United States District Court, S.D. Florida
Singh v. Carnival Corporation






Plaintiff, an Indian seaman, brought an action against Defendant, a Bermudan cruise ship employer, alleging to have suffered injuries while working. Defendant opposed the action, contending that, pursuant to an arbitration clause in the employment agreement, any dispute between the parties should be settled via arbitration. Plaintiff resisted Defendant’s motion for compelling arbitration, alleging that the arbitration clause was invalid, inter alia, under the defense of unconscionability, on account of the parties' uneven bargaining power.

To support the applicability of the unconscionability defense, Plaintiff referred to the UNIDROIT Principles, which he stated to represent "a collection of black letter commercial laws, list[ing] various internationally recognized defenses to any contract, including unequal bargaining power”, to demonstrate that the unconscionability defense "can be applied neutrally on an international scale" for the purposes of Art. II(3) of the New York Convention.

The Court rejected Plaintiff’s argument. In so doing, the Court observed that Plaintiff has failed to demonstrate that, as questioned by the Court in previous decisions, there exist a "universal definition of the unequal bargaining power defense that may be applied effectively across the range of countries that are parties to the Convention” (see, among others, United States District Court, S.D. Florida, Koda v. Carnival Corp., 30-03-2007, in Unilex). The Court noted that, while 148 countries are parties to the New York Convention, only less than half of them are also members of the UNIDROIT. It follows that, even assuming a total correspondence between the two groups of countries, and that the UNIDROIT Principles do provide for an objectively determinable definition of 'unconscionability' – which it is not the case, despite the admirable efforts of their drafters –, such construction is not accepted by more than half of the New York Convention signatories.

Furthermore, while appreciating the efforts by UNIDROIT in developing universal principles of contract law and recognizing the UNIDROIT Principles’ value, the Court found that the provision on Gross Disparity contained in the Principles does not set forth an objective standard for discerning unconscionability. In the Court’s view, indeed, if it true that the rule on Gross Disparity aims at sanctioning contracts where one party enjoys an excessive advantage vis-à-vis the other party; however, avoidance or adaptation of the contract, or of an individual term, require the disequilibrium in the circumstances to be so great as to shock the conscience of a reasonable person (see Art. 3.2.7, Comment 1). Such disequilibrium, the Court concluded, “while clothed in the language of an objective standard, is hardly, in practical application, capable of objective ascertainment across the 148 countries who are signatories to the Convention. What shocks the conscience in one country is not necessarily the same as what shocks the conscience in another country”.

Finally, as the Court dismissed all others Plaintiff’s claims, it decided in favor of the enforceability of the arbitration agreement and granted Defendant’s motion to compel arbitration.



I. Background
This case arises out of Plaintiff Mahaveer Singh's claims for injuries allegedly sustained during the course of his employment with Defendant Carnival Corporation. Carnival [*2] filed its Notice of Removal [D.E. 1] of this action to federal court on February 4, 2013, and shortly thereafter moved this Court to compel arbitration pursuant to an arbitration provision contained within the employment contract between the parties. See D.E. 7.
In response, Plaintiff asserts that the Court should invalidate the arbitration clause and remand this action to state court. See D.E. 12 at 4.

