Asignacion v. Rickmers Genoa Schiffahrtsgesellschaft mbH & Cie KG

• Decision Date: 16 April 2015
• Docket Number: No. 14–30132.,14–30132.
• Citation: 783 F.3d 1010
• Parties: Lito Martinez ASIGNACION, Plaintiff–Appellee, v. RICKMERS GENOA SCHIFFAHRTSGESELLSCHAFT MBH & CIE KG, Defendant–Appellant. Rickmers Genoa Schiffahrtsgesellschaft mbH & Cie KG, Plaintiff–Appellant, v. Lito Martinez Asignacion, Defendant–Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

783 F.3d 1010

Lito Martinez ASIGNACION, Plaintiff–Appellee

v.RICKMERS GENOA SCHIFFAHRTSGESELLSCHAFT MBH & CIE KG, Defendant–Appellant.

Rickmers Genoa Schiffahrtsgesellschaft mbH & Cie KG, Plaintiff–Appellant

v.Lito Martinez Asignacion, Defendant–Appellee.

No. 14–30132.

United States Court of Appeals, Fifth Circuit.

April 16, 2015.

Richard J. Dodson, Esq. (argued), Frederick & Beckers, L.L.C., Baton Rouge, LA, Darren D. Sumich, Cossich, Sumich, Parsiola & Taylor, L.L.C., Belle Chasse, LA, for Plaintiff–Appellee.

Peter Brooks Sloss, Esq. (argued), Timothy David DePaula, Esq., Robert H. Murphy, Esq., Murphy, Rogers, Sloss & Gambel, New Orleans, LA, for Defendant–Appellant.

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

Before STEWART, Chief Judge, and BENAVIDES and OWEN, Circuit Judges.

Opinion

PRISCILLA R. OWEN, Circuit Judge:

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 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.

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 Lauritzen³ –Rhoditis⁴ 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 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 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 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 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,...