cir. 2009); see also
Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216, 221 n.25 (5th Cir. 1998) (“The effect
of POEA intervention in employment contracts is to shift the balance of power slightly in
favor of the employee in much the same way that a labor union or legislative enactment of
minimum work standards increases the level of protection for employees in the United
States.”).
35 Convention art. V(2)(b).
36 Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 629 (1985).
10
Case: 14-30132 Document: 00513007448 Page: 11 Date Filed: 04/16/2015
No. 14-30132
Asignacion maintains that in particularly egregious circumstances, a
United States court may apply our choice-of-law and forum-selection laws as a
means of implementing the Convention’s public-policy defense and refusing to
enforce an award.
The seminal maritime-injuries choice-of-law case is Lauritzen v.
Larsen. 37 In Lauritzen, a Danish seaman injured in Cuba aboard a Danish-
owned and flagged ship brought suit in the United States. 38 The seaman’s
contract provided that Danish law applied. 39 Unlike United States law,
Danish law fixed maintenance and cure to a twelve-week period and provided
a no-fault compensation scheme “similar to [American] workmen’s
compensation.” 40 The Court enumerated a seven-factor test to determine
choice of law 41 but also commented that “[e]xcept as forbidden by some public
policy, the tendency of the law is to apply in contract matters the law which
the parties intended to apply.” 42 The Court then cautioned that “a different
result would follow if the contract attempted to avoid applicable law,” such as
applying foreign law to a United States flagged ship. 43 The Court thus had
little hesitation applying the contracted-for Danish law, as the law of the ship’s
flag. 44
37 345 U.S. 571 (1953).
38 Id. at 573.
39 Id.
40 Id. at 575-76.
41 See id. at 583-92 ((1) place of injury; (2) the vessel’s flag; (3) plaintiff’s domicile or
allegiance; (4) shipowner’s allegiance; (5) place of contract; (6) inaccessibility of a foreign
forum; and (7) law of the forum); see also Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306, 309
(1970) (noting the Lauritzen factors are not exhaustive and considered the shipowner’s base
of operations).
42 Lauritzen, 345 U.S. at 588-89.
43 Id. at 589.
44 Id. at 588-89.
11
Case: 14-30132 Document: 00513007448 Page: 12 Date Filed: 04/16/2015
No. 14-30132
Lauritzen’s rule—that contractual choice-of-law provisions for foreign
seamen are generally enforceable—favors Rickmers. However, the reach of the
exception—which condemns a choice-of-law provision that attempts to “avoid
applicable law”—is less clear. On one hand, Rickmers did little, if anything, to
avoid applicable law through its contract with Asignacion. Rickmers had no
say in the choice-of-law provision; POEA’s Standard Terms mandated
Philippine law. On the other hand, the Philippine government has arguably
attempted to avoid the application of foreign law to its seamen. But it is far
from certain that the Lauritzen Court condemned such choice-of-law clauses
mandated by a foreign sovereign rather than a party to the contract.
Several cases from our court have ordered that a Filipino seamen’s
claims be resolved in Philippine arbitration or under Philippine law. Rickmers
argues that these cases establish that applying Philippine law to Asignacion’s
claims does not violate public policy. Many of these cases simply weigh the
Lauritzen–Rhoditis factors without addressing any public-policy concerns. 45
The decisions that reach public-policy considerations address policies
irrelevant to the remedies at issue in the present case. 46
Our decision in Calix-Chacon v. Global International Marine, Inc. 47
addressed the question of reduced remedies in foreign law. In Calix-Chacon, a
45 See Quintero v. Klaveness Ship Lines, 914 F.2d 717, 722-23 (5th Cir. 1990); Cuevas
v. Reading & Bates Corp., 770 F.2d 1371, 1378-79 (5th Cir. 1985), abrogated on other grounds
by In re Air Crash Disaster Near New Orleans, La., 821 F.2d 1147 (5th Cir. 1987) (en banc).
