Arbitration/Maritime law

• Pages: 46-50

46 Volume 21, April–June 2015 international law update

© 2015 International Law Group, LLC. All rights reserved. ISSN 1089-5450, ISSN 1943-1287 (on-line) | www.internationallawupdate.com

ARBITRATION/

MARITIME LAW

Fifth Circuit reverses district court

determination that small arbitral award

by Philippine arbitration panel in favor of

injured seaman violated public policy of

the United States; remands for district

court to enforce the arbitral award

is case arose out of work-related injuries that

Lito Martinez Asignacion (Asignacion), a citizen

and resident of the Philippines, sustained while

working on a vessel owned by Rickmers Genoa

Schiahrtsgesellschaft mbH & Cie KG (Rickmers),

a German Corporation.

Asignacion had signed a contract to work

aboard the vessel M/V RICKMERS DAILAN

owned by Rickmers which sailed under the ag of

the Marshall Islands. Under Philippine law, foreign

employers can hire Filipino workers through the

Philippine Overseas Employment Administration

(POEA), which is an arm of the Philippine

government. Asignacion’s contract incorporated

the “Standard Terms and Conditions Governing

the Employment of Filipino Seafarers On Board

Ocean Going Vessels” (Standard Terms), required

by POEA. ese terms include several provisions

related to dispute resolution, such as:

Section 29—providing that in case of claims

and disputes arising from the employment, the

parties shall submit the claim or dispute to the

original and exclusive jurisdiction of the voluntary

arbitrator or panel of arbitrators;

Section 31—providing that any unresolved

dispute, claim or grievance arising out of or in

connection with the contract shall be governed

by the laws of the Republic of the Philippines,

international conventions, treaties, and covenants

to which the Philippines is a signatory; and

Section 20 (B)—providing that when a seaman

suers work-related injuries, the employer must

provide the full cost of medical treatment until the

seaman is declared t to work or his level of disability

is declared after repatriation to the Philippines; that

if the seaman is permanently disabled, he is entitled

to disability benets; and 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.”

Asignacion suered burns when a cascade tank

aboard the vessel overowed. e vessel was at

that moment docked in the Port of New Orleans,

Louisiana. Asignacion received treatment at a burn

unit in Baton Rouge, and was thereafter repatriated

to the Philippines, where he continued to receive

medical attention. Asignacion sued Rickmers in

Louisiana state court to recover for his bodily injuries.

e court found that Asignacion sustained severe

burns to 35% of his body, suered problems with

his body-heat control mechanism, and experienced

skin ulcerations and sexual dysfunction. When

Rickmers led 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.

e arbitration commenced before a Philippine

panel convened under the auspices of the

Philippine Department of Labor and Employment.

e panel found that Section 31 of the Standard

Terms prevented the panel from applying any

law besides Philippine law. Furthermore, the

panel accepted Rickmers’s physician’s nding 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 led a motion in 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 arbitral award.

e district court determined that the only

defense Asignacion invoked was Article V(2)(b) of

the Convention on the Recognition and Enforcement

of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T.

2517, 330 U.N.T.S. 3. (“Convention”), which

allows a signatory country to refuse enforcement

if “recognition or enforcement of the award would

be contrary to the public policy of that country.”

e district court then applied the traditional