II. Discussion
The United States is a signatory country to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention"), which is implemented in the United States by the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 201-208 (2006). The FAA provides that "[a]n arbitration or arbitral award arising out of a legal relationship, whether contractual or not, which is considered as commercial, including a transaction, contract, or agreement . . . falls under the Convention. . . ." 9 U.S.C. § 202. In turn, "[a]n action or
proceeding falling under the Convention shall be deemed to arise under the laws and treaties of the United States. The district courts of the United States . . .shall have original jurisdiction over such an action or proceeding . . . ." 9 U.S.C. § 203. The FAA continues, "Where the subject matter [*3] of an action or proceeding pending in a State court relates to an arbitration agreement or award falling under the Convention, the defendant or the defendants may, at any time before the trial thereof, remove such action or proceeding to the district court of the United States." 9 U.S.C. § 205.
A. The Action Falls Under the Convention
Four jurisdictional prerequisites must exist for an action to fall under the Convention: (1) there is an agreement in writing within the meaning of the Convention; (2) the agreement
provides for arbitration in the territory of a signatory of the Convention; (3) the agreement arises out of a legal relationship, whether contractual or not, which is considered commercial; and (4) a party to the agreement is not an American citizen, or that the commercial relationship has some reasonable relation with one or more foreign states.
Bautista v. Star Cruises, 396 F.3d 1289, 1294, n.7 (11th Cir. 2005). The party seeking arbitration bears the burden of establishing the jurisdictional prerequisites.
Lindo v. NCL (Bahamas) Ltd., 09-22926-CIV, 2009 U.S. Dist. LEXIS 129452, 2009 WL 7264038 (S.D. Fla. Dec. 23, 2009) aff'd, Lindo v. NCL (Bahamas), Ltd., 652 F.3d
1257 (11th Cir. 2011). Here, Carnival has satisfied its burden to demonstrate that all of the jurisdictional prerequisites exist. First, the Seafarer's Agreement, signed by Plaintiff on March 24, 2012, contains an arbitration clause [*4] that provides, Arbitration. Except for a wage dispute governed by CCL's Wage Grievance Policy and Procedure, any and all disputes arising out of or in connection with this Agreement, including any question regarding its existence, validity, or termination, or Seafarer's service on the vessel,
shall be referred to and finally resolved by arbitration und er t he A m e r ic an Arbitration Association/International Centre for Dispute Resolution International Rules, which Rules are deemed to be incorporated by reference into this clause. The number of arbitrators shall be one. The place of arbitration shall be London, England, Monaco, Panama City, Panama or Manila, Philippines whichever is closer to Seafarer's home country. The Seafarer and CCL must arbitrate in the designated jurisdiction, to the exclusion of all
other jurisdictions. The language of the arbitral proceedings shall be English. Each party shall bear its own attorney's fees, but CCL shall pay for the costs of arbitration as assessed by the AAA.
Seafarer agrees to appear for medical examinations by doctors designated by CCL in specialties relevant to any claims Seafarer asserts, and otherwise the parties agree to waive any and [*5] all rights to compel information from each other. See D.E. 7-1 at ¶ 7(emphasis in original). Singh's acceptance of Carnival's terms of employment, containing the subject arbitration provision, establishes "'an agreement in writing' in which the parties undertake to submit the dispute to arbitration." Bautista, 396 F.3d at 1300. Additionally, because the Philippines — the place of arbitration in Plaintiff's case — is a signatory to the Convention, the first two jurisdictional prerequisites are met.
As for the third requirement, Singh and Carnival's arbitration agreement arose out of their commercial legal relationship, as required by the Convention. In Bautista, the Eleventh Circuit determined that "arbitration provisions constitute commercial legal relationships within the meaning of the Convention Act."
Id. Finally, the fourth requirement is fulfilled because Singh, who is from India, is a foreign citizen. Therefore, Carnival has met its burden to establish that the Court
has jurisdiction over this action.