46 See Lim v. Offshore Specialty Fabricators, Inc., 404 F.3d 898, 900, 906 (5th Cir.
2005) (rejecting a public-policy challenge to Philippine arbitration based on Louisiana’s policy
disfavoring forum-selection clauses in employment litigation); Marinechance Shipping Ltd.
v. Sebastian, 143 F.3d 216, 219-21 (5th Cir. 1998) (citing Carnival Cruise Lines, Inc. v. Shute,
499 U.S. 585 (1991)) (rejecting a challenge to contracts containing the POEA Standard Terms
because individual Filipino seamen lacked bargaining power); cf. Francisco v. STOLT
ACHIEVEMENT MT, 293 F.3d 270, 277-78 (5th Cir. 2002) (upholding an order to arbitrate
in the Philippines and finding that the suspension of a Philippine law that would have
otherwise limited remedies did not compel against arbitration).
47 493 F.3d 507 (5th Cir. 2007).
12
Case: 14-30132 Document: 00513007448 Page: 13 Date Filed: 04/16/2015
No. 14-30132
Honduran seaman signed a contract providing that Honduran law would apply
and specifying a Honduran forum. 48 He brought a claim in an American court
for maintenance and cure, and the district court held the forum-selection
clause unenforceable on public-policy grounds because both general maritime
law and the Shipowner’s Liability Convention of 1936 (Shipowner’s
Convention) “express[ed] a strong public policy” against abridging
maintenance and cure liability in contract. 49 On appeal, we concluded that
under our precedents, the Shipowner’s Convention did not require us to
invalidate a foreign forum-selection clause when foreign law imposed a lower
standard of care. 50 We vacated the district court’s decision because it relied on
the Shipowner’s Convention and remanded for further analysis of the public-
policy question under the general maritime law. 51
In Calix-Chacon, we expressly refrained from addressing the general
maritime law’s weight in the public-policy analysis. Nonetheless, our
conclusion that the Shipowner’s Convention did not, as a matter of policy,
prevail over a reduced standard of care in Honduran law, suggests we should
be reluctant to conclude that lesser remedies make an award unenforceable on
policy grounds.
In Aggarao v. MOL Ship Management Co., 52 the District of Maryland,
relying on the district court’s decision in the present case, refused to enforce a
Filipino seaman’s arbitral award. The Philippine arbitrators determined that
Aggarao had a Grade 1 disability—the highest grade under the POEA
contract—and awarded him $89,100 in disability benefits, sick pay, and
48 Id. at 509.
49 Id. at 510.
50 Id. at 514 (citing In re McClelland Eng’rs, Inc. 742 F.2d 837, 839 (5th Cir. 1984)).
51 Id.
52 Civ. No. CCB–09–3106, 2014 WL 3894079 (D. Md. Aug. 7, 2014).
13
Case: 14-30132 Document: 00513007448 Page: 14 Date Filed: 04/16/2015
No. 14-30132
attorney’s fees. 53 The district court found that Aggarao had over $700,000 in
unpaid medical debts, had to forgo necessary treatments, and would require
lifetime care. 54 The Maryland district court found that Aggarao’s limited
remedies under the POEA contract violated public policy and refused to enforce
the arbitral award. 55
Asignacion contends that Aggarao is on all fours with his claims. We
disagree. Unlike in Aggarao, the arbitrators found that Asignacion had a
Grade 14 disability—the lowest compensable grade—and the district court
made no findings related to the adequacy of the award vis-à-vis Asignacion’s
lasting injuries or unmet medical expenses. Rather, the district court only
determined that the arbitration and award “effective[ly] deni[ed]” Asignacion
the right to pursue his general maritime remedies. But that finding is
insufficient to support the conclusion that the public policy of the United States
requires refusing to enforce the award.
Asignacion’s arbitral award does not represent the sum total of
Rickmers’s obligation to Asignacion under the POEA Standard Terms contract.
Section 20(B) required Rickmers to pay Asignacion’s medical costs until he was
repatriated to the Philippines and his disability level was established. There
is no dispute that Rickmers met its obligations under Section 20(B). At oral
argument, Asignacion’s counsel represents that he has incurred medical
expenses after Rickmers’s Section 20(B) obligation terminated. But our careful
review of the record has found no evidence that the Philippine arbitral award
was inadequate relative to Asignacion’s unmet medical needs, let alone so
inadequate as to violate this nation’s “most basic notions of morality and
53 Id. at *6-7.
54 Id. at *5.
55 Id. at *14.
14
Case: 14-30132 Document: 00513007448 Page: 15 Date Filed: 04/16/2015
No. 14-30132
justice.” 56 We conclude that the district court erred in determining that
Asignacion’s award violated the public policy of the United States.
