Opinion
NO. 01-1314
July 23, 2001
ORDER AND REASONS
Before the Court is plaintiff Tobias D. Gavino's Motion for Remand. For the following reasons, the plaintiff's motion is DENIED.
A. Background
On October 10, 2000, plaintiff Tobias D. Gavino ("Gavino"), a Philippine citizen and resident, was injured in an accident while working as a seaman on board the M/V MONTALLEGRO, an Italian ship. Gavino was serving on the vessel pursuant to a standard Philippine Overseas Employment Administration (POEA) contract, which requires any dispute to be resolved through arbitration in the Philippines.
The POEA is a Philippine government agency which regulates overseas employment of Filipinos. The POEA prescribes rules and regulations for the employment of seamen and approves their employment contracts.
On January 24, 2001, Gavino filed suit against Eurochem Italia ("Eurochem"), the owner of the MONTALLEGRO, in Louisiana state court. Eurochem subsequently removed the case, alleging that this Court has federal question jurisdiction to enforce the arbitration agreement under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. § 201-08 ("the Convention"). Gavino argues that the Convention is inapplicable to his case and seeks remand.
B. Law and Analysis
A defendant generally may remove a civil action brought in state court to a federal district court which would have had original jurisdiction. See 28 U.S.C. § 1441. "[Wjhen faced with a motion to remand, it is the defendant's burden to establish the existence of federal jurisdiction over the controversy." Winters v. Diamond Shamrock Chem. Co., 149 F.3d 387, 397 (5th Cir. 1998), cert. denied, 526 U.S. 1034 (1999).
Disputing the defendant's argument that the Convention confers federal question jurisdiction, Gavino claims that the Convention does not apply to employment contracts of seamen. Alternatively, he argues that his employment contract fails to meet the Convention's requirements and that the arbitration agreement is inequitable and violates Louisiana law.
Gavino first asserts that the employment contracts of seamen are explicitly excluded from the Convention. However, the district courts inLejano v. K.S. Bandak, No. 00-2990 (E.D.La. Nov. 3, 2000) (Feldman, J.) and Francisco v. M/T STOLT ACHIEVEMENT, 2001 WL 290172 (E.D.La. Mar 23, 2001) (Vance, J.) have recently considered this issue, and both courts decided that the employment contracts of seamen are governed by the Convention. This Court comes to the same conclusion.
Title 9 of the United States Code governs arbitration. Under Chapter 1 of Title 9, "contracts of employment of seamen" are generally excluded from arbitration. See 9 U.S.C. § 1 and 2. However, the Convention is found in Chapter 2 of Title 9, and the provisions of Chapter 1 have only been incorporated into Chapter 2 "to the extent that [Chapter 11 is not in conflict with [Chapter 2] or the Convention as ratified by the United States." See 9 U.S.C. § 208. Because § 202 of Chapter 2 covers all commercial legal relationships, while § 1 of Chapter 1 limits transactions involving commerce by excluding employment contracts of seamen, the Court finds that § 1 is in conflict with § 202. Accordingly, like the Lejano and Francisco courts, this Court finds that § 1 of Chapter 1 is not applicable to the Convention by virtue of § 208 of Chapter 2. Therefore, the Convention is applicable to Gavino's employment contract.
§ 202 refers to "a legal relationship . . . which is considered as commercial, including a transaction, contract or agreement described in section 2. . . ."
See 9 U.S.C. § 1 and 2.
Gavino argues that the Court should reject the reasoning of Lejano and Francisco and adopt the analysis of Jaranilla v. Megasea Maritime, Ltd, No. 01-51 (Barbier, J.). Due to the perceived ambiguity of Title 9, the Jaranilla court turned to the legislative history and found that the Senate did not intend for the Convention to apply to employment contracts of seamen. Tr. of Court's Ruling, June 20, 2001 at 4 — 5. However, this Court finds that the conclusions in Lejano and Francisco are supported by a plain reading of the statute.
Gavino's second argument is that the purported arbitration agreement is unenforceable because it does not meet the criteria set forth in Sedco, Inc. v. Petroleos Mexicanos Mexican Nat'l Oil Co., 767 F.2d 1140, 1144 (5th Cir. 1985). Sedco instructs that, in order to find that the Convention applies to an arbitration agreement, the following elements must be satisfied: (1) there must be an agreement in writing to arbitrate the dispute; (2) the agreement must provide for arbitration in the territory of a Convention signatory; (3) the agreement to arbitrate must arise out of a commercial legal relationship; and (4) the party to the agreement must not be an American citizen.
The second and fourth Sedco requirements are not in dispute. The contract provides for arbitration in the Philippines, which has signed the Convention; and no party to the contract is an American citizen. The Court has already addressed the third factor, supra, and has found that a seaman's employment contract is a "commercial legal relationship" within the meaning of the Convention. See, also, Lelano v. K.S. Bandak, No. 00-2990 (E.D.La. Nov. 3, 2000) (Feldman, J.) and Francisco v. M/T STOLT ACHIEVEMENT, 2001 WL 290172 (E.D.La. Mar 23, 2001) (Vance, J.).
