Lindo v. NCL (Bahamas), Ltd.
652 F.3d 1257, 2012 A.M.C. 409, 191 L.R.R.M. (BNA) 2551 (2011)
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Rule of Law:
An international arbitration agreement subject to the New York Convention is enforceable at the initial agreement-enforcement stage, even if it requires a U.S. statutory claim to be arbitrated under foreign law. Public policy objections based on a prospective waiver of statutory rights are premature and may only be raised at the subsequent award-enforcement stage.
Facts:
- Harold Leonel Pineda Lindo, a citizen of Nicaragua, executed an employment contract in January 2008 with NCL (Bahamas) Ltd. to work as a crewmember on its cruise ship.
- The contract specified that the ship, M/S Norwegian Dawn, flew a Bahamian flag of convenience.
- The employment contract contained an arbitration clause requiring all claims, including personal injury claims under the U.S. Jones Act, to be resolved exclusively by binding arbitration pursuant to the New York Convention.
- This arbitration clause stipulated that the arbitration would take place in the seaman's country of citizenship (Nicaragua).
- The contract also included a choice-of-law provision stating that the substantive law to be applied in arbitration would be the law of the vessel's flag state (Bahamian law).
- In December 2008, while working for NCL on the company's private island in the Bahamas, Lindo injured his back after being ordered to transport heavy trash bags to the ship.
Procedural Posture:
- In 2009, Harold Leonel Pineda Lindo filed a lawsuit against NCL (Bahamas) Ltd. in Florida state court, alleging Jones Act negligence and other claims.
- NCL removed the case to the U.S. District Court for the Southern District of Florida and filed a motion to compel arbitration based on Lindo's employment contract.
- Lindo filed a second amended complaint alleging only a single count of Jones Act negligence and opposed the motion to compel arbitration.
- Lindo argued the arbitration provision was void as against public policy because it operated as a prospective waiver of his Jones Act claim.
- The U.S. District Court granted NCL's motion to compel arbitration and dismissed Lindo's complaint.
- Lindo, as appellant, appealed the district court's order to the U.S. Court of Appeals for the Eleventh Circuit, with NCL as the appellee.
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Issue:
Does an arbitration agreement governed by the New York Convention, which prospectively waives a seaman's statutory remedies under the Jones Act by requiring arbitration in a foreign country under foreign law, violate public policy and render the agreement unenforceable at the agreement-enforcement stage?
Opinions:
Majority - Hull, J.
No, such an agreement is enforceable at the agreement-enforcement stage. The New York Convention establishes a two-stage process for handling international arbitration: an initial agreement-enforcement stage (Article II) and a subsequent award-enforcement stage (Article V). The public policy defense that a party prospectively waived its statutory rights is located in Article V and can only be raised at the award-enforcement stage, after arbitration has concluded. At the initial agreement-enforcement stage, a court's inquiry is limited to the narrow defenses in Article II, which permit invalidating an agreement only if it is 'null and void, inoperative or incapable of being performed.' Following circuit precedent in Bautista, the 'null and void' clause encompasses only standard, internationally neutral contract defenses like fraud, duress, or mistake, not the domestic public policy of the forum. Therefore, Lindo's argument is premature and he must proceed to arbitration.
Dissenting - Barkett, J.
Yes, such an agreement is unenforceable as a violation of public policy. The 'null and void' clause of Article II of the New York Convention should be interpreted to include public policy defenses, as it is inefficient and unjust to compel arbitration when the resulting award would be unenforceable. Supreme Court precedent, particularly the 'prospective waiver' doctrine from Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., indicates that an agreement should be condemned if it forces a party to forfeit its statutory remedies. Here, the agreement forces Lindo to arbitrate his Jones Act claim under Bahamian law, which has a much stricter causation standard than the 'featherweight' standard under the Jones Act. This effectively eviscerates his statutory right, constituting a prospective waiver that violates the strong U.S. public policy of protecting seamen, and therefore the agreement should be found null and void at the outset.
Analysis:
This decision reinforces a strict, two-stage approach to enforcing international arbitration agreements under the New York Convention, prioritizing the enforcement of the agreement itself over substantive U.S. public policy concerns at the initial stage. It significantly narrows the path for litigants to challenge arbitration clauses based on the 'prospective waiver' doctrine, pushing such arguments to the post-award stage. The ruling also creates a clear internal tension within the Eleventh Circuit by explicitly rejecting the reasoning of a prior panel in Thomas v. Carnival Corp., setting the stage for potential en banc review or Supreme Court clarification on when public policy defenses can be raised.