C
Finally, Rickmers contends that the district court erred by also relying
on the prospective-waiver doctrine to refuse to recognize the Philippine
arbitral award. We agree.
In Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., the
Supreme Court addressed a district court’s enforcement of an agreement to
arbitrate, which forced an auto dealer to arbitrate its antitrust claims under
the Sherman Act, 15 U.S.C. § 1 et seq., in Japan. 57 The Court commented, in
dictum, that “in the event the choice-of-forum and choice-of-law clauses
operated in tandem as a prospective waiver of a party's right to pursue
statutory remedies for antitrust violations, we would have little hesitation in
condemning the agreement as against public policy.” 58 Similarly, in Vimar
Seguros y Reaseguros, S.A. v. M/V Sky Reefer, the Court, again in dictum,
suggested that Mitsubishi’s prospective-waiver doctrine might apply to
contracts under the Carriage of Goods by Sea Act, 46 U.S.C. app. § 1300 et
seq. 59 In both cases, the Court declined to apply the doctrine, in part, because
it would be premature to do so; each case addressed the enforceability of an
agreement to arbitrate, as opposed to awards in which the arbitrators actually
failed to address causes of action under American statutes. 60
56Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
364 F.3d 274, 288 (5th Cir. 2004) (quoting M & C Corp. v. Erwin Behr GmbH & Co., KG, 87
F.3d 844, 851 n.2 (6th Cir. 1996)).
57 473 U.S. 614, 619-21 (1985).
58 Id. at 637 n.19.
59 515 U.S. 528, 540-41 (1995).
60 See Mitsubishi, 473 U.S. at 637 n.19; Vimar, 515 U.S. at 540.
15
Case: 14-30132 Document: 00513007448 Page: 16 Date Filed: 04/16/2015
No. 14-30132
The present case is at the award-enforcement stage, unlike Mitsubishi
and Vimar, and the district court applied the prospective-waiver doctrine. The
district court noted that the antitrust laws in Mitsubishi and COGSA in Vimar
applied to “business disputes between sophisticated parties.” Because seamen
are afforded special protections under United States law, unlike sophisticated
parties, the district court concluded that the prospective-waiver doctrine
prevented the enforcement of the Philippine arbitral award.
However, the prospective-waiver doctrine is limited to statutory rights
and remedies. From Mitsubishi onwards, the Supreme Court has referred only
to “statutory” rights and remedies when discussing the doctrine. 61 The Court
recently continued that phrasing in American Express Co. v. Italian Colors
Restaurant, where the Court refused to apply the doctrine to a waiver of class
arbitration. 62 The Supreme Court has not extended the prospective-waiver
doctrine beyond statutory rights and remedies. The district court therefore
erred when it relied on the doctrine to afford Asignacion an opportunity to
pursue his claims under the general maritime law. Additionally, to apply that
doctrine in every case in which a seaman agreed to a choice-of-law provision
that would result in lesser remedies than those available under laws of the
United States would be at odds with the rationale of the Supreme Court’s
61 See Mitsubishi, 473 U.S. at 637 (“so long as the prospective litigant effectively may
vindicate its statutory cause of action in the arbitral forum”); id. at 637 n.19 (“take cognizance
of the statutory cause of action”); id. (“right to pursue statutory remedies”); see also Vimar,
515 U.S. at 540 (“right to pursue statutory remedies” (quoting Mitsubishi, 473 U.S. at 637
n.19)).
62 See 133 S. Ct. at 2310 (2013) (“agreement forbidding the assertion of certain
statutory rights”); id. at 2311 (“it is not worth the expense involved in proving a statutory
remedy”); id. (“[i]t no more eliminates those parties’ right to pursue their statutory remedy”);
see also id. at 2319 (KAGAN, J., dissenting) (arguing that the doctrine should apply but noting
that the doctrine “asks about the world today, not the world as it might have looked when
Congress passed a given statute”).
16
Case: 14-30132 Document: 00513007448 Page: 17 Date Filed: 04/16/2015
No. 14-30132
reasoning in Romero v. International Terminal Operating Co., 63 discussed
above.
* * *
For the foregoing reasons, we REVERSE the order of the district court
and REMAND for the district court to enforce the arbitral award.
63 358 U.S. 354, 384 (1989).
17