B. Plaintiff's Defenses to Arbitration

Because the jurisdictional prerequisites are present, this Court considers the merits of Carnival's Motion to Compel Arbitration. The Convention Act "generally establishes [*6] a strong presumption in favor of arbitration of international commercial disputes." Bautista, 396 F.3d at 1295 (citing Indus. Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434, 1440 (11th Cir. 1998) (citation omitted)). As a result, a court's inquiry on a motion to compel arbitration is "very limited." Id., 396 F.3d at 1294 (citation and internal
quotation marks omitted). Indeed, a district court "must order arbitration" unless one of the Convention's affirmative defenses applies. Id. at 1294-95.
To determine whether Singh has invoked one of the Convention's affirmative defenses that would remove this matter from arbitration, the Court turns to Article II of
the Convention, which governs a "request of one of the parties" to "refer the parties to arbitration." See Lindo 652 F.3d at 1263. Article II, in turn, "requires that courts
enforce an agreement to arbitrate unless the agreement is 'null and void, inoperative or incapable of being performed.'" Bautista, 396 F.3d at 1301 (citing Convention, art. II(3)). Affirmative defenses encompassed within the "null and void" clause are limited to "'standard breach-of-contract defenses,' such as fraud, mistake, duress, and waiver — that can be applied neutrally on an international scale." Id. at 1302 (citing DiMercurio v. Sphere Drake Ins. PLC, 202 F.3d 71, 79-80 (1st Cir. 2000)).
As the Eleventh Circuit has explicated this very strict limitation on defenses that may be recognized under Article II, this "approach [*7] is required by the unique circumstances of foreign arbitration." Id. More specifically, these considerations include the following: concerns of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need of the international commercial system for predictability in the resolution of disputes require that we enforce the parties' agreement, even assuming that a contrary result would be forthcoming in a domestic context. Id. (quoting Mitsubishi Motors Corp. v. Soler Chrysler- Plymouth, Inc., 473 U.S. 614, 629, 105 S. Ct. 3346, 87 L. Ed. 2d 444 (1985)) (internal quotation marks omitted).
These concerns result from the Convention's purpose: The goal of the Convention, and the principal purpose underlying American adoption and implementation of it, was to encourage the recognition and enforcement of commercial arbitration agreements in international contracts and to unify the standards by which agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries. Id. at 1299 (quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n.15, 94 S. Ct. 2449, 41 L. Ed. 2d 270
(1974) (emphasis added by Bautista Court omitted)). Significantly, the framers of the Convention wished to avoid undermining the treaty's benefits by domestic courts' injection of so-called "'parochial' values" into the scheme: In their discussion of [Article II(1)], [*8] the delegates to the Convention voiced frequent concern that the courts of signatory countries in which an agreement to arbitrate is sought to be enforced should not be permitted to decline enforcement of such agreements on the basis of parochial views of their desirability or in a manner that would diminish the mutually binding nature of the agreements. Id. at 1300 (quoting Scherk, 417 U.S. at 520 n.15).