Accordingly, the primary issue in controversy is whether there is an agreement in writing to arbitrate the dispute. Gavino first contends that his contract does not contain an agreement to arbitrate. However, paragraph 2 of his contract states that:
The terms and conditions of the revised Employment Contract governing the employment of all seafarers approved per Department Order No. 33 and Memorandum Circular No. 55 both Series of 1996 shall be strictly and faithfully observed.
Contract at ¶ 2. Section 28 of the revised Employment Contract for seafarers (the "Revised Contract") provides that:
The Philippine Overseas Employment Administration (POEA) or the National Labor Relations Commission (NLRC) shall have original and exclusive jurisdiction over any and all disputes or controversies arising out of or by virtue of this Contract.
Although the term "arbitration" does not appear in § 28, the Court finds that a plain reading of this section requires Gavino to submit to dispute resolution before the POEA and the NLRC prior to resorting to the judiciary process.
The Court notes that the "arbitration clause" is more precisely a forum selection clause which compels aggrieved seamen to submit their complaints to the named Philippine agencies.
Gavino further contends that, even if there is an agreement to arbitrate, it is not applicable in a dispute with Eurochein because Eurochem is not a party to the employment contract. The contract is between Gavino and Magsaysay Maritime Corporation, which signed "[f]or and on behalf of Sirius Ship Management" for the MONTALLEGRO. Empl. Contr. The contract further states that Magsaysay, Sirius, and the MONTALLEGRO are collectively "hereinafter referred to as the Employer."Id. Since Gavino seeks damages from Eurochem for injuries allegedly sustained during the course of his employment on the MONTALLEGRO, the Court finds that the arbitration agreement is binding in a suit against Eurochem, the MONTALLEGRO's owner.
Finally, Gavino contends that, even if a binding arbitration agreement exists, it does not apply to his tort claim. Specifically, he asserts that "any and all disputes or controversies arising out of or by virtue of the Contract" refers only to contractual claims and not tort claims. Rev. Empl. Contract § 28. In support of this position Gavino cites the Amicus Curiae brief filed by the Republic of the Philippines to the Louisiana Supreme Court in Abuan v. Smedvig Tankships. Ltd., 717 So.2d 1194 (La.Ct.App. 4 Cir. 1998), writ denied, 736 So.2d 208. In its Abuan brief, the Republic of the Philippines stated that § 28 of the Revised Employment Contract "clearly and unambiguously refers only to issues or claims regarding the interpretation or implementation of the agreement itself and clearly does not refer or pertain to tort actions." Amicus Br. at 10. The Philippine government further contended that "the POEA is devoid of jurisdiction over tort claims" and the POEA and the NLRC only have "exclusive jurisdiction over the money claims arising from employment contracts." Id. at 10-11.
While the Philippine Government's interpretation of its own agencies' jurisdiction is highly persuasive, this Court's interpretation of § 28 of the Revised Contract is constrained by Fifth Circuit precedent, which has explicitly rejected the position advanced by the Republic of the Philippines in Abuan. In Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216, 222-23 (5th Cir. 1998), several Filipino seamen argued that § 28 did not apply to tort actions. The Fifth Circuit held that nothing in the contract justified limiting its application to contract claims and interpreted "any and all disputes or controversies arising out of or by virtue of this Contract" to include tort causes of action. Id. at 223. Accordingly, this Court must follow the Marinechance holding and interpret § 28 to include tort claims.
In addition to contesting the employment contract itself, Gavino advances several alternative arguments in support of his position that the Convention is inapplicable to his case. First, he claims that the contract's forum selection clause is unenforceable under La. R.S. § 23:921. However, since the instant dispute has no connection to Louisiana, the Court does not find that Louisiana's policy against forum selection clauses in employment contracts is applicable. See Keramidas v. Profile Shipping Ltd., 785 So.2d 1004, 1009 (La.App. 5 Cir. Apr 11, 2001) (holding that § 23:921 does not apply to employment contracts of foreign maritime workers).
Second, Gavino argues that the arbitration agreement is unenforceable because the United States ignored a similar agreement in Reich v. Japan Enterprises Corp., 91 F.3d 154 (9th Cir. (N. Mariana Island) Jul 10, 1996). However, in Japan Enterprises Corp. the United States government brought claims for wage violations on behalf of Philippine citizens working in a U.S. territory. It is therefore distinguishable from the instant case, in which a Philippine national was working for an Italian corporation in international waters.
Finally, Gavino argues that enforcing the arbitration agreement would be unfair. However, the Court does not find that Gavino's appeal to equity overcomes the strong policy favoring arbitration in international disputes. See Scherk v. Alberto-Culver Co., 417 U.S. 506, 516-17 (1974).
CONCLUSION
For the reasons stated above, the Court finds that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards applies to Gavino's employment contract. Accordingly, the Court has federal question jurisdiction under 9 U.S.C. § 201, and the plaintiffs Motion for Remand is DENIED.