ENFORCING FORUM SELECTION CLAUSES IN CREW CONTRACTS
(published December
1999)
In
recent years there has been an ever-increasing number of U.S. claims filed
by seamen who are neither citizens nor residents of the United States. These
seamen file claims in U.S. courts, hoping for large verdicts from U.S. juries,
despite their injuries occurring aboard foreign-flag vessels sailing outside
U.S. waters. Typically they seek little or no medical treatment at any U.S.
facility. Their home countries often provide reasonable remedies for injuries
sustained aboard foreign-flagged vessels, including in some cases no-fault
compensation. Under certain circumstances, U.S. courts can and do compel foreign
litigants to pursue their claims abroad, particularly when a forum selection
clause is included in the seafarer's employment contract.
The labor force on non-U.S. flagged vessels includes many thousands of seamen who hail from major seafaring nations around the globe, including the United Kingdom, Canada, France, Germany, Italy, Norway, Portugal and the Philippines. These countries often have sophisticated legal remedies available to their seafarers for death, injury or contract based claims which arise during employment aboard foreign-flagged vessels. Many of these non-U.S. seafarers are members of strong seamen's unions, and their employment is subject to carefully negotiated terms of collective bargaining agreements ("CBAs"). Often, one of the terms of the CBA contract is a forum selection clause requiring that disputes be litigated in the home nation of the seaman where adequate remedies exist. U.S. courts are being called upon with increasing frequency to resolve cases involving foreign seamen who have no contact with the forum state, other than the fortuity that the vessel upon which they are employed entered a U.S. port at some point. Thus, the question often before the court is whether a union negotiated forum selection provision in crewmembers' contracts is enforceable. The issue is significant and recurring because most foreign flag vessel operators employ crewmembers under union contracts which dictate the terms of their employment, including the forum for dispute resolution.
The U.S. Supreme Court in M/S BREMEN v. Zapata Off-Shore Co., 407 U.S. I (1972), held that forum selection clauses in admiralty cases generally "are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be unreasonable under the circumstances." Although the case involved a cargo dispute, the High Court held that unless the party opposing the clause can meet his heavy burden of proof with evidence that: (1) enforcement would be unreasonable or unjust; or (2) the clause was procured by fraud; and (3) that the forum selected would be so gravely difficult and inconvenient that for all purposes the party would be deprived of their day in court, the clause must be enforced. M/S BREMEN, 407 U.S. at 17.
The U.S. Supreme Court refined its analysis of forum selection clauses in Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), which involved a cruise ship passenger's slip and fall action against Carnival Cruise Lines ("Carnival"). The Carnival passage contract contained a clause requiring that all disputes be filed in Florida. The passenger, a Washington resident who embarked in California, filed suit in Washington. Carnival asserted the Florida forum selection clause as a defense. Plaintiff attacked the clause because it was not the product of negotiation and effectively deprived her of her day in court. 499 U.S. at 590. The Court rejected these arguments, even though plaintiff did not and could not bargain for the clause. The Court held forum selection clauses in routine adhesion contracts are enforceable so long as they are reasonable. Id. at 593. Because the clause limited Carnival's exposure to suits in many states, eliminated passengers' confusion about where to file suit, and tended to reduce ticket prices, the clause was reasonable and enforceable. Id. at 593-594.
More recently, the Fifth Circuit Court of Appeal, in Marinechance Shpg. v. Sebastian, 143 F.3d 216 (Sth Cir. 1998), adopted Shute's analysis in concluding a Philippine choice-of-law/forum clause contained in a seaman's employment contract was valid and enforceable, despite the fact that his injuries occurred in Mississippi waters. (The case was filed in the District of Mississippi.) The court held: "The similarities between the present case and [Shute] are many. The contracts of employment for seamen aboard international vessels are routine; the seamen individually do not have much bargaining power. The selection of a forum in advance reduces the vessel owner's exposure to suits in forums all over the world. Furthermore, it informs the seamen of where their causes of action can be maintained." Id. at 226.
