Francisco v. Stolt Achievement Mt

• Citation: 293 F.3d 270
• Decision Date: 04 June 2002
• Docket Number: No. 01-30694.,01-30694.
• Parties: Ernesto FRANCISCO, Plaintiff-Appellant, v. STOLT ACHIEVEMENT MT, a vessel bearing official number 1973; Stolt Achievement, Inc.; Stolt-Nielsen Transportation Group, Ltd.; Stolt Parcel Tankers, Inc., the operator and/or owner of the M/T STOLT ACHIEVEMENT, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 270

293 F.3d 270

Ernesto FRANCISCO, Plaintiff-Appellant, v. STOLT ACHIEVEMENT MT, a vessel bearing official number 1973; Stolt Achievement, Inc.; Stolt-Nielsen Transportation Group, Ltd.; Stolt Parcel Tankers, Inc., the operator and/or owner of the M/T STOLT ACHIEVEMENT, Defendants-Appellees.

No. 01-30694.

United States Court of Appeals, Fifth Circuit.

June 4, 2002.

James R. Sutterfield (argued), Charmagne A. Padua, Sutterfield & Webb, New Orleans, LA, for Plaintiff-Appellant.

David B. Lawton (argued), Kenneth Joseph Gelpi, Jr., Terriberry, Carroll & Yancey, New Orleans, LA, for Defendants-Appellees.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before KING, Chief Judge, and REAVLEY and WIENER, Circuit Judges.

REAVLEY, Circuit Judge:

In this appeal we conclude that the district court properly ordered the case to arbitration and accordingly affirm.

BACKGROUND

Appellant Ernesto Francisco, a Philippine national, was injured on a chemical tanker ship located on the Mississippi River. Francisco was employed aboard the M/T STOLT ACHIEVEMENT (the vessel), which was allegedly operated by Stolt-Nielsen Transportation Group, Inc., (Stolt) a Liberian corporation.

Stolt's "Crewing Manager" submitted an affidavit attesting that when Stolt hires Philippine seamen, it must comply with employment contract requirements of the Philippine Overseas Employment Administration. Francisco signed such a contract. The contract contains lengthy provisions addressing employee compensation and benefits in the event of work-related injury, illness, or death. It provides in section 29 of the "Standard Terms and Conditions" that in the event of "claims and disputes arising from this employment," the parties agree to arbitrate their disputes in the Philippines.¹ Section 31 of the same document provides that "[a]ny unresolved dispute, claim or grievance arising out of or in connection with this Contract ... shall be governed by the laws of the Republic of the Philippines, international conventions, treaties and covenants where the Philippines is a signatory."

Francisco sued Stolt in Louisiana state court, asserting claims under the Jones Act² and under general maritime law for unseaworthiness and for maintenance and cure. He alleged that suit in state court was authorized by the saving to suitors clause of 28 U.S.C. § 1333(1).

Stolt removed the case to federal district court, alleging that Francisco had signed an employment contract agreeing to arbitrate claims against Stolt in the Philippines, and that this agreement was subject to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the Convention),³ a convention to which the United States and the Philippines are both signatories. The United States implemented the Convention in 1970 through the enactment of 9 U.S.C. §§ 201-208 (hereinafter the Convention Act). Francisco filed a motion to remand the case to state court, and Stolt filed a motion to compel arbitration under 9 U.S.C. § 206. The district court denied the motion to remand, granted the motion to compel arbitration, and dismissed the suit. This appeal by Francisco followed.

DISCUSSION

Generally, the removal jurisdiction of the federal district courts extends to cases over which they have original jurisdiction.⁴ "Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties."⁵ Under § 203 of the Convention Act,⁶ "[a]n action or proceeding falling under the Convention shall be deemed to arise under the laws and treaties of the United States." Notwithstanding the saving to suitors clause,⁷ under § 205 of the Convention Act,⁸

[w]here the subject matter of an action or proceeding pending in a State court relates to an arbitration agreement or award falling under the Convention, the defendant or the defendants may, at any time before the trial thereof, remove such action or proceeding to the district court of the United States for the district and division embracing the place where the action or proceeding is pending.