1. Unconscionability

Here, Singh raises two affirmative defenses: unconscionability and violation of public policy. With regard to unconscionability, Singh asserts that the contract was offered on a "'take-it-or-leave-it' basis to a poor Indian seaman and ward of admiralty by his wealthy corporate employer with all the bargaining power."1 D.E. 11 at 2. The Eleventh Circuit, however, has already expressly held that Article II does not include an unconscionability defense based on the reasoning that Singh asserts here. In Bautista, the court specifically considered the plaintiffs' contention that their arbitration agreement was unconscionable because they "were put in a difficult 'take it or leave it' situation when presented with the terms of employment." Bautista, 396 F.3d at 1302. Rejecting the Bautista plaintiffs' position, the Eleventh Circuit explained, [*9] "It is doubtful that there exists a precise, universal
definition of the unequal bargaining power defense that may be applied effectively across the range of countries that are parties to the Convention, and absent any indication to the contrary, we decline to formulate one." Id. Since Bautista, the Eleventh Circuit has reaffirmed its holding on unconscionability. See, e.g., Lindo, 652 F.3d at 1273, 1276-77 ("This Court expressly rejected [the argument that unconscionability based on the "take-itor- leave-it" nature of an arbitration agreement was encompassed within the permissible Article II defenses], concluding that an unconscionability defense was not [*10] available under Article II of the Convention"); Henriquez v. NCL (Bahamas), Ltd., 440 F. App'x 714,
716 (11th Cir. 2011) ("In Bautista, we refused to recognize unconscionability as a defense to enforcement of this kind of arbitration agreement"). District courts in this Circuit have likewise applied the Bautista rule to claims of unconscionability. See, e.g., Ballesteros v. NCL (Bahamas) Ltd., 925 F. Supp. 2d 1303, 2013 WL 588328, *2 (S.D. Fla. 2013); Estibeiro v. Carnival Corp., 2012 U.S. Dist. LEXIS 143058, 2012 WL 4718978, *5 (S.D. Fla. Oct. 3, 2012); Lujan v. Carnival Corp., 2012 U.S. Dist. LEXIS 45812, 2012 WL 1104253,
*2-3 (S.D. Fla. Apr. 2, 2012); Kote v. Princess Cruise Lines, Ltd., 2011 U.S. Dist. LEXIS 108717, 2011 WL 4434858, *3 (S.D. Fla. Sept. 23, 2011).
While Singh recognizes this precedent, he posits that it does not foreclose his unconscionability argument. In particular, Singh points to Arauz v. Carnival Corp., 466
F. App'x 815, 817 (11th Cir. 2012), in which the Eleventh Circuit declined to consider whether Bautista allows for an unconscionability defense if it "can be applied neutrally on an international scale" because the Arauz plaintiff had not raised the argument in the district court. Based on Arauz, Singh asserts that he need only show that the unconscionability defense "can be applied neutrally on an international scale" in order to be permitted to raise the defense under Article II. In his quest to establish this, Singh invokes the UNIDROIT Principles of International Commercial Contracts ("UNIDROIT Principles"), "a collection of black letter commercial laws, list[ing] various internationally recognized defenses to any contract, including unequal bargaining power." D.E. 11 at 10 (citing Art. 3.10, Gross Disparity). Although the Court certainly understands Singh's efforts
to bring the unconscionability defense within the ambit of Article II, the Court is not persuaded by Singh's argument. First, presently, 148 countries are signatories to the Convention. See Kevin R. Owens, Mayer Brown, Myanmar: Myanmar Agrees to Become a Signatory to the New York Convention, (Mar. 21, 2013). But only sixtythree
countries are members of UNIDROIT. See UNIDROIT, (last visited Mar. 25, 2013). Even assuming a 100% crossover between the two universes of signatories, fewer than half of the Convention signatories have ascribed to the UNIDROIT Principles. Thus, even if the UNIDROIT Principles set forth an objectively determinable definition of "unconscionability" — which they do not, despite admirable efforts to do so and an improvement over the utter lack of any principles, [*12] that construction of "unconscionability" has not been accepted by more than half of the Convention signatories. As a result, Singh has not demonstrated the existence of a "universal definition of the unequal bargaining power defense that may be applied effectively across the range of countries that are parties to the Convention." See Bautista, 396
F.3d at 1302. Second, as noted above, while the Court admires, respects, and appreciates the diligent efforts of UNIDROIT to develop universal principles of contract interpretation and finds the UNIDROIT Principles to have value, the Gross Disparity provision contained within the UNIDROIT Principles does not provide an objective standard for discerning unconscionability. For example, although the Gross Disparity article prohibits contracts where one party has an "excessive advantage," in explicating the meaning of this term, the UNIDROIT Principles state. As the term 'excessive' advantage denotes, even a considerable disparity in the value and the price or some other element which upsets the equilibrium of performance and counter-performance is not sufficient to permit the avoidance or the adaptation of the contract under this Article. What is required is that the disequilibrium is in the circumstances so great as to shock the conscience of a reasonable person. UNIDROIT Principles, Art. 3.2.7, Comment 1. Of course, a "disequilibrium . . . so great as to shock the conscience of a reasonable person," while clothed in the language of an objective standard, is hardly, in practical application, capable of objective ascertainment across the 148 countries who are signatories to the Convention. What shocks the conscience in one country is not necessarily the same as what shocks the
conscience in another country. Third, other judges have similarly concluded that the UNIDROIT Principles do not solve Bautista's concern for a "universal definition of the unequal bargaining power defense that may be applied effectively across the range of countries that are parties to the Convention." See, e.g., Krstic v. Princess Cruise Lines,
Ltd. (Corp.), 706 F. Supp. 2d 1271, 1277-78 (S.D. Fla. 2010) (Gold, J.); Koda v. Carnival Corp., Case No. 06- 21088-CIV-HOEVELER, 2007 U.S. Dist. LEXIS 100084
(S.D. Fla. Sept. 7, 2007), D.E. 47 at 2. For all of these reasons — and particularly because of the emphasis in international arbitration on the need for universally applicable defenses [*14] under Article II of the Convention, the Court concludes that Singh has not established that he may invoke the defense of unconscionability under Article II of the Convention.