Likewise, in Lejano v. Bandak, 705 So.2d 158 (La. 1997), a Filipino seaman filed a Jones Act claim in Louisiana state court for injuries arising in Florida while he was employed aboard defendant's Norwegian-flagged vessel. The employment contract/CBA between plaintiff and his employer contained a forum selection clause which required that suit be brought in either the Philippines or Norway. Id. at 160. The Louisiana State Court determined the forum selection clause to be valid and that the case was governed by either Norwegian or Philippine law. Id. The decision was upheld on appeal. Plaintiff sought a writ. The Louisiana Supreme Court enforced the forum selection/choice-of-law clause, holding: "Under these circumstances, this court finds that the forum selection provision of the employment contract is not adhesive, neither is it affected by fraud, undue influence, or overweening bargaining power. Moreover, Mr. Lejano has failed to make a clear showing that enforcement would be unreasonable, unjust, fraudulent or overreaching. Following the standards of The Bremen, we hold that the forum selection provision of the employment contract is enforceable." Id. at 168. Plaintiff also argued the contract was written in English, a language he did not understand. Lejano, 705 So.2d at 167. This argument was of no consequence. The CBA was negotiated on his behalf and he had been afforded the benefits of its provisions. Id.
U.S. courts in the Second, Third and Fourth Circuits have also relied on M/S BREMEN/Shute to enforce forum selection clauses in Jones Act cases, regardless of whether the provisions were the result of collective bargaining negotiations, and even when an accident arose in the U.S., an American seaman was involved or the defendant was American. Second Circuit decisions include: Ioannides v. Marika Maritime Corp., 928 F.Supp. 374 (S.D. N.Y. 1996) [enforcing Greek forum selection clause contained in CBA against relatives and personal representatives of deceased Greek nationals despite vessel being owned and operated by U.S. interests with a New York base of operations]; Tsakonites v. Transpacific Carriers Corp., 368 F.2d 426 (2d Cir. 1966), cert. denied, 386 U.S. 1007 (1967) [dismissing Greek seaman's Jones Act claim against U.S. shipowner for injuries sustained while vessel was berthed in Brooklyn pursuant to Greek choice-of-law clause; court noted "his employment contract by its terms limits his rights to those arising under Greek law - a factor which weight must be given because it represents plaintiff's jurisdictional choice he doubtless did not have the slightest knowledge of the provision of American statutes enacted for the benefit of American seamen by our Congress for their protection. It is not unfair to have him abide by his agreement"]; and Damigos v. Flanders Compania Naviera S.A., 716 F.Supp. 104, 105 (S.D. N.Y. 1989) [Greek forum selection/choice-of-law clause contained in Greek seaman's CBA required dismissal of suit for Jones Act negligence against the owner of the Greek-flagged vessel upon which they served, the vessel's Greek and U.S. operating agents and the shareholder/director of defendant corporations].
Third Circuit decisions include: Bastas v. Atlantic Maritime Enterprises Corp., 1988 A.M.C. 2162 (E.D. Pa. 1988) [Greek citizen filed suit in Pennsylvania under the Jones Act and general maritime law for injuries he sustained aboard a Greek vessel in the Philadelphia harbor; his injuries required medical treatment in Philadelphia and Greece; the vessel's agent was a New York corporation and her owner was a Liberian corporation. Defendants motion for dismissal pursuant to the Greek forum selection/choice-of-law clause contained in plaintiff's employment agreement, negotiated through a collective bargaining process granted].
Decisions from the Fourth Circuit include: Sanchez v. Commodore Cruise Lines, 713 So.2d 572 (LA. App. 4th Cir. 1998) [Panama forum selection clause contained in employment contract enforced against Honduran plaintiff injured aboard a Panamanian vessel docked in the Port of Orleans, despite his claim he did not speak english and could not understand the terms of the contract]; and Prado v. Sloman Neptun Schiffahrts - A.Gr., 611 So.2d 691 (4th Cir. 1992) [Philippine choice-of-law/forum clauses in employment contract required dismissal of suit notwithstanding Louisiana's statutory prohibition of forum non conveniens dismissal and despite the fact defendant's only vessel called to New Orleans every 12 days].