The district court, therefore, had removal jurisdiction and subject matter jurisdiction if the pending dispute was one "falling under" the Convention.

The district court concluded that it should compel arbitration because this case fell under the arbitration provision of the employment contract, as well as the provisions of the Convention Act and the Convention. Francisco essentially makes three arguments as to why the district court erred. He argues first that his case does not fall under the Convention Act because there is an exception making that Act inapplicable to seaman employment contracts. He argues second that, under the Convention itself, his case is not "capable of settlement by arbitration" and otherwise does not fall under the Convention. He argues third that his claims are not subject to the arbitration agreement.

A. The Convention Act (9 U.S.C. §§ 201-208)

The Convention Act provides that "[a] court having jurisdiction under this chapter may direct that arbitration be held in accordance with the agreement at any place therein provided for, whether that place is within or without the United States."⁹ In applying the Convention, we have held that it "contemplates a very limited inquiry by courts when considering a motion to compel arbitration," and that the court should compel arbitration if (1) there is an agreement in writing to arbitrate the dispute, (2) the agreement provides for arbitration in the territory of a Convention signatory, (3) the agreement arises out of a commercial legal relationship, and (4) a party to the agreement is not an American citizen.¹⁰ "If these requirements are met, the Convention requires district courts to order arbitration."¹¹

These elements were met in the pending case. Francisco, a Philippine national, signed a written employment contract stating that claims and disputes arising from his employment, including personal injury claims, were subject to arbitration in the Philippines. The employment contract states that it shall be governed by the law of the Philippines and such conventions and treaties to which the Philippines is a signatory. The Philippines and the United States are both signatories to the Convention.¹²

Title 9 of the United States Code has two chapters relevant to this appeal. Chapter 1 contains the Federal Arbitration Act (Arbitration Act). Chapter 2 is the Convention Act. Francisco argues that under § 1 of the Arbitration Act,¹³ seaman employment contracts are excluded from the reach of the Convention Act. He argues that this exclusion applies to the Convention Act because, under § 208 of the Convention Act,¹⁴ the Arbitration Act "applies to actions and proceedings brought under [the Convention Act] to the extent that [the Arbitration Act] is not in conflict with [the Convention Act] or the Convention as ratified by the United States."

Francisco correctly points out that the Arbitration Act does not cover seaman employment contracts. Section 2 of the Arbitration Act¹⁵ generally recognizes the validity of arbitration provisions "in any maritime transaction or a contract evidencing a transaction involving commerce." However, § 1 of the Arbitration Act¹⁶ expressly excludes "contracts of employment of seamen" from the reach of the Arbitration Act.

This exclusion of seamen employment contracts in the Arbitration Act, however, conflicts with the Convention Act and "with the Convention as ratified by the United States" under § 208 of the Convention Act, and therefore is not applicable to the Convention Act. Article II(1) of the Convention itself is very broadly worded to provide that signing nations shall recognize arbitration agreements "in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration." The United States, in ratifying the Convention, agreed to apply it "only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the United States."¹⁷ Neither the Convention nor the limiting language ratifying the Convention contemplate any exception for seamen employment contracts or employment contracts in general. While the ratification language expresses an intent to limit the reach of the Convention to commercial relationships, there is no indication that employment contracts or seamen employment contracts are not considered "commercial."

In keeping with the ratification language, § 202 of the Convention Act states:

An arbitration agreement or arbitral award arising out of a legal relationship, whether contractual or not, which is considered as commercial, including a transaction, contract, or agreement described in section 2 of this title, falls under the Convention. An agreement or award arising out of such a relationship which is entirely between citizens of the United States shall be deemed not to fall under the Convention unless that relationship involves property located abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more foreign states. For the purpose of this section a corporation is a citizen of the United States if it is incorporated or has its principal place of business in the United States.

Again, nothing in this language suggests an exception for seaman employment contracts. While the Arbitration Act contains such an exception, the language from § 202 of the Convention Act states only that the legal relationships covered by the Convention Act include those transactions covered by § 2 of the Arbitration Act. The Convention Act does not state that agreements falling under the Convention are exclusively limited to those which also fall under § 2 of the ...