Case of the Day: Asignacion v. Rickmers Genoa Schiffahrts
Posted on April 15, 2014
The case of the day is Asignacion v. Rickmers Genoa Schiffahrts (E.D. La. 2014). Lito Martinez Asignacion, a Philippine national, was employed by Rickmers Genoa Schiffahrts as a seaman aboard the M/V Rickmers Dalian, a Marshall Islands-flagged vessel. There was a written employment contract, entered into by Rickmers and by the Philippine government through the Philippine Overseas Employment Administration. The contract contained an arbitration provision requiring arbitration of disputes in the Philippines, and it provided that claims arising out of Asignacion’s employment would be governed by Philippines law.
Asignacion suffered a severe injury aboard the ship while it was in port in New Orleans. He sued Rickmers in state court in Louisiana under the Jones Act and general maritime law. Rickmers moved to stay the case and to compel arbitration. The state court granted the motion. The parties then participated in an arbitration in the Philippines. The tribunal found that Philippine law, not American law, governed, and that Asignacion was entitled to damages in an amount determined according to a schedule set by Philippine law, which amount to only $1,870.
Rickmers returned to the Louisiana state court and moved for an order lifting the stay and recognizing the Philippine arbitral award. Asignacion removed the case to the District Court. Rickmers filed a new action in the District Court seeking recognition of the award. The two actions were consolidated.
The court refused recognition of the award on the grounds that it was contrary to public policy. This is a permissible ground for refusal under Article V(2)(b) of the New York Convention. The gist of the decision was that the employment contract not only had an arbitration provision but also a substantive choice of law provision. I’m not going to review the doctrinal issues, but in essence, the judge seems to be saying that a US court, applying the test applicable in maritime cases, would have applied US law (the law of the flag state, the Marshall Islands, expressly incorporates the general maritime law of the United States, which makes the analysis easier). The arbitrators apparently did not undertake any choice of law analysis, instead simply applying Philippines law by default. Particularly given seamen’s status as wards of the admiralty courts entitled to special protection, the judge concluded that the award violated US public policy.