Fifth Circuit decisions include: Dorizos v. Lemos & Pateras, Ltd, 437 F.Supp. 120, 121 (S.D. Ala. 1977) [Greek forum selection clause enforced against Greek suing for injuries sustained aboard a Greek-flagged vessel docked in Alabama despite arguments pertaining to the nature and extent of defendants' U.S. contacts]; and Bellaza v. Chios Sky Shipping & Trading, S.A., et al., 1999 A.M.C. 1607 (E.D. La. 1999) [Nicaraguan seaman who did not speak, read or understand English, the language used in the employment contract, was allegedly injured while the Panamanian vessel owned and operated by Panamanian corporations was moored in New Orleans; court enforced Greek forum selection clause in employment contract and dismissed plaintiff's suit].
Despite the fact that courts from several circuits across the U.S. have concluded forum selection clauses contained in crewmembers' contracts of employment do not contravene public policy and should be respected, there is no guarantee on enforcement. Until the issue is squarely addressed by the United States Supreme Court, the outcome of every case, particularly those outside of the Second, Third, Fourth and Fifth Circuits, remains uncertain. This is, in part, because crewmembers' attorneys typically blur the analysis set forth by the U.S. Supreme Court for determining the enforceability of a forum selection clause (i.e. that such clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be unreasonable under the circumstances), with the forum non conveniens/choice-of-law analysis set forth by the U.S. Supreme Court in Lauritzen v. Larsen, 345 U.S. 571 (1953) and Hellenic Lines, Limited v. Rhoditis, 398 U.S. 306 (1970). Each of these two forum non conveniens/choice-of-law decisions predate M/S BREMEN and Shute. More importantly, neither decision deals with the specific issue of the enforceability of a forum selection clause in a crewmember employment contract. In Rhoditis supra, 398 U.S. at 306, the Supreme Court was concerned with "determining whether a particular shipowner should be held to be an employer for Jones Act purposes." The enforcement of plaintiff's employment contract (or forum selection clause) was not addressed. In Lauritzen, supra, 345 U.S. at 573 the Court stated: "[T]he key issue in this case is whether statutes of the United States should be applied to this claim of maritime tort." The enforceability of the forum selection clause in plaintiff's employment contract was not raised, although the court found the contract's explicit terms compelling: "But if contract law is nonetheless to be considered, we face the fact that this contract was explicit that the Danish law and the contract with the Danish Union were to control. Except 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. We are aware of no public policy that would prevent the parties to this contract, which contemplates performance in a multitude of territorial jurisdictions and on the high seas, from so settling upon the law of the flag-state as their governing code." Id. at 588-589.
The relevancy of the forum non conveniens/choice-of-law analysis on a motion to enforce a forum selection clause in an employment agreement was raised in Lejano, supra and was rejected. The Louisiana Supreme Court held the plaintiff's union employment contract requiring he pursue his claim in Norway or the Philippines was valid and enforceable despite his "Jones Act" claims. In light of the existence of an enforceable forum selection clause, the court found there was simply no reason for a court to engage the Lauritzen / Rhoditis choice-of-law analysis. Lejano, supra, 705 So.2d at 169.
In the past, shipowners have been reluctant to move to dismiss based solely on a forum selection clause. Instead, defense attorneys representing foreign shipowners have typically raised forum-non-conveniens or choice-of-law defenses. Many courts in reviewing this tactic, and applying the Lauritzen / Rhoditis choice-of-law analysis, have found the existence of a forum selection or choice-of-law clause in the crewmember's contract of employment to be compelling evidence in the shipowner's favor that U.S. Iaw does not apply if the forum in the contract can, in fact, provide a remedy. Forum selection clauses designating the Philippines, for example, have been found persuasive in the choice of law and/or forum non-conveniens analysis. Saroza v. Royal Caribbean Corp., 1992 A.M.C. 428 (C.D. Cal. 1991), aff 'd, 1994 A.M.C. 3224 (9th Cir. 1993) [Philippine forum selection clause in employment contract enforced despite vessel operator having a Florida base of operations and fact injury occurred while Liberian-flag ship was docked in U.S.]; and Santos v. Royal Cruise Line Ltd., 1996 A.M.C. 773 (Cal. Sup. Ct. 1995) [Filipino plaintiff's employment contract deemed