2. Public Policy

Nor does Singh's second defense — that of public policy — fare any better. Specifically, Singh argues that Carnival, through the arbitration agreement, has effectively insulated itself from compliance with the Jones Act and the general maritime law of the United States because the agreement contains a forum selection clause that requires arbitration in the Philippines, using Panamanian law. D.E. 11 at 14. In support of this argument, Singh relies primarily on Thomas v. Carnival Corp., 573 F.3d 1113 (11th Cir. 2009). Thomas involved a seaman's arbitration agreement that specified that any disputes would be arbitrated in the Philippines and resolved under Panamanian law. Among other bases, the plaintiff challenged the agreement as violative of public policy because, the plaintiff argued, it precluded the possibility that United States law would be applied in resolving
disputes arising under the agreement. 573 F.3d at 1122- 23. In reaching this conclusion, the Thomas panel relied on language in Article V of the Convention to find the
contract "null and void" under Article [*15] II of the Convention. See id. at 1120-24. In particular, the Thomas panel quoted the following part of Article V: "Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that .. . [t]he recognition or enforcement of the award would be contrary to the public policy of that country." Id. at 1120 (citing Art. V(2)(b)) (internal quotation marks omitted). But, as Lindo pointed out, by its terms, Article V "applies only at the arbitral award-enforcement stage and not at the arbitration-enforcement stage at issue [under Article II]. . . . Article V has no application . . . where [one party] seeks to enforce arbitration at the outset of the dispute,"as under Article II. 652 F.3d at 1280. In fact, the Lindo Court noted, the Convention's delegates voted down a proposal to include language linking arbitration agreements to the award-enforcement stage, and thus, to Article V's public policy defense. Id. at 1280 n.25
(citing Leonard V. Quigley, Accession by the United States to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 70 Yale L.J. 1049, 1063 (1961); G.W. Haight, Convention on the Recognition and Enforcement of Foreign Arbitral Awards: Summary [*16] Analysis of Record of United Nations Conference 27-28 (1958)). Moreover, the Lindo Court disagreed with the Thomas panel that it was established that United States law would never be applied in resolving the Thomas plaintiff's claims. Lindo, 652 F.3d at 1279. In this respect, Lindo emphasized the Supreme Court's warning in Vimar Seguros y Reaseguros v. M/V Sky Reefer, 515 U.S. 528, 115 S. Ct. 2322, 132 L. Ed. 2d 462 (1995), that, "at the arbitration-enforcement stage, it is generally premature to make findings about how arbitrators will conduct the arbitral process, whether a
claim will be heard, or whether the foreign-law remedies will be adequate or inadequate." Lindo, 652 F.3d at 1279. Furthermore, the Lindo Court explained, Vimar
cautioned that "there would be 'subsequent opportunity for review' [at the Article V stage] to ensure that public policy interests have been adequately addressed." Id. (quoting Vimar, 515 U.S. at 540). At that time, the arbitrator will have ruled, and the record will establish what principles were applied and what Plaintiff recovered, or did not recover, and why. See id. at 1284. Review can then meaningfully occur. For these reasons, among others, the Lindo Courtconcluded that Thomas conflicts with Bautista, and, therefore, is not good precedent.4 Lindo, 652 F.3d at 1278. Since the Lindo Court reached this determination, subsequent Eleventh Circuit panels [*17] have embraced it. See, e.g., Maxwell v. NCL (Bahamas), Ltd., 454 F. App'x 709, 710 (11th Cir. 2011) (per curiam);5 Fernandes v. Carnival Corp., 484 F. App'x 361, 362 (11th Cir. 2012); Arauz, 466 F. App'x at 816. Thus, this Court cannot rely on Thomas to invalidate Singh's arbitration agreement. In addition, even beyond the lack of precedential value of Thomas, Lindo also criticized Thomas's analysis of the merits of the plaintiff's public-policy argument. Whereas the Thomas panel rejected the idea of applying Panamanian law to the plaintiff's claims (which
the plaintiff asserted under the Jones Act, the Seaman's Wage Act, and the obligation for maintenance and cure under general maritime law of the United States), the
Lindo Court took issue with the Thomas panel's failure in arriving at this conclusion to analyze whether Panamanian [*18] remedies would be so inadequate as
to be fundamentally unfair. Lindo, 652 F.3d at 1283 (citing Lipcon v. Underwriters at Lloyd's, London, 148 F.3d 1285, 1288-89, 1297-99 (11th Cir. 1998)).
Similarly, here, Singh does not even attempt to analyze Panamanian law to show that its remedies would fail the Lipcon standard. Finally, contrary to Singh's suggestion, his maintenance and- cure claim is also subject to arbitration. See Bautista, 396 F.3d 1289 (requiring arbitration of all claims, including the plaintiffs' maintenance-and-cure
claim); Arauz, 466 F. App'x 815 (same); Fernandes, 484 F. App'x 361 (same); Henriquez, 440 F. App'x 714 (Bautista forecloses the argument that a claim for
maintenance and cure is non-arbitrable because it arose from an employment relationship with the employer, not from the employment contract). Because Eleventh
Circuit precedent precludes Singh's argument, this Court must deny Singh's claim.

C. Dismissal

The FAA contemplates "two causes of action in federal court for a party seeking to enforce arbitration agreements covered by the Convention: (1) an action to compel arbitration in accord with the terms of the agreement, 9 U.S.C. § 206, and (2) at a later stage, an action to confirm an arbitral award made pursuant to an arbitration agreement, 9 U.S.C. § 207." Lindo, 652 F.3d at 1262-63. At the latter stage, "[t]he court shall confirm 5 This panel included one of the judges who sat on the Thomas panel and who subsequently dissented from the Lindo decision. the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement [*19] of the award specified in the . . . Convention." 9 U.S.C. § 207. Because the FAA provides for two possible stages of litigation under the Convention, the Court may, but is not required, to retain jurisdiction over an action governed by the FAA and the Convention. See Lindo, 652 F.3d at 1279-80. In this regard, the FAA provides, "Within three years after an arbitral award falling under the
Convention is made, any party to the arbitration may apply to any court having jurisdiction under this chapter for an order confirming the award as against any other
party to the arbitration." 9 U.S.C. § 207 (emphasis added). Thus, an action to confirm an arbitral award may be brought as its own separate action, irrespective
of whether another action was already filed seeking to compel arbitration. Lindo, 652 F.3d at 1279-80. The Court recognizes that it may properly compel arbitration and stay this case. See, e.g., Alcalde v. Carnival Cruise Lines, 798 F. Supp. 2d 1314, 1321 (S.D. Fla. 2011). To stay the action assumes, however, that one of the parties will be unhappy with the results of arbitration. In fact, both parties might be satisfied with the outcome of arbitration and choose not to proceed to a later cause of action to confirm the award or contest
its enforcement. At this point, Plaintiff has provided no reason for the Court to believe that there [*20] is no way that arbitration of his dispute will be productive.
Therefore, the Court dismisses this action. Once arbitration is complete, either party may file a new complaint seeking for the Court to confirm the award in accordance with the provisions of the FAA and the Convention.
III. Conclusion
For the foregoing reasons, it is hereby ORDERED and ADJUDGED as follows:
1. Defendant Carnival Corporation's Motion to Compel Arbitration [D.E. 7] is GRANTED. The parties are required to comply with the terms of the vessel
operator's Seafarer's Agreement, including the arbitration provision [D.E. 7-1].
2. Plaintiff Mahaveer Singh's Motion to Remand is DENIED.
3. Plaintiff's Complaint [D.E. 1] is DISMISSED WITH PREJUDICE.
4. To the extent not otherwise disposed of, all pending motions are hereby DENIED AS MOOT.
5. The Clerk is directed to CLOSE this matter.}}


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