binding and enforceable, requiring claim for personal injuries which occurred while vessel docked in Los Angeles, California be adjudicated in the Philippines under Philippine law]. Clauses designating Greece as the proper forum have also been found compelling, as stated in Ram v. J.G. Carras, Ltd., 1981 U.S. Dist. Lexis 9731 (D.C. Mass. 1981) [Greek forum selection clause enforced against Indian seaman injured aboard Greek vessel docked in Massachusetts]; Plataniotis v. David Shipping, Inc. and Seres Shipping, Inc., 1978 A.M.C. 2603 (S. Ct. N.Y. 1978) [Greek forum selection clause contained in CBA governing Greek seaman's employment contract enforced; personal injury occurred aboard Liberian-flagged vessel while in Romanian waters]; and Morewitz v. Evgenia G, 1979 A.M.C. 1137 (E.D. Va 1978) [Greek forum selection clause in deceased Greek seaman's employment contract enforceable]. Forum selection and choice-of-law clauses required by the Norwegian Seaman's Union ("NSU") designating Norway as an exclusive forum have also been found to be compelling evidence U.S. Iaw does not apply: Tjonaman v. Alshlittre, 340 F.2d 290 (2d Cir. 1965) [Norwegian choice-of-law clause contained in NSU employment agreement executed in New York for work on Norwegian registered vessel enforced against Dutch national who was a legal U.S. resident-alien]; Shahid v. Als J. Ludwig Mowinckels Rederi, 236 F.Supp. 751 (S.D. N.Y. 1964) [NSU Norwegian choice-of-law clause contained in employment agreement executed in New York enforced against Egyptian national who sustained injuries aboard Norwegian flag vessel while in New York]; The AUSTVARD, 34 F.Supp. 431 (D. MD. 1940) [Denmark nationals and members of the Norwegian Seamen's Union, required to pursue claim for wages in Norway, pursuant to the Norwegian choice-of-law/forum clause contained in seaman's employment contracts]; Johnson v. Stolt Nielsen, Inc., 1995 A.M.C. 2662 (Diet. Ct. N.J. 1994) [Norwegian choice-of-law clause enforced against English seaman injured off coast of Germany aboard Liberian-owned, Norwegian-flagged vessel]; Lockwood v. M/S Royal Viking Star, 663 F.Supp. 181 (C.D. Cal. 1986), aff'd, 820 F.2d 1227 (9th Cir. 1987) [Norwegian choice-of-law clause enforced against American plaintiff filing Jones Act suit for injuries received while Norwegian cruise ship was in Hong Kong]; and Tarasenko v. Cardigan Shipping Co., 671 F.Supp. 997 (S.D. N.Y. 1987) [Norwegian plaintiff's suit dismissed pursuant to Norwegian forum selection clause in employment contract signed in the U.S.].
Many states enforce forum selection clauses against non-seafaring U.S. citizens, even if the clause is not the product of union negotiations and the forum selected requires litigation outside of the United States. If courts are required to honor such clauses in cases brought by and against U.S. citizens, logic dictates they must be enforced against foreign citizens who have never resided in the United States, are suing foreign defendants, and have prescribed remedies and compensation systems available in their home nations. There may be certain cases in which enforcement of a forum selection clause may be unreasonable, such as when no remedy exists in the chosen forum. However, there are clearly many cases in which the terms of a union-negotiated employment contract and applicable foreign laws are reasonable, should be respected and must be enforced under controlling precedents. Blanket refusal to enforce forum selection clauses in employment contracts violates the comity and respect for the laws developed by other civilized nations. Access to U.S. courts by foreign seamen without any limitation whatsoever merely encourages forum shopping, wastes judicial resources and encourages frivolous lawsuits.
Kaye, Rose has been actively pursuing enforcement of forum selection clauses in crewmembers' contracts of employments for many years. Although the federal courts are becoming more receptive to the idea, state courts remain reluctant to enforce such contract terms. Consequently, there has been an increase in the number of crewmember filings in state court. As was the case with enforcement of forum selection clauses in the passenger context prior to the Shute decision of the U.S. Supreme Court, it will most likely take some time before these clauses are treated as presumptively valid and enforceable against crewmembers. In light of the fact many courts currently embrace the idea of enforcing these clauses, continued perseverance on the part of the defense bar is likely to reap positive results. The conclusion is simply inescapable that there is little or no difference between enforcement of these clauses in the passenger or crewmember context, and that the Shute analysis must be applied with equal vigor in both